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Morgan Sindall has said it is upgrading its target margins for its biggest business over the coming years after turning in another set of thumping results with the firm now expected to beat forecasts for its full year.

The firm gave construction and infrastructure an operating margin target of 2.5% last August but this has now been revised upwards on the back of a strong first half this year.

Construction saw operating margins come in at 2% 鈥� up from 1.7% for the same period last year 鈥� while infrastructure posted 2.1%, up from 1.7% last time.

But chief executive John Morgan (pictured) said the firm had now set a target of 2.5% for construction in the medium term, which he said was the next two to three years, with infrastructure handed a 3% figure over the same period.

鈥淚鈥檓 not quoting margins that I don鈥檛 think are achievable or realistic,鈥� he said.

Around 90% of the firm鈥檚 infrastructure business 鈥� which accounted for just over half of the firm鈥檚 拢679m construction and infrastructure revenue in the half year 鈥� is in long term frameworks and Morgan admitted: 鈥淧eople can make a bit more out of infrastructure. There are fewer bigger infrastructure players than there are in the construction market.鈥�

Workloads at its fit-out business, which is fitting out six floors of the 100 Bishopsgate tower in the City for the Royal Bank of Canada and carrying out work at the headquarters of Virgin Media in Reading, slipped 4% to 拢407m with operating margins dropping to 4% from 4.4% last time.

Morgan said he still expected the business, which trades under the Overbury and Morgan Lovell names, to hit the higher end of its targeted 拢30m-拢35m annual profit range.

He added: 鈥淭here鈥檚 quite a lot of work about, it鈥檚 just not as booming as it once was. Our average job is 拢2m so in fit out we need to win a job every day.鈥�

Morgan Sindall鈥檚 partnership housing business improved numbers but Morgan said it was not doing as well as it could be. 鈥淧artnership housing is not making the money that best in class are doing so we have some work to do there.鈥� Revenue at the division was up 3% to 拢238m with operating profit up one third to 拢6.4m on operating margins up from 2% to 2.7%.

In the six months to 30 June, group pre-tax profit was up 19% to 拢35.5m on turnover flat at 拢1.4bn. Operating profit was up 18% to 拢37.5m with operating margins now at 2.6% from 2.2% for the first six months of 2018.

As a result, the firm said it expected to beat previous pre-tax profit forecasts of 拢82m with this figure now expected to be around the 拢85m mark. 鈥淲e wouldn鈥檛 have upped the expectation if we didn鈥檛 feel positive,鈥� Morgan added.

Stephen Rawlinson, analyst at Applied Value, said: 鈥淭he statement is based on hard facts not boosterism. It is the culmination of five-six years of development to ensure low risk on projects and a good mix of activity. It is possible to make good and consistent earnings in this area and avoid large marquee jobs that can too easily backfire, the real causes of the decline of Carillion, Interserve and now Kier.鈥�

In its last set of full year results, the firm made a pre-tax profit of 拢80.6m on turnover of 拢2.9bn.