IN Brief:
- Morgan Sindall expects materially higher, double-digit Construction profit growth in 2026, with revenue progressing towards £1.5bn.
- Infrastructure also expects double-digit profit growth, while two Great Grid Partnership energy projects have entered construction.
- Partnership Housing remains under pressure, although the group has raised its overall earnings expectations and announced a £75m share buyback.
Morgan Sindall Group has raised its profit expectations for 2026 following stronger trading across construction, infrastructure, and fit-out operations, with the contractor reporting improved margins and continued progress on major project frameworks.
The group expects its full-year results to finish slightly ahead of previous forecasts, supported by secured orders and the performance of its principal contracting divisions. Its Construction business is now expected to deliver materially higher, double-digit profit growth, exceeding the guidance issued earlier in the year.
Construction revenue is forecast to progress towards £1.5bn, compared with £1.37bn in 2025, while the operating margin is expected to reach the upper end of its 3.5% to 4.0% medium-term target range. The division generated £39m in operating profit during 2025, providing the comparison for the anticipated increase.
The stronger outlook reflects Morgan Sindall's approach to contract selection, delivery management, and commercial risk. The company has concentrated on securing projects where construction obligations, pricing, and expected returns are consistent with its operating requirements, rather than pursuing additional turnover without regard to margins.
During October, the Construction division secured appointments to all five lots of Pagabo's £5bn Major Works Framework. Morgan Sindall was one of two contractors appointed across the complete arrangement, extending its access to potential public sector building projects.
Framework appointments establish procurement routes through which clients can commission work, but they do not represent guaranteed construction revenue. Individual schemes must still be approved, funded, and awarded before they contribute to the contractor's secured workload.
The distinction is particularly important in public sector construction, where funding decisions, technical design, planning requirements, and procurement procedures can affect the interval between inclusion on a framework and commencement of work on site.
Morgan Sindall's Infrastructure division has also performed strongly and is expected to deliver double-digit profit growth during 2026. Revenue is forecast to approach £1bn, compared with £935m last year, with operating margins expected towards the upper end of the division's 3.75% to 4.25% target range.
Two energy infrastructure projects supporting the Great Grid Partnership have progressed into construction. The division is also continuing planning and design activities across major frameworks, developing projects that have not yet reached the physical construction stage.
Infrastructure delivery frequently involves extended periods of engineering development before construction begins. Site investigations, design coordination, access arrangements, temporary works, and interfaces with existing assets must be resolved sufficiently to allow the construction programme to proceed.
Contracts operating through major infrastructure frameworks can therefore contain substantial design and preparatory work before the corresponding construction revenue is generated. The transition of two energy projects into construction represents a progression from earlier development activity, although Morgan Sindall has not provided individual construction values for those projects in its latest trading update.
The division's improved outlook comes alongside continued investment in electricity infrastructure, utilities, and other long-term programmes. These markets are supported by different funding and procurement arrangements from residential development, helping explain the contrasting performance of the group's operating divisions.
Fit Out remains another strong contributor. Morgan Sindall expects the division to deliver a full-year operating result slightly ahead of the £139.9m achieved in 2025, supported by its secured order book and continuing demand for commercial fit-out services.
The group's partnership operations have faced more difficult conditions. Partnership Housing has reduced its profit expectations because of weak consumer confidence and housing affordability pressures, although management continues to implement measures intended to improve resilience and capital efficiency.
Average capital employed in Partnership Housing is expected to be between £550m and £580m, compared with the previous forecast range of £500m to £580m. The revision indicates that more capital may remain committed within the business than previously anticipated.
Housebuilding requires substantial investment before completed properties generate sales proceeds. Land acquisition, infrastructure, construction, and associated development costs can remain tied up in projects for extended periods, leaving developers exposed when sales or funding transactions progress more slowly than expected.
Morgan Sindall expects the government's Your First Home programme to provide additional opportunities for its partnership housing activities from 2027 into 2028. The company's current trading guidance nevertheless reflects the weaker demand and affordability conditions affecting the residential sector.
Mixed Use Partnerships commenced seven projects during the first nine months of 2026, with a further three starts planned before the end of December. Because much of that activity is concentrated in the second half, the division expects to recognise associated upfront investment costs during the current financial year.
Its full-year loss is therefore expected to be broadly comparable with the £5.3m reported in 2025. Morgan Sindall continues to prioritise the commencement of approved developments while managing the capital commitments associated with the early stages of regeneration projects.
The difference between the partnership operations and the group's contracting businesses is reflected in their financial requirements. Construction and Infrastructure are benefiting from stronger margins on secured work, while partnership development involves direct investment in sites and greater exposure to the timing of future transactions.
Against that background, Morgan Sindall has announced a share buyback programme of up to £75m. The programme began on 5 November and is scheduled to conclude no later than 4 November 2027, subject to the applicable market and regulatory conditions.
The group expects average daily net cash for the full year to be between £390m and £400m after taking account of the buyback. This measure reflects the company's cash position throughout the reporting period rather than solely the balance held at the year end.
Morgan Sindall intends to maintain its approach to capital allocation, balancing investment in partnership activities with ordinary shareholder returns, potential acquisitions, and the preservation of a strong balance sheet.
Despite the weaker residential outlook, the company has maintained its expectations for 2027. The final months of 2026 will be focused on completing secured construction and infrastructure work, progressing projects through design and into delivery, and managing capital requirements across its partnership businesses.
