Shares in engineering consultancy WYG (WYG) tumbled more than 40 per cent on news of a substantial downgrade in operating profit expectations for the first half of the year. This follows an initial profit warning released in March, flagging a £9m downgrade to operating profit due to Brexit-induced uncertainty.
This latest warning indicated the group's troubles extend much further than the UK, with management expecting year-on-year operating profit for the six months to the end of September to be significantly lower than in 2016. Two major projects won by its international development business in January and June have taken longer than expected to get off the ground. The group won a series of framework contracts earlier this year, including one at the Climate Resilient Infrastructure Facility in Southern Africa, which management had expected to lead to a significant increase in revenue and profit.
Meanwhile, a review of the consultancy business revealed some engineering contracts are likely to be less profitable than expected. Framework contracts for the division have also been slow to deliver. On top of this, both the planning and transport planning and real estate businesses have failed to meet expectations. However, management does expect some recovery during the second half.
In March management said delays to work commencing had been caused by Brexit uncertainty. However, it was quick to add that the group had not seen any project cancellations or opportunities being taken off the table, and expected to see the work materialise during the first quarter of its 2018 financial year.
