February 22, 2018 / 8:26 AM / a year ago

UPDATE 1-Morgan Sindall sees strong 2018; FY 17 pretax profit leaps

(Adds background about sector peers, analyst comment)

Feb 22 (Reuters) - Britain’s Morgan Sindall Group on Thursday said its office installation and refurbishment business ‘Fit Out’ lifted its 2017 annual pretax profit by about a half and the company expected the performance to continue this year. Shares of the construction and regeneration company rose 3.7 percent to a more than three-week high in early trade on the London Stock Exchange. Operating profit at Fit Out, the company’s refurbishment business, grew 42 percent to 39.1 million pounds in 2017, it added.

The infrastructure and regeneration company, said it was “well-placed to deliver a result for the year which is slightly above previous expectations.”

Analysts at Liberum said, “now (we) have improved visibility on another strong year in FY 2018 ... increased Fit-Out EBIT guidance from 29 million euros to 34 million euros results in a 7 percent earnings per share increase for 2018”.

The company raised its 2017 earnings forecast twice in the last year, citing better margins in construction and its office installation and refurbishment business.

Morgan Sindall’s results contrast with that of sector peers, who have been hit over the past year after they took on work at wafer-thin margins during the financial downturn.

Construction and support services providers Interserve , Mitie and Capita have all issued profit warnings in the past few months, and Carillion collapsed in January under a huge pile of debt.

However, Morgan Sindall has in recent years been more selective on which contracts it bids for.

The building and infrastructure company said pretax profit rose to 64.9 million pounds ($90.07 million) for the year ended Dec. 31, from 43.9 million pounds in 2016.

Its order book rose 6 percent to 3.8 billion pounds.

$1 = 0.7206 pounds Reporting by Hanna Paul and Radhika Rukmangadhan in Bengaluru; Editing by Sunil Nair and Vyas Mohan

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