Buoyant engineering and construction activity in the UK today saw infrastructure giant WS Atkins upgrade its profit expectations for the year.
The firm, which carried out engineering work at the London 2012 Games and is now overseeing the Olympic Park’s transformation, said a strong fourth quarter meant its profits for the 12 months to April would be “slightly higher” than expected.
Atkins, which also provided signalling, telecoms and electrification on the North London Rail Infrastructure project and helped redesign Farrington Station, reported “positive momentum” in its UK business.
“Headcount has continued to grow and we expect to report an improved margin in the second half,” the firm added. “We see a number of future growth opportunities in the UK including electrification of the rail network, airport development and aerospace.”
Atkins is selling its UK highways services business to rival Skanska, and said 1200 staff will transfer across to the Swedish firm on completion next month. The company warned investors it would face around £4 million of fees and restructuring costs in this financial year to organise overheads following the removal of that business, but said those costs would be “more than offset by a profit on the sale of around £15 million” which will be booked in the next financial year.
Elsewhere, WS Atkins said its North American consultancy business was still facing soft market conditions, with clients demanding more subcontracting, which dilutes its margins. In the Middle East, protracted negotiations are still ongoing on a series of deals.
“These issues have impacted our financial performance in the region in terms of both profitability and cash flow. However, we believe this market continues to offer significant project opportunities for us going forward,” the firm said.
It also claimed that its energy division was booming, especially on oil and gas and nuclear work. “Headcount in this business continues to grow, reflecting an increasing pipeline of opportunities,” Atkins said.
It is a supplier to EDF Energy as the industry giant seeks to extend the life of its existing nuclear plants. Shares rose 16p to 903.5p.