Ricardo cuts jobs after 'depressed' trading

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The Independent Online

The automotive consultancy business Ricardo in effect issued a profits warning in its AGM statement yesterday, saying that its first half trading result "will be depressed".

Analysts slashed their profit forecasts, with Arden Partners dropping its predicted pre-tax profit figure for this year from £13.5m to £8.5m, although it left sales forecasts for the year unchanged.

Ben Thefaut, at Arden, said the "margin impact" of three major order cancellations in the first quarter, announced in September, had been "greater than anticipated".

Ricardo said the loss of the three orders - estimated to be worth £17m, or around 12 per cent of turnover - and the related restructuring costs would contribute to an "extremely challenging" year.

The chief executive, Rodney Westhead, said that approximately 170 staff, or 10 per cent of the company's total workforce, would be made redundant, with the last of them leaving in December. All of the jobs will be lost from the company's UK operations at Shoreham, Kent, and in the Midlands.

Mr Westhead said clients' decision-making processes on new orders had lengthened and that had affected the replacement of the orders lost in the first quarter of the year.

The shares, which traded at 390p in September, closed down 32.5p, or 14 per cent, at 198.5p yesterday.