Morgan Sindall Group Reports 21% Surge in Half-Year Profit, Boosts Fit Out and Construction Targets

Fit Out and Construction Drive Record Profit Growth

Morgan Sindall Group posted its strongest half-year financial results ever, with adjusted operating profit rising 21% to a3111.5m from a391.8m in H1 2025. This growth was mainly fueled by strong performances from the Fit Out and Construction Services divisions, which significantly contributed to overall profitability. Adjusted profit before tax increased to a3116.1m from a395.9m, and adjusted earnings per share grew 22% to 186.1p, highlighting enhanced shareholder returns amid operational momentum. The adjusted effective tax rate was 25%, with a tax charge of a329.0m during the period.

Operating margin improved by 50 basis points to 4.4%, reflecting effective cost control and operational leverage across divisions. Net finance income added a34.6m to profit before tax, up from a34.1m previously. The company attributed profit growth to sustained demand across sectors, disciplined bidding, and successful contract execution. Reported and adjusted profit figures aligned closely, as exceptional items and intangible amortisation were minimal.

Revenue Climbs 8% to a32.56 Billion with Fit Out Up 19%

Group revenue rose 8% to a32,562m in H1 2026 versus a32,370m last year, led by Fit Out’s 19% surge to a3996m and Construction Services’ 18% increase to a3742m. Partnership Housing revenue fell 14% to a3347m due to weaker private housing markets and local election delays, though mixed-tenure revenues grew 6% to a3100m. Infrastructure revenue declined 3% to a3468m, and Mixed Use Partnerships revenue dropped 4% to a325m amid ongoing project investments.

Fit Out’s revenue growth to a3996m was driven by lease renewals, refurbishments, and corporate focus on sustainability and energy efficiency. Operating profit rose 19% to a369.1m, maintaining a 6.9% margin. Construction Services saw revenue increase 18% to a3742m with operating profit up 47% to a324.4m, improving margin to 3.3% from 2.6%. The company emphasized disciplined contract selection and risk management to sustain margins.

Fit Out Division Raises Medium-Term Profit Targets to a3100m–a3130m Annually

On 23 July 2026, Morgan Sindall upgraded Fit Out’s medium-term profit guidance to an average annual operating profit range of a3100m to a3130m, up from a380m to a3100m. This reflects the division’s market leadership, contract quality, and growth prospects driven by workplace transformation, asset refurbishment, and sustainability retrofits.

Fit Out posted a first-half operating profit of a369.1m with a stable 6.9% margin despite the 19% revenue rise. The division expects full-year 2026 profits to slightly exceed the top of the revised target. Its order book stood at a31,331m, down 8% year-on-year, but visibility remains strong through preferred bidder projects and pipeline demand, fueled by lease events and refurbishment trends prioritizing energy efficiency and flexible workspaces.

Construction Division Upgrades Operating Margin Target to 3.5%–4.0%

Construction Services’ medium-term operating margin target was raised to 3.5%–4.0% from 3.0%–3.5%, while maintaining a revenue target above a31.5bn annually. The division’s H1 operating profit jumped 47% to a324.4m on 18% revenue growth to a3742m, achieving a 3.3% margin versus 2.6% previously. This performance reflects strong operational discipline and risk management.

For full-year 2026, Construction Services expects an operating margin near the new target’s lower bound and revenues approaching a31.5bn. The division benefits from government investments in affordable housing, defence, infrastructure, schools, and health. Its order book was a31,904m, stable year-on-year, with a31,466m in preferred bidder projects offering future pipeline visibility. The division increasingly pursues long-term contracts with robust risk frameworks supporting margin growth.

Partnership Housing Margin Improves Despite 14% Revenue Drop

Partnership Housing showed resilience amid challenging market conditions, with revenue down 14% to a3347m due to weaker private housing demand and local election delays. Operating profit remained steady at a313.2m, while operating margin expanded 50 basis points to 3.8%, reflecting strong contract quality and disciplined pricing in public sector partnerships.

The division advanced partnerships with local authorities and housing associations, securing a full development agreement for the Druids Heath regeneration with Birmingham City Council and a new 500-home deal with North Yorkshire Council. Public sector work accounted for about two-thirds of revenues, cushioning private market volatility. Mixed-tenure revenues rose 6% to a3100m, while contracting revenues declined 21% to a3247m. The secured order book grew 12% to a32,461m, with a33,033m at preferred bidder stage.

