The half-year results for engineering consultancy RPS (RPS) illustrated the highly-cyclical nature of the type of building, infrastructure and energy projects on which the company offers its consultancy advice. For example, significant exposure to Australia's vast natural resources industry was an asset for most of the past five years, until a slowdown in Chinese buying sent mining companies scurrying to save cash on capital projects. Consequently, underlying profits were largely flat at £35.7m.
Energy was the strongest of the company's two divisions, with fee income rising to £122m, up from £108m this time last year, while a stable profit margin of 17.7 per cent meant divisional profits rose by 12.6 per cent to £21.5m. That helped offset a much weaker performance at built and natural environment, where exposure to under-pressure Australian projects edged sales lower to £46.4m - alongside a drop in margin from 13.1 per cent to 9.9 per cent that meant profits fell 27 per cent to £4.6m. Management said the division should benefit in the second half from cost savings "provided the market does not deteriorate further". Business in Europe suffered from tougher comparisons due to strong demand from UK water companies last time, but profits held up at £9.6m despite a 10 per cent fall in sales to £74.7m.
Broker Investec Securities forecasts pre-tax profits of £62.6m for 2013, giving EPS of 20p (from £60.1m and EPS 19.4p in 2012).
RPS (RPS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 228p | MARKET VALUE: | £502m | |
| TOUCH: | 228-229p | 12-MONTH HIGH: | 280p | LOW: 190p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 173p* | NET DEBT: | £20.7m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 276.0 | 19.9 | 5.68 | 3.06 |
| 2013 | 281.0 | 21.0 | 6.53 | 3.52 |
| % change | +2 | +6 | +15 | +15 |
Ex-div: 18 Sep Payment: 17 Oct *Includes intangible assets of £340m, or 155p a share | ||||
