UPDATE 2-Morgan Sindall H1 profit falls, building healthy

* Pretax profit in line, 20.5 mln stg vs 28.6 mln last yr

* Forward order book at 3.6 bln stg, vs 3.7 bln in Feb

* Confident of meeting its FY expectations

* Shares up 0.8 percent

(Adds CEO, analyst comment, share price)

By Lorraine Turner

LONDON, Aug 10 (Reuters) - British construction group Morgan Sindall (MGNS.L) said on Monday its first-half profit fell by nearly a third, dragged down by a loss at its urban regeneration unit and weakness at its office fit-out business.

But chairman John Morgan reassured that construction and infrastructure - its largest units by turnover - remain healthy, with the group boosted by a "record six months".

"In infrastructure the projects are there, and they are increasingly there for the larger infrastructure players to do more sophisticated projects. In construction the order books are pretty good at the moment," he said.

The group, which previously said it expects growth to slow in three of its five divisions this year, posted a pretax profit for the six months to end June of 20.5 million pounds ($34.36 million), in line with market expectations, compared with 28.6 million last year. Revenue slipped 8 percent to 1.14 billion.

"H1 numbers are slightly better than our H1 estimates but we will leave full year numbers unchanged to reflect the continuing uncertainties in the construction sector," said analysts at Numis Securities.

Analysts are forecasting a full-year pretax profit of 50.18 million pounds according to a poll supplied by the company.

Recent project wins for Morgan Sindall include a 71-million-pound contract to build a wing assembly factory for Airbus in Broughton, Wales and a 24-million-pound housing refurbishment scheme in Leicestershire.

Shares in Morgan Sindall, which have risen 28 percent since the start of the year but slipped from a high of 743 pence in June, were 0.8 percent higher at 630 pence at 0810 GMT after falling in early trade.

CONSTRUCTION RECOVERY

Morgan Sindall, which bolstered its construction business through the acquisition of Amec's (AMEC.L) construction and civil engineering business in 2007, said its forward order book stands nearly flat at 3.6 billion pounds but it is confident of growing it during the second half as well as meeting its expectations for 2009.

Growth at the group's construction unit was underpinned by public spending, particularly health education, it said.

Recent data shows that some activity is returning to the UK construction sector. A survey released last week by the Chartered Institute of Purchasing and Supply revealed that the rate of contraction in British construction activity is slowing, though housing continues to trail. [ID:nL4084712]

The Office for National Statistics said British construction orders rose 18 percent in the second quarter of 2009 compared with the previous three months. [ID:nL6112205]

But weak demand for commercial property markets dented profit at Morgan Sindall's urban regeneration unit, which swung to an operating loss of 1.1 million pounds against a profit of 5.6 million last year, with the market expected to remain weak into 2010.

Operating profit at its Fit Out unit fell over 35 percent to 7.4 million pounds, but the group said there were tentative signs of the market improving in the short term. "Our tender list is bigger than it's been for a year," said Morgan.

Morgan Sindall said it will maintain its interim dividend of 12 pence while net cash stands at 89 million pounds.

($1=.5966 Pound) (Editing by David Cowell)