John Morgan, executive chairman of Morgan Sindall, has said clients are giving more work to large contractors amid fears over the financial health of small and medium-sized firms
Speaking after Morgan Sindall announced results for the six months to 30 June 2009, Morgan said the uncertainty also meant performance bonds and guarantees by parent groups were increasingly sought by clients.
He said: 鈥淭he order books of larger firms are holding up better than others because clients don鈥檛 want contractors to go bust.鈥�
Last week, 拢181m-turnover contractor Haymills became the largest company to run into severe financial difficulty so far after its bank RBS froze its accounts.
Morgan Sindall posted an 8% fall in turnover for the period, from 拢1.24bn to 拢1.14bn. Pre-tax profit fell 28% from 拢28.6m to 拢20.5m, which the company described as a 鈥渟olid鈥� result that was in line with management expectations.
Asked whether he was more optimistic about the future than six months ago, Morgan said: 鈥淭his is a challenging market and will remain so but I am cautiously more optimistic than I was before.鈥�
He said fit-out enquiries had 鈥渋mproved dramatically鈥� and private housing reservations were up 50%.
The company ended the period with cash of 拢89m, 拢9m less than 2008, and Morgan said it would be open to acquisitions although it was not currently 鈥渋n the middle of any deal鈥�.
Meanwhile the order book at its construction division fell from 拢838m to 拢696m. Andy Brown, an analyst at Panmure Gordon, said: 鈥淭he short-term pipeline remains healthy although some uncertainty exists beyond 2011.鈥�
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