Pre-tax profits halved at WSP as poor private-sector performance in the US and UK was only partially offset by robust public-sector trading in mainland Europe. The engineering consultant's profits were doubly hammered by a £12m exceptional write-down on monies owed in Dubai and work in progress there.
As private-sector orders were postponed or cancelled, the group's largest division, property, saw revenues plummet 20 per cent at constant exchange rates, while environmental and energy revenues fell 19 per cent. On the upside, transport and infrastructure revenues leapt 14 per cent on the back of continued central government investment. Operationally, fat was trimmed as global staff numbers were reduced from 10,000 to 9,000 and further cost savings were achieved by off-shoring and renegotiating contracts with suppliers. Despite this, operating margins declined 1.8 percentage points to 5.7 per cent.
Looking forward, the order book is 15 per cent down on last year at £959m. Management does not envisage further significant downsizing, but holds a cautious stance as short-term government contracts are expected to slow. Finance director Peter Gill said: "Markets remain difficult and uncertain, but our financial position is strong and we think our diversification should continue to afford us protection."
Broker WH Ireland expects full-year adjusted pre-tax profits of £34m and EPS of 37.4p.
WSP GROUP (WSH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 266p | MARKET VALUE: | £169m | |
| TOUCH: | 265-279p | 12-MONTH HIGH: | 374p | LOW: 172p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 275p* | NET DEBT: | 34% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 374 | 19.8 | 22.8 | 6.4 |
| 2006 | 449 | 26.4 | 31.4 | 9.0 |
| 2007 | 557 | 37.9 | 43.0 | 12 |
| 2008 | 755 | 52.1 | 58.3 | 15 |
| 2009 | 723 | 25.4 | 20.6 | 15 |
| % change | -4 | -51 | -65 | - |
Ex-div: 7 Apr Payment: 11 May *Includes intangible assets of £206m, or 324p a share | ||||
