Mouchel hit by Middle East strife

City A.M. Reporter
BUSINESS services group Mouchel posted a 28 per cent fall in first-half profit yesterday, hit by the downturn in the Middle East and uncertainty on public sector contract awards ahead of the general election.

Mouchel, which maintains highways, monitors the cleanliness of the drinking water and manages local government IT systems, yesterday reported a pre-tax profit of £15m for the six months to the end of January on revenues 14 per cent lower at £365.6m.

“Trading in the Middle East has again been difficult. We have therefore taken action to reduce our risk and negotiations are now at an advanced stage to dispose of our business in the region,” said chief executive Richard Cuthbert.

“In our core UK businesses, we are not short of opportunities and with the increased certainty that will follow the general election, we remain increasingly optimistic about the group’s longer-term prospects.”

Mouchel, which last month rejected a £330m takeover approach from defence services firm VT Group, held the interim dividend at 2.25p and said it aimed to grow its highways and government services in the future.

Mouchel’s pre-tax profit for the year to the end of July is expected to come in at between £32.1m £41m, with the consensus at £38.2m, according to a poll of 10 analysts.

Shares in Mouchel, which have fallen a fifth this year, closed at 193p yesterday.

“There will be opportunities in the sector after the election, but the prospect of political change is likely to keep investors nervous in the short term,” said John Lawson, an analyst at Investec Securities.