Growth in the UK boosts WS Atkins profits

Suzie Neuwirth
ENGINEERING consultancy WS Atkins yesterday announced results which beat expectations, as its chief executive mooted the possibility of Asian acquisitions.

The FTSE 250-listed firm posted a 2.9 per cent increase in underlying pre-tax profits to £104.5m for the year ended 31 March 2013. Analysts had forecast a pre-tax profit of £102m.

A strong UK performance boosted results, as revenues rose 4.7 per cent and operating profit was up 9.7 per cent, partly due to work on the London 2012 Olympic Games.

Uwe Krueger, chief executive, told City A.M. that he was “very pleased” with the UK performance and sees good growth potential from Asia, the firm having been historically strong in Hong Kong.

“Our strategy so far has been focused on organic growth,” he said.

“There is no reason – with an 18 per cent growth rate – to be pushed into making acquisitions.

“However, we have strengthened our balance sheet and increased our fire power, so if the right opportunity comes up we may be interested,” he added. “It would most likely be a bolt-on acquisition in Asia, in a core area of the company such as energy.”

Business in other parts of the world was less successful. In the US, operating profits fell 27.8 per cent, with loss-making construction business Peter Brown now focused on closing its last legacy contract – which Krueger said would happen by the end of the fiscal year – and finding new work.

Meanwhile in the Middle East, operating profit was down 30 per cent and revenues fell 5.4 per cent due to delays and prolonged negotiations on contracts.

“Following the slight upgrades with the trading update in April, Atkins finals are at the upper end of consensus,” said broker Numis.

“Management guides to unchanged forecasts, and we make no material changes. We think momentum has on balance continued to improve, and we think that the shares remain an attractively priced play.”

In February, Atkins announced the proposed sale of its UK highways services business to Skanska, which is expected to complete in the summer for £16m. The firm expects to pay around £4m of restructuring costs but said this will be offset by a profit on sale of around £15m in the next financial year. Atkins shares closed up 3.7 per cent at 912.5p.