The contraction in earnings suffered by design, engineering and management consultant WSP comes as no surprise, although the results were not as bad as some analysts were predicting. The public sector divisions performed strongly whereas most private sector markets declined. Finance director Peter Gill stressed the importance to the group's fortunes of its spread in services and geographical markets.
As expected, the property division, the group's largest, has been hardest hit by the downturn, with revenue declining by 27 per cent in the UK and by 18 per cent in the US. The sharp slowdown in Dubai in late 2008 also hit the group hard, although conditions are better in the wider Middle East. The downturn caused the group to restructure operations, principally in the UK and Middle East, which resulted in headcount falling from over 10,000 at the end of 2008 to around 9,000, and restructuring costs of £4.1m.
WSP's transport and infrastructure division continues to grow strongly, buoyed by infrastructure management, inspection and maintenance contracts in the UK and US. Mr Gill doesn't see any evidence of reduced UK government spend and regards the group's market share as more important than the level of macro spend.
Broker WH Ireland is expecting full-year EPS to fall by 28 per cent to 40.9p, driven by pressure on both revenue and margins.
| WSP (WSH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 244p | MARKET VALUE: | £155m | |
| TOUCH: | 240-248p | 12-MONTH HIGH: | 540p | LOW: 155p |
| DIVIDEND YIELD: | 6.1% | PE RATIO: | 5 | |
| NET ASSET VALUE: | 259p* | NET DEBT: | 45% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 364 | 28.4 | 31.8 | 5.0 |
| 2009 | 377 | 17.2 | 18.4 | 5.0 |
| % change | +4 | -39 | -42 | - |
Ex-div: 9 Sep Payment: 9 Oct *Includes intangible assets of £190m, or 299p a share | ||||
