Atkins trading to expectations, though difficulties remain

The FTSE 250 group's overall first half performance, including positive currency effects, was expected to be in line with expectations.

“We remain confident for the second half, despite continued uncertainty and volatility in some of our markets,” the board said.

Its UK and Europe business was expected to deliver a good first half result, reflecting both strong infrastructure markets and the company’s continued focus on “operational excellence”.

“In this financial year, in a continued drive for operational efficiencies, we have combined our design and engineering and water, ground and environment business units into a new infrastructure division, and also integrated Scandinavia into our Transportation business.

“To date, the EU Referendum result has had minimal impact on our highly diversified UK and Europe business.”

In North America, the business enjoyed a “particularly good” first half.

“We have fully mobilised resources on the Purple Line light rail project in Maryland and our work on project NEON, our transportation project for the Nevada Department of Transportation, has progressed well,” the board said.

“Our focus is now on the successful delivery of these two key projects and securing other major infrastructure opportunities within our pipeline.”

Atkins said the forthcoming presidential election was likely to bring a period of uncertainty, and while it did not expect to see a short term benefit from the five-year Transportation Bill, its work on the Purple Line and project NEON will help it to deliver good volume growth and margin progression this year.

In the Middle East, Atkins’ design work on the Riyadh Metro in Saudi Arabia and the Doha Metro Gold Line in Qatar continued through the first half.

“As mentioned previously, we were pleased to secure a number of contracts in the property market during the period, although some of these have been a little slow to mobilise.

“The transport and infrastructure markets have been more challenging, with a number of significant award delays.”

As the board saw no improvement in the liquidity situation during the period, cash collection remained a key focus on the company’s various projects across the region.

The company’s Asia Pacific business also traded in line with expectations in the first half of the financial year.

“As noted previously, 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 currently focused on opportunities in both South East Asia and the Middle East.”

Finally, the trading environment for Atkins’ oil and gas businesses in the UK and North America remained very challenging, and during the period it took further steps to proactively adjust its resources.

“By contrast, our Middle East oil and gas business has continued to trade well in the period.

“The recent green light on the Hinkley Point C new build nuclear project is a very positive step for the nuclear industry in the UK and an encouraging signal of commitment from the government to building crucial energy infrastructure.”

Elsewhere in its nuclear business, the integration of the PP&T acquisition progressed well, although product sales to Japan, associated with treatment of decontaminated water at the Fukushima site, were slower than anticipated through the first half.

“The group's overall first half performance, including positive currency effects, is expected to be in line with expectations,” the board explained.

“We remain confident for the second half, despite continued uncertainty and volatility in some of our markets.”