Engineering group Atkins back in the black
Civil engineering group WS Atkins today showed the benefits of its recent shake-up with a sharp return to profitability.
UK-based Atkins said cost-cutting and axing of loss-making contracts had paid off as it posted pre-tax profits of £62m (€93.6m) against losses of £45.3m (€68.4m) last time.
Pre-tax profits before exceptionals and goodwill rose to £56.2m (€84.9m) against £18.7m (€28.2m) previously, better than some analysts had expected.
Atkins sank into the red last year after being hit by cost increases and problems in installing a new computer system.
The group has since tackled the IT glitches and implemented a restructuring drive involving 400 redundancies.
It said today’s results reflected the strength of the group’s underlying businesses and continued overhead cost controls.
Chairman Michael Jeffries said the outlook in its markets was robust and forward orders were healthy, with about 60% of budgeted turnover for 2005 already secured.
“In my view, the group is in better shape than at any time since flotation in 1996,” he said.
Atkins carries out design and consultancy work on infrastructure projects in a range of sectors including rail, water, health and education.
It said today’s results included the first year of activity in the London Underground Public-Private Partnership (PPP), in which it is involved as part of the Metronet consortium.
It said inclusion of the first year’s trading on Metronet improved the group’s share of pre-tax profits from its joint ventures from £6.7m (€10m) to £20.6m (€31m).
It added declines in performance in the first year of the contract resulted in income being about £10m (€15m) below budget, although the shortfall was offset by lower than expected funding and administration costs.
There was also a slower than expected build-up in activity, and the capital works programme was suffering delays, which Metronet and London Underground were working to address, it said.
The group’s transport division, which does work for bodies including Network Rail and the Highways Agency, increased operating profits by 132% to £23.5m (€35.5m).
Its design and engineering solutions business boosted operating profits to £13.4m (€20.2m) from £3.2m (€4.8m) previously.
It includes the group’s industrial division, one of the largest engineering consultants in the UK utility, defence, and oil and gas markets.
Conditions in the business’s key markets during the year were good and public sector initiatives such as the British government’s £8bn (€12.08bn) education programme were expected to present ongoing opportunities in areas of proven strength, Atkins said.
