StockMarketWire.com - Construction support group Mountfield posted a fall in first-half profit after a rise in revenue was more than offset by shrinking margins.

Pre-tax profit for the six months through June amounted to £0.84m, down froma profit of £1.11m on-year, even as revenue rose 30% to £21.0.

'This was a disappointing year for the group because despite producing its highest annual turnover since its listing in 2008, it also recorded lower profits than in the previous year,' the company said.

Mountfield's gross margin slipped to 10.4%, back from 15.5%, while its operating margin shrank to 4.1%, from 7.0%.

The company said the margin pressure came from several large contracts, but owed mostly to a substantial loss incurred on a contract completed in 2020.

Citing a weaker order book, it added that it didn't expect that a substantial amount of new turnover would be won and delivered by this year end.

As a result, it forecast a significant drop in its performance for the full year.

'The board believes that as regards future prospects, the changes resulting from the Covid-19 epidemic are of a fundamental nature and that these changes are likely to have a long term and materially negative impact on the markets in which the group companies operate' Mountfield said.

'The sharp recession that resulted from the steps taken to limit the spread of the virus has impacted the construction business generally, having had a significant, negative effect on the demand for construction services and in activity levels in the industry generally.'

'The group has also suffered because both group companies offer specialist services to small segments of their respective markets.'

Mountfield said it would take a cautious approach to securing its current and mid-term turnover targets and would concentrate on servicing the requirements of core clients on contracts that were neither onerous nor carried a significant risk element.

'The board acknowledges that this policy will impact of turnover and net profit but believe that it is necessary and appropriate in order to protect the group and the interests of shareholders in a period of unprecedented levels of uncertainty and risk.'




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