2013 was a mixed year for AMEC (AMEC), with rising cashflow and orders set against declining oil sands and mining revenues from the Americas. The engineering group confirmed it had signed a definitive agreement for the $3.3bn (£2bn) takeover of US rival Foster Wheeler, but it also warned that operating margins could soften through the remainder of this year due to a change in its business mix.
The group continued to experience strong order intake, pushing its backlog to a record £4.1bn. With a cash conversion rate of 99 per cent, the pace at which AMEC can turn these orders into cashflow is not an issue for investors. Operating cashflow increased by 9 per cent to £341m, compared to adjusted pre-tax profits of £332m - up 2 per cent.
Management is particularly encouraged by a step-up in activity linked to the US clean energy market. But there was also a notable upturn in activity from the North Sea, including a lucrative maintenance deal for BP’s Forties Pipeline, and a new contract for the Tern oil-production platform awarded by the Abu Dhabi National Energy Company. The UK has even supplanted Canada as AMEC’s most lucrative client in terms of sales, while receipts from Europe as a whole were up 14 per cent through the year.
| AMEC (AMEC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,105p | MARKET VALUE: | £3.3bn | |
| TOUCH: | 1,104-1,106p | 12-MONTH HIGH: | 1,210p | LOW: 961p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 376p* | NET CASH: | £121m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 2.5 | 204 | 47.6 | 17.7 |
| 2010 | 3.0 | 259 | 73.0 | 26.5 |
| 2011 | 3.3 | 259 | 63.3 | 30.5 |
| 2012 (restated) | 4.1 | 254 | 65.2 | 36.5 |
| 2013 | 4.0 | 255 | 63.8 | 42.0 |
| % change | -3 | - | -2 | +15 |
Ex-div: 28 May Payment: 2 Jul *Includes intangible assets of £907m, or 304p a share | ||||