Mixed Use Partnerships Advances Projects Despite Operating Loss

Mixed Use Partnerships reported a a31.1m operating loss in H1 2026, improved from a31.5m last year, reflecting investment in early-stage projects. Revenue fell 4% to a325m as the division focused on progressing projects to site commencement rather than near-term revenue maximization. Five projects started on site in H1, with eight more planned for later in 2026. Nine projects were under construction at period-end, with three reaching practical completion.

The division expects a small full-year loss in 2026, with average capital employed between a3135m and a3165m. Capital invested in a London apartment scheme launched in 2025 saw slow sales due to affordability challenges. New long-term partnerships were formed with Barrow, Gateshead, and Sunderland councils via ECF, a joint venture with Homes England and Legal & General. Projects under construction include a Ministry of Defence office in Blackpool and mixed-use developments in Prestwich and Wythenshawe.

Infrastructure Division Maintains Margin and Advances Frameworks

The Infrastructure division delivered stable results in H1 2026, with operating profit slightly lower at a318.3m but operating margin up 10 basis points to 3.9%. Revenue dipped 3% to a3468m. The division continued planning and design work on large frameworks while maintaining quality project delivery. Full-year 2026 operating margin is expected near the top of the 3.75%–4.25% target range, with revenues around a31.0bn, consistent with prior guidance.

Supported by government investment in electricity transmission, defence, and public sector programmes, the division’s secured order book rose 3% to a31,927m. Medium-term targets remain 3.75%–4.25% operating margin with revenues approaching a31.5bn. Exposure to long-term frameworks and government-backed projects supports operational stability and margin consistency.

Robust a312.2bn Order Book Ensures Full-Year Visibility

Morgan Sindall’s secured order book stood at a312.2bn at H1 end, slightly above a312.0bn a year earlier. Preferred bidder work totaled a37.3bn, combining for a a319.5bn secured and preferred bidder pipeline. Breakdown includes Partnerships at a312.1bn (up 18%), Fit Out at a31.7bn (flat), Construction Services at a35.7bn (down 1%), and other divisions at a31.9bn. High-quality secured contracts and preferred bidder projects provide strong revenue and profit visibility through 2026.

Management stresses contract selectivity and disciplined bidding to maintain risk balance, especially for long-term agreements where margin protection is vital. The diverse operations and strong order book underpin confidence in meeting full-year 2026 expectations despite varied market conditions. The order book reflects both execution quality and market strength across public, regulated, and private sectors.

Strong Balance Sheet and Cash Flow Support Dividend Increase

Morgan Sindall sustained strong cash generation and balance sheet discipline in H1 2026. Net cash rose a328m to a3418m from a3390m a year prior, with average daily net cash at a3423m versus a3354m previously. Of this, a335m was held in joint ventures or reserved for supplier payments. The company expects average daily net cash above a3400m for full-year 2026, providing financial flexibility for investments and shareholder returns.

Operating cash flow was a a310.0m outflow, improved from a316.7m last year, mainly due to a3122m net investment in Partnership Housing for site development and partnership growth. Seasonal working capital movements in Construction Services and Fit Out also influenced cash flow. The trailing twelve months’ operating cash flow was positive at a3202.6m. This strong financial position enabled a 10% interim dividend increase to 55.0p per share from 50.0p, reflecting performance, balance sheet strength, and long-term confidence, balancing shareholder returns with partnership business investments.

Macroeconomic Challenges and Market Outlook for 2026

Morgan Sindall recognizes ongoing uncertainty in UK and global markets, with private housing affected by inflationary pressures and interest rate concerns impacting affordability. Mixed Use Partnerships faces economic challenges affecting project viability and timing. Despite this, the group’s diversified model and strong balance sheet provide resilience against market cycles. Partnership Housing anticipates full-year operating profits slightly below last year, with average capital employed between a3500m and a3580m.

Conversely, Fit Out benefits from lease events, refurbishment, retrofit schemes, and corporate emphasis on sustainability and energy efficiency, alongside demand for flexible workspaces. UK construction continues to gain from government spending on affordable housing, defence, energy infrastructure, schools, and health. Increased Defence Investment Plan funding offers long-term bidding opportunities across divisions. Management remains confident full-year 2026 results will align with expectations, supported by diverse operations and a strong order book.