It was the core UK business that led the way in driving up earnings at WS Atkins (ATK) during the first half of the year. The engineering consultancy benefited from increased UK government infrastructure spending, including design work for Highways England for the £1.5bn A14 Cambridge to Huntington upgrade programme. Operating profit for this segment grew by a third to £29.8m as the average margin increased by over a percentage point to 6.8 per cent. That helped boost group operating profit by 35 per cent to £60m.
One of management's key focuses has been improving margins, which at the group level rose 120 basis points to 6.6 per cent. Finance director Heath Drewett says one way the group has done this is to "bring the work to the people". A centralised system allows management to appoint employees to work on contracts in different countries, reducing lag time between projects.
Atkins continued to benefit from its work on major metro projects in the Middle East, including the Doha Metro Gold Line. Operating profit in the region rose by a quarter to £11.3m. However, orders have been weak as low oil and gas prices have caused uncertainty over property and infrastructure spending. Meanwhile, the group has been busy bidding for new work in North America, the cost of which pulled down regional operating profit by about 17 per cent to £8.5m.
Broker Numis expects adjusted EPS of 101p for the full year to March 2016, up from 97p for the 2015 financial year.
WS ATKINS (ATK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,387p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 1,385-1,388p | 12-MONTH HIGH: | 1,579p | LOW: 1,225p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 221p* | NET CASH: | £141m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 831 | 39.0 | 31.8 | 11.0 |
| 2015 | 905 | 53.8 | 44.1 | 11.7 |
| % change | +9 | +38 | +39 | +6 |
Ex-div: 26 Nov Payment: 8 Jan *includes intangible assets of £283m, or 283p a share | ||||
