WS Atkins enjoys lift in profit margin to 7.0%

WS Atkins has announced a pre-tax profit of £92m which represents a margin of 7.0%, comfortably ahead of the 6.3% margin achieved in 2007.

The latest figures cover the 12 months to 31 March 2008.

Atkins’ turnover ran to £1.3bn (figure in previous year: £1.2bn).

Keith Clarke, chief executive, said: “The group has had another successful year, with revenue [i.e. turnover] up 11%. We have made good progress, demonstrated by the increase in operating margins. We believe that improvements in margin will continue.”

Atkins decided it had so much cash pouring out of the systems that it would initiate a plan to return £100m to shareholders.

By the end of the period, Atkins had spent £35m buying back shares.

Divisional analysis shows turnover to be split between:

• £390m - design and engineering
• £290m – highways and transportation
• £220m – rail
• £220m – management and project services
• £210 – Middle East, China and Europe
• £50m – asset management

The operating profits generated by each of these was:

• £30m - design and engineering
• £17m – highways and transportation
• £12m – rail
• £14m – management and project services
• £11m – Middle East, China and Europe
• £3m – asset management

Clarke said that Atkins’ markets remain strong. The group started the current financial year with work-in-hand representing 55% of the budgeted turnover (figure in the previous year: 58%).

“While there uncertainty about the future direction of some of the economies in which we operate, we have not seen any sign of reduction in activity,” Clarke reports.

“Climate change is becoming an issue for many clients. We are working to raise awareness, develop tools and engage with clients to help them respond to the complex requirements of a carbon-critical economy.”

The group’s highways and transport division’s report comments that in May the Connect Plus consortium, of which Atkins is a member, was announced by the Highways Agency as the provisional preferred bidder for the 30-year, M25 motorway widening £4.5bn DBFO contract.

Final confirmation would give Atkins responsibility for designing the works to increase the motorway’s capacity. This design work should commence before financial close, which is expected to be late 2008 or early 2009, to enable the contract to start on site as soon as possible.

As well as being a 10% shareholder in Connect Plus, the joint venture company, the group’s involvement will also include a 33% share in an operation and maintenance jv that will manage the entire M25 and a network of feeder roads, including the tolling operations at the Dartford Crossing.

Atkins might have a surfeit of cash but it isn’t using it to eliminate its pension fund deficit which still runs to more than £200m.