Results released today for the six months to June 30 show group pre-tax profits up to £53.7m from £52.4m last time on an increased  turnover of £1,698m from £1,559m.

Morgan Sindall said it has been offsetting industry inflation by a combination of “contractual protection, operational efficiencies, flexible sourcing and (in the case of Partnership Housing) by house sales price inflation.”

It added: “Where projects are being priced for future delivery, the inflationary environment has continued to place some project budgets under pressure particularly in Construction & Infrastructure, which in turn has led to some delays in decision-making and project commencement.”

Construction & Infrastructure margins rose to 3.2% from 2.9% by “continuing its disciplined focus on operational delivery and contract selectivity.”

The division delivered an operating profit up 7% to £24.1m while turnover dipped slightly to £764m from £774m.

Fit out work delivered a profit up 10% to £21.2m at a margin of 4.6% from revenue up 20% to £457m.

Chief Executive, John Morgan said: “We’ve had a record first half of the year and these results reinforce the significant strategic and operational progress we have made over the past few years. Whilst early days, this is a good start towards our medium-term targets outlined in February.

“With the more challenging economic backdrop, our strong balance sheet including a substantial net cash position is critical to operating efficiently and effectively. It allows us to continue making the right decisions and to best position us in our markets, giving us competitive advantage for continued sustainable long-term growth.

“Our market positions and disciplined approach to contract selection continues to drive positive momentum across the Group. Our order book is substantial and of high quality.

“Following our strong first half performance and with the current visibility we have of the rest of the year, we now expect to deliver a result for the full year which is slightly ahead of our previous expectations”.