Amec (AMEC) delivered fairly anaemic numbers at the half-way mark as the level of greenfield activity fell away in several key markets. The group provides engineering services for the oil and gas, mining, nuclear and renewable energy industries – the last of which was the stand-out performer during the period. Overall, gross profits were down 8 per cent to £244m, while operating cash flow fell by a third to £39m.
A central issue was that Amec’s top line took a £160m hit from foreign currency translations. The strength of sterling is problematic because about 60 per cent of the group's revenues are generated in the Americas.
But the headline figures give a slightly distorted picture. Underlying revenue, which excludes the impact of acquisitions, disposals, currency movements and other one-off factors, was actually up 4 per cent during the period, on stable margins. The order book is also looking healthy, up 16 per cent to £4.2bn on an underlying basis. The group continues to benefit from strong growth from its Clean Energy and Middle Eastern Oil & Gas segments. The integration planning linked to the acquisition of fellow engineer Foster Wheeler is also progressing well.
However, Amec’s management, which had already flagged a slight reduction in group margins in 2014, still felt obliged to lower expectations for full-year underlying revenue growth. Investec predicts adjusted 2014 EPS of 89p, rising to 99.4p in 2015.
| AMEC (AMEC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,056p | MARKET VALUE: | £3.2bn | |
| TOUCH: | 1,056-1,057p | 12-MONTH HIGH: | 1,271p | LOW: 995p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 345p* | NET CASH: | £28m | |
| Half-year to 30 June | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 2.0 | 118 | 32.8 | 13.5 |
| 2014 | 1.9 | 83 | 20.2 | 14.8 |
| % change | -7 | -30 | -38 | +10 |
Ex-div:26 Nov Payment:05 Jan *Includes intangible assets of £903m, or 303p a share | ||||
