Atkins to beat expectations as margins expand

published 10 April 2013

Engineer Atkins (WS) has revealed that its full year results will come in ahead of expectations thanks to stronger second-half margins in the UK and US.

The group said that after a good fourth quarter, results for the year ended March 31st 2013 would be "slightly ahead" of the market's expectations, with a very strong cash performance in the second half increasing net funds from £123m around £140m.

Positive momentum in the UK business was reportedly maintained as headcount continued to grow, with improved margins in the second half. There was good progress made in closing the disposal of the UK highways services business to Skanska, announced on February 28th, with 1,200 people transferring out of the business on completion before the end of May.

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Atkins revealed that it will incur exceptional transaction fees and restructuring costs of around £4m in this last financial year as it realigns the overhead base to reflect the removal of this business, but in the new financial year that this amount will be more than offset by a profit on sale of around £15m on completion.

Less encouraging was news that the North American consultancy business, the second largest segment, continues to experience soft market conditions and that protracted contract negotiations in its Middle East business impacted our financial performance in the region in terms of both profitability and cash flow.

However, strong first half growth in Asia Pacific and Europe, the group's second smallest segment, was maintained through the second half. Management said Asia Pacific remained a focus area for investment along with the smaller Energy arm to capitalise on good prospects there for oil and gas and nuclear businesses.

Looking forward, the group sees a number of growth opportunities in the UK including electrification of the rail network, airport development and aerospace.