Citing weak trading conditions in Australia, an unexpected update from RPS (RPS) has warned that full-year results will be materially lower than expected. Australia and Asia Pacific accounted for a fifth of group revenue and a quarter of operating profit last year.
Predominantly working in the public sector, the group has suffered due to a hiatus in Australian infrastructure spending and the slower release of major defence projects. The subdued property market is also impacting private sector work – dwelling approvals are down by more than 20 per cent.
Having previously identified a softening in property and touting an “active” defence sector in February’s full-year results, the extent of the weakness appears to have caught the group off guard. Chief executive John Douglas believes the impact will be short term. As the integration of Corview continues and a new “business-friendly” government begins its work, he maintains the group is well positioned to capitalise on an Australian recovery.
The group is hoping to soothe shareholders’ concerns by pointing to progress elsewhere. However, the revival in energy remains vulnerable to oil price weakness. Political uncertainty continues to impact consulting in the UK and Ireland (the largest division), which is now expected to slightly underperform.
Lowering its forecast for the second time in nine months, Numis now forecasts adjusted pre-tax profit of £36.1m (from £51.6m) and EPS of 11.7p (from 16.8p) in 2019.
