Organic growth and acquisitions led to another record first-half performance from energy and resources engineer AMEC, with higher revenue and profit reported in each of its three divisions. The group is seeing customer spending returning in most areas and the order book strengthened almost 10 per cent to £3.5bn. As in previous years, the second half is expected to be stronger than the first. The cash earnings margin improved to 7.9 per cent and chief executive Samir Brikho remains confident of beating the full-year margin target of 8.5 per cent.
The natural resources division achieved good growth in Canada, particularly in oil sands, but returned a slightly lower margin. Mr Brikho believes its power and process division offers significant long-term growth potential, as evidenced by recent contract wins in the nuclear sector, and it has also made progress resolving unattractive older contracts. The division is expected to continue to grow in the second half, despite still-challenging North American markets. Meanwhile, the performance of the earth and environmental division was boosted by the acquisition of Entec.
The strong balance sheet will allow AMEC to continue to seek acquisitions as it stays focused on its target of delivering EPS of over 100p by 2015. Subject to revision post results, broker Evolution Securities expects full-year pre-tax profits of £241m and EPS of 55p (£193m and 51.5p in 2009).
| AMEC (AMEC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 868p | MARKET VALUE: | £2.87bn | |
| TOUCH: | 867-868p | 12-MONTH HIGH: | 937p | LOW: 721p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 323p* | NET CASH: | £670m | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 1.26 | 88 | 20.0 | 6.1 |
| 2010 | 1.43 | 114 | 27.2 | 7.3 |
| % change | +13 | +28 | +36 | +20 |
Ex-div: 24 Nov Payment: 4 Jan *Includes intangible assets of £554m, or 167p a share | ||||
