Profits and turnover up as Atkins announces half year results

Atkins has announced its half yearly results for the six months ended 30 September 2016, with underlying profit before tax up by 14% to £63.6m and revenue up 10% to £994.7m.

Commenting on the results, Uwe Krueger, Atkins’ chief executive officer, said: “Despite challenges in some markets, we have delivered good underlying profitability and the near term outlook in our UK and North American businesses is particularly positive. We are confident that our focus on differentiation in nuclear, digital innovation and advisory will deliver further growth over the longer term. Our outlook for the full year is unchanged.”

Speaking to Infrastructure Intelligence, Atkins’ UK and Europe CEO Nick Roberts, said: “The figures represent a good first half of the year. In the UK and Europe context I think it represents not only good trading but we’re also seeing some of the benefits of the changes that we put into our business over the last couple of years. Two of the key changes we put in were a relentless focus on our chosen clients and investing in those and that is staring to pay off. We also have a really diligent view on our cost base and the efficiency of the business and we also are a much more agile business as our markets remain more uncertain in the future,” Roberts said.

Roberts said that Atkins was very optimistic about the UK and European market and he was pleased to see recent UK government announcements regarding infrastructure. “In the UK and northern Europe we still see a healthy pipeline of projects in what are pretty strong markets. We have seen some good project announcements from the government over the last few weeks and we see an underlying supportive sentiment towards infrastructure investment continuing. We also have a PM who continues to be committed to the devolution agenda which opens up the future of more local devolved decision making in projects and infrastructure investment,” he said.

Atkins’ optimism about the North American market is buoyed by two recent successes there in the transportation field. “The first is Project Neon, a highways scheme in Nevada and the other is Purple Line, a new metro line from Maryland into Washington DC,” said Roberts. “Both of these are major design projects and we have teams working with the contractors and they are representative of our ability in North America to win major projects that has put us on a national stage in the US,” he explained.

Roberts said that the election of Donald Trump as president elect held few worries for the company and they still expected to see significant investment in infrastructure there. “It’s way too early to say how the events of last week will play out in reality. Clearly we will look to see what real policy statements are made over the coming weeks and months, particularly around the $600bn proposed investment in US infrastructure that president elect Trump talked about during his campaign,” Roberts said.

"It's way too early to say how the results of the US election will play out in reality. Clearly we will look to see what real policy statements are made over the coming weeks and months, particularly around the £600bn proposed investment in US infrastructure that president elect Trump talked about during his campaign."
Nick Roberts, Atkins' UK and Europe CEO

“It’s important to recognise that the US has recognised for a long time the need to invest in its aging infrastructure, in its highways and bridges and to look at an increase in its rail network which has been underdeveloped in passenger terms over recent years. Those fundamentals haven’t changed and the ability of states and local authorities to look at funding for these projects hasn’t changed, so the outlook we think is quite positive in the US and we remain committed to our business there,” said Roberts.

In the oil and gas sector, in common with other firms operating there, Atkins has seen some challenges. “The oil price over the last couple of years has led to significant changes in the spend profile by the global oil and gas industry which has affected everyone including us but we continue to make progress in that market and our focus on nuclear in the UK and elsewhere shows our ability to flex accordingly in the light of market circumstances,” Roberts said.

Returning to the UK, Roberts said that he was looking forward to an increased focus on infrastructure in next week’s Autumn Statement. “What we will look for is a commitment to devolution and indications that more local projects will be looked on favourably,” he said. “We have recently won the masterplan of Leeds Station which is a key economic hub in the centre of Leeds and of significant importance with the northern extension of HS2 and it is those sorts of projects, particularly those that can return discernible value within a political cycle, that are the ones that we would expect to see the Autumn Statement focus on. If we see continued government support for infrastructure as a whole then that is really good for the industry and the country,” Roberts said.

The devolution agenda was of particular importance said Roberts. “We have always had a very strong regional presence and that has been the backbone of our business for many, many years, so the ability and confidence of cities to look at the devolution agenda and what it means for them and then for them to take some more confident decisions around investment and infrastructure within those cities is something that we see as a positive, for us and those cities,” he said.

Roberts was also keen for infrastructure businesses to step up to the plate and become more involved in influencing the debate at local and national level. “The infrastructure industry has a huge role to play and we shouldn’t just look to government to drive policy. The industry is already involved in advising ministers on strategy and negotiations around Brexit and we have a big part to play in helping people at Transport for the North and the Northern Powerhouse more generally, as well as other areas, think about how local projects can be delivered and funded as a means to instil economic growth. The industry has a huge part to play and is playing it,” Roberts said.

Atkins half-year financial highlights

• Revenue up 10.0% to £994.7m, up 4.0% on a constant currency basis
• Underlying operating profit up 10.7%, underlying constant currency operating profit up 4.3%
• Underlying profit before tax of £63.6m, up 14%
• Underlying diluted EPS up 12.6%, interim dividend up 6.8%
• Net borrowings of £90.3m at September 2016, following acquisition of EnergySolutions’ project, products and technology (PP&T) business

Operational summary

• Significant increase in UK and Europe profit, up 32.2% supported by strong markets and improved operational delivery 
• Good first half performance in North America, underpinned by two major transportation projects
• Middle East impacted by more difficult transportation and infrastructure markets and demobilisation of metro projects; good wins in Dubai property market
• Energy business continues to face challenging market conditions in oil and gas, North American oil and gas impairment of £23.3m in the period
• First major PP&T project in US (DUF6) secured and integration progressing well

Click here to view Atkins’ half year results.