Trouble in the construction sector today spread to Morgan Sindall, which saw its shares plunge after warning that spiralling costs will hit its full-year profits.
Following a string of profit downgrades from rival Balfour Beatty, the company, which is working on Crossrail, said a number of projects in London and the south-East had experienced “timetable slippages and increased estimated costs to complete”.
Its shares plummeted more than 12% to 692p, a fall of about 20% since the summer as the industry continues to be hit by rising labour, energy and material costs.
John Morgan, chief executive, said: “This is a short-term and localised issue which is receiving the highest level of management attention and which should be worked through over the next six months.
“The rest of the business is performing well, particularly fit out, and we expect an improved performance from urban regeneration in the year, supporting our long-term strategy of investment in regeneration.”
Morgan Sindall said its order book stood at £2.7 billion at the end of September, up 12% since the start of the year.
Analysts at Jefferies downgraded the company from buy to hold. “As the true extent of the school report becomes clear during the half-term holiday, so Morgan Sindall’s problem children have come home for the holiday,” they said. “A handful of contracts have blotted what was otherwise a clean copybook.”
