PROFITS at construction group Morgan Sindall have been dented amid a contraction in public sector markets following the Government’s austerity cuts.

The group, which also owns affordable housing firm Lovell, said its profit margins had fallen to 1.5% from 2% as it battled tough competition to win contracts.

However, it said it was gaining business in private sector construction and large infrastructure projects to help off-set for the squeeze in public sector spending.

Underlying profits for the six months to June 30 fell by 16% compared with the same period a year ago to �19.5million, despite revenues growing by 11% to �1.1billion.

Construction and infrastructure revenues grew 1% to �617m, although underlying profits fell by 22% to �9.5m, while Lovell saw profits rise 20% to �8.3m, on revenues up 32% to �228m, boosted by the acquisition of some assets from collapsed rival Connaught.

New contracts for Morgan Sindall in East Anglia included a �2.9m scheme to deliver a new Magnetic Resonance Imaging (MRI) unit for Norfolk and Norwich University Hospital and the company has also been awarded a �148,000 scheme with Colchester Hospital University NHS Foundation Trust to replace some of its kitchens.

Contract wins for Lovell within the region included a �7.9m development providing 38 affordable homes for Flagship and 25 family homes for open market sale in Horsford in Norfolk, a �5.8m scheme of 66 affordable homes in Thetford, also for Flagship, and a �5.8m development of 81 new affordable homes for Orbit Group in Great Blakenham, near Ipswich.

Lovell managing director Stewart Davenport says: “It’s almost one year since we completed the high-profile acquisition of interests in a large number of social housing contracts from Connaught. This was a landmark deal for Lovell and we are delighted at the speed and success of the integration process.”