Engineering and consultancy group AMEC may have reiterated its full-year revenue guidance but investors expressed their disappointment on Thursday with the shares tanking after it revealed that underlying sales growth would slow 'significantly' going into the second half.
The group, which works in the oil and gas, minerals and metals, energy and infrastructure markets, said that reported revenues in the six months to June 30th surged by 37% from £1,484m to £2,026m, driven by strong performances in the oil, gas and mining sectors.
On an underlying basis, which excludes the impact of current and acquisitions, revenues increased by 28%, helped by the incremental impact of procurement activities on certain natural resources contracts; without this, underlying sales would have increased by just 15%.
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While the group said that it was on track to deliver double-digit underlying revenue growth in 2012, second-half underlying growth will be "significantly lower than H1 2012 due to phasing of project executive in Natural Resources".
The market clearly wasn't pleased, with shares down 5.0% at 1,101p before the close of trade. Michael Hewson, the senior market analysts at CMC Markets UK said: "Some investors are never happy but given the shares were trading just below one-year highs perhaps some of the value was already priced in.
Earnings before interest, tax and amortisation (EBITDA) increased by 25% from £122m to £152m, however the EBITDA margin fell from 8.2% to 7.5% year-on-year as expected, as a result of the increase in procurement activities and a shift in the work mix in the Natural Resources division. These issues will mean that the second-half margin will be lower than last year, though it is still expected to improve on the first half.
Operating cash-flow jumped by 89% from £75m to £142m. The dividend per share was hiked by 15% from 10.2p to 11.7p.
"The order book has been maintained at record levels. We see continued demand for our services, and this has not been significantly impacted by the on-going economic uncertainty. Second-half revenues are anticipated to be maintained at broadly the same level as the first half, leaving us on track to deliver double-digit underlying revenue growth for the full-year. We expect to continue to deliver good growth in 2013," Brikho said.
BC
