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Profit tumbles at WSP
13:15 19 Mar 2003
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WSP Group survived major headaches last year. Restructuring costs
and an exceptional charge reduced pre-tax profit to just
£400,000. However, net trading margins proved resilient,
leaving the consultancy group facing much better prospects in
2003.
Finance director Malcolm Paul said: "It was tough trading but our size has held up - our fee income of £260m was £30m higher than in 2001 - and we continue to have good contract wins.
"Share prices in the support services sector have been brought down by Atkins and Amey, but we are making a profit across the board."
WSP was quick off the mark in mid-2002 with a major reshaping of its three business streams, but as numbers in the property division were cut, recruitment was needed in transport as a result of increased workload. "We still have 5,000 employees worldwide, but the mix has changed," said Paul. "We are still recruiting in transport."
WSP's property division saw margins fall to 4.8% (8.6%) as a result of patchy workloads in differing sectors. "Commercial and financial were slow," said Paul, "while health, aviation and education were busy. It was 60:40 if you divide it up into good:bad areas."
Transportation and infrastructure stood firm, holding margins at 6.5% while enjoying 24% organic growth. "We expect this growth will continue," said Paul. "We have won several long-term contracts including the management of Area 12 for the Highways Agency, won in jv with Carillion."
WSP's third division, environmental, achieved a net trading margin of 6%.
The restructuring programme has cost £5.3m. Staff redundancies accounted for £3.2m of this, with empty property costs adding a further £900,000. There was a £1.2m exceptional item from a project to design and build three internet data centres in Frankfurt, Stockholm and London, valued at £50m. However, the client, a US venture capital group, went into administration leaving WSP holding the baby.
Paul said: "We did a prime contract for the client, which meant that for us to act honourably we had to pay the £1m retentions to the contractors. We did just that."
Finance director Malcolm Paul said: "It was tough trading but our size has held up - our fee income of £260m was £30m higher than in 2001 - and we continue to have good contract wins.
"Share prices in the support services sector have been brought down by Atkins and Amey, but we are making a profit across the board."
WSP was quick off the mark in mid-2002 with a major reshaping of its three business streams, but as numbers in the property division were cut, recruitment was needed in transport as a result of increased workload. "We still have 5,000 employees worldwide, but the mix has changed," said Paul. "We are still recruiting in transport."
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WSP's property division saw margins fall to 4.8% (8.6%) as a result of patchy workloads in differing sectors. "Commercial and financial were slow," said Paul, "while health, aviation and education were busy. It was 60:40 if you divide it up into good:bad areas."
Transportation and infrastructure stood firm, holding margins at 6.5% while enjoying 24% organic growth. "We expect this growth will continue," said Paul. "We have won several long-term contracts including the management of Area 12 for the Highways Agency, won in jv with Carillion."
WSP's third division, environmental, achieved a net trading margin of 6%.
The restructuring programme has cost £5.3m. Staff redundancies accounted for £3.2m of this, with empty property costs adding a further £900,000. There was a £1.2m exceptional item from a project to design and build three internet data centres in Frankfurt, Stockholm and London, valued at £50m. However, the client, a US venture capital group, went into administration leaving WSP holding the baby.
Paul said: "We did a prime contract for the client, which meant that for us to act honourably we had to pay the £1m retentions to the contractors. We did just that."
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