Atkins warns on spending delays caused by general election

WS Atkins, the UK engineering consultant, has warned of a "hiatus" in work around the UK general election as spending decisions are delayed.

In a pre-close trading update ahead of its full-year results in June, the 77-year-old company said it expected some disruption around the May 7 vote.

However, Atkins, which counts the transformation of the London 2012 Olympic Park and redesign of Trafalgar Square among its high-profile projects, was "encouraged by the bipartisan commitment to continued infrastructure spend".

This note of caution came as the group said that it had continued to trade well in the fourth quarter, and expected its full-year underlying results to be in line with expectations.

Atkins also reported an improved cash performance, with net cash expected to be about £175m in the year to March 31, above analyst estimates of about £135m.

John Lawson, analyst at Investec, said that the better than expected cash outcome was probably a result of the settlement of UK rail contract issues and a better working capital performance than anticipated.

Middle East operations had a good second-half performance, it said, and the Hong Kong and mainland China businesses traded in line with its expectations. Atkins aims to reduce its exposure to the UK, which accounts for about half of group revenues.

Atkins has been focusing on winning more work in the Middle East, including contracts on Qatar's Doha metro and the £20bn Barakah Nuclear Programme through a joint venture. It also plans to expand in Vietnam and China.

Having restructured its North American division, the group said that the unit was starting to deliver "improved productivity". It added: "We see good growth opportunities for our five client-facing [North American] business units as we enter the new financial year."

While its oil and gas, nuclear and power businesses performed well in the second half, Atkins said that it was monitoring the trading environment closely "given the impact of a lower oil price on our clients' spending levels".

Overall, the group said that its outlook remained "unchanged", and was "confident of taking further steps towards the achievement of our strategic goals in the next financial year".

Atkins, whose engineering design expertise was used to ensure the gas flow to the flame at the London Olympic Games in 2012, is the UK's largest engineering consultancy and employs about 18,000 people worldwide.

Atkins shares closed up 0.92 per cent at 1,317p.

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