First Quarter Trading Update: Atkins Trading in Line with Expectations
WS Atkins plc (“Atkins” or the “Group”), the design, engineering and project management consultancy, today provides its first quarter trading update for the period from 1 April 2016 to date.
Group performance
The Group has traded in line with expectations through the first quarter and we remain confident for the year ahead, despite continued uncertainty in some of our markets.
United Kingdom and Europe
In the UK we have had a good start to the new financial year. In the quarter we secured some strategically important projects in cyber security and defence, together with major frameworks in transportation and water. At the beginning of April we took a further step to simplify our organisational structure, as we combined our design and engineering and water, ground and environment business units into a new infrastructure division, which will enhance our ability to cross-sell our capabilities.
While the result of the EU referendum has obviously created some uncertainty in the market, to date we have not experienced any immediate impact. Benefiting from a very diversified business in the region, we continue to monitor activity levels closely across our various markets.
North America
Our North American business has also enjoyed a good start to the new financial year. We have now begun to mobilise resources on the Purple Line light rail project in Maryland, and we are working on project NEON, our transportation project for the Nevada Department of Transportation. While we do not expect to see a significant impact from the five-year Transportation Bill until after the presidential election in November, our work on these two major projects will help us to deliver good volume growth and margin progression this year.
Middle East
Our design work on Riyadh Metro in the Kingdom of Saudi Arabia and the Doha Metro Gold Line and Red Line South in Qatar has continued into the new financial year. While we were pleased to secure a number of contracts in the property market during the period, the transport and infrastructure markets have been more challenging and we have experienced a number of award delays. As a consequence, we have adjusted our resources in the period to match the anticipated workload.
Cash collection remains a key focus across the region and we continue to monitor the liquidity situation closely.
Asia Pacific
Our Asia Pacific business has traded in line with our expectations during the period and we were particularly pleased to secure the airfield facilities design consultancy for Hong Kong airport. We have seen some early signs of an improvement in the property market in mainland China, although we remain cautious as to whether this improvement will be sustained.
Our strategy of geographic diversification continues, supported further by our new Acuity business which is focused on opportunities in both South East Asia and the Middle East.
Energy
The trading environment for our oil and gas businesses in the UK and North America remains very challenging and we have taken further steps to respond. By contrast, our Middle East oil and gas business has continued to trade well in the period.
We welcome the final investment decision on Hinkley Point last week, and look forward to a positive outcome from the Government’s review in the autumn. Elsewhere in our nuclear business, the integration of the PP&T acquisition, which completed on 11 April 2016, is progressing well.
Balance sheet
Despite the normal seasonal working capital outflow and the acquisition of PP&T, the Group’s financial position remains strong with net borrowings at the end of June of around £50m (March 2016: net funds of £191.7m).
Outlook
The Group has traded in line with expectations through the first quarter and we remain confident for the year ahead, despite continued uncertainty in some of our markets.
