Atkins issues profit warning after overseas performance
WS Atkins plc has issued a profit warning due to weak conditions in North America and the Middle East, although performance in the UK held up.
The group said it was revising down performance expectations for the year, but insisted its financial position “remains strong”.
The company’s shares dipped by 14.5 per cent on the news today.
According to the firm’s interim management statement, its North American operation “continues to experience weak market conditions, further impacted by a number of project delays as uncertainty increases ahead of the US presidential election in November.”
“We do not expect an improvement in the trading environment during the remainder of this financial year and, as a result, we have taken action to further reduce headcount to reflect anticipated market demand.”
The UK region, meanwhile, had a good start, with two signalling framework awards and new work beginning in highways services. The water, defence and aerospace businesses were also performing well, while the engineering and design arms were benefiting from their Olympic showcase.
Peter Brown, Atkin’s construction management at risk business, is said to be “expecting to incur additional costs in the final close out of legacy contracts”, which with a shortfall in its current backlog previously noted will lead to increased losses this year.
The Middle East division reported delays in projects coming to market, as well as increasingly onerous contract payment terms for government and infrastructure work, although the firm expected headcount growth across the region.
The Asia Pacific and Europe branch reported good contract wins, while the energy business was said to be “trading well in buoyant markets across all sectors”.