Amec profits flattened by pounds 3.2m loss on property sale

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The Independent Online
A LOSS of pounds 3.2m on a property disposal in Brighton left Amec, the construction and engineering group, with flat profits in the six months to June. But the shares closed 6p higher at 123p after Sir Alan Cockshaw, chairman, said orders were finally increasing.

'The improvement in the UK economy is filtering through to Amec's business,' he said. 'At the same time, the increased focus on international activities bears out the potential the group has to offer.'

Despite his confidence, Amec failed to make a profit from its building and civil engineering operations and made only a small return from housing, where it is still working through low-margin land bought at the peak of the cycle.

Pre-tax profits were pounds 9.3m compared with pounds 9.1m in the first half of 1993. Undiluted earnings per share fell from 1.4p to 1.1p and the interim dividend stayed at 1.5p.

Sir Alan said a 17 per cent reduction in turnover reflected Amec's selective approach to tendering for contracts in difficult market conditions.

Process and energy work and mechanical and electrical engineering were boosted by overseas contracts, especially in Indonesia and China.

In construction, the civil engineering workload increased, but margins remained tight. Growth in South-east Asia and good performances in Germany and the US made up for depressed profits in the UK.

Amec's housing division sold 57 per cent more houses in the first half, with 701 completions. Despite an increase in turnover from pounds 41.1m to pounds 54.9m, however, last year's pounds 3.2m loss was only converted into a pounds 100,000 profit.

Sir Alan said 70 per cent of houses sold during the half were on expensive land but he expected the ratio to reverse next year, when profits from house building are forecast to recover strongly.