Strong Atkins results bolster confidence
Atkins increased margins in the six months to 30 September and said it was confident about the second half of the year, despite expecting continued turbulence in the markets.
First half results showed operating margins up from 6.8% to 6.9% compared to the same period of 2008.
Atkins said 90% of its full year forecast revenue is secured at this point (compared to 87% in 2008).
“We are in a resilient position, we’ve taken early action where necessary.”
Keith Clarke, Atkins
Revenues are down by 1% at £701.M compared with the same period of last year and average staff numbers were down 4%.
The Board has declared an interim dividend of 9.25p per share − a 6% increase on the same period last year which reflects the Board’s confidence in the Group’s prospects.
“We are very confident about our position,” said Atkins chief execurive Keith Clarke. “Overall these are good results, we are in a resilient position, we’ve taken early action where necessary.”
Further challenges
Clarke said he expected to face further challenges from the recession. “We know there will be considerable turbulence going forward, we expect that,” he said. “We’re now at the point where it’s not going to get much worse, but it’s not going to get much better and I think we have potentially a two year recession ahead of us.”
He pointed out the high level of redeployment within the company. “We are very pleased we have been able to deploy over 400 people within Atkins,” he said. “We wish we could have done more than that, but that’s still a big achievement. He noted that the company is still hiring.
Clarke also said that he anticipated a hiatus in public spending around and immediately after 2010’s general election, and said he was confident that Crossrail would survive.
Outsourcing quality
Clarke also commented on Atkins’ outsourcing of work to Bangalore in India, which has met controversy in light of redundancies in the UK. He rejected claims that the outsourcing would compromise commitment to UK employees, reduce investment in the UK or become the equivalent of outsourced Indian call centres.
“We’ve been doing it for five years,” he said. “We’ve always used remote sources − it’s not just in Bangalore. There is cost pressure now as well and the Philippines and Bangalore can offer us cost efficiency.
“Water companies are under extreme pressure to cut costs and we have responded. But we’re not changing the quality of work, we’re not going down to commodity type work. They are remote resources with highly skilled engineers.”
- Atkins’ full Half Yearly Report can be viewed at http://www.londonstockexchange.com/exchange/prices-and-news/news/market-news/market-news-detail.html?announcementId=10286726
Financial summary
| | | Six months to 30 Sept 2009 | Six months to 30 Sept 2008 | Increase / (Decrease) |
Income statement - as reported | | | | |
| Revenue | | £701.2m | £710.8m | (1)% |
| Operating profit | | £51.1m | £48.2m | 6% |
| Operating margin | | 7.3% | 6.8% | 0.5pp |
| Profit before taxation | | £43.5m | £50.0m | (13)% |
| Profit after taxation | | £33.9m | £38.8m | (13)% |
| Diluted earnings per share | | 34.3p | 39.0p | (12)% |
| Dividend | a | 9.25p | 8.75p | 6% |
People | | | | |
| Staff numbers at 30 September | b | 16,235 | 18,322 | (11)% |
| Average staff numbers | b | 16,923 | 17,713 | (4)% |
Cash | | | | |
| Net funds | c | £230.6m | £164.5m | 40% |
| | | | | |
Notes: a. Interim dividend declared for the six months to 30 September. b. Staff numbers are shown for continuing operations and on a full-time equivalent basis, including agency staff. c. Net funds comprise cash and cash equivalents plus financial assets and loan notes receivable less borrowings.
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Readers' comments (10)
Anonymous | 25-Nov-2009 12:07 pm
outsourcing is no real substitute for nurturing one's own staff --who have to spoon feed the outsourcing.If costs are the be all then reduce the CEO salaries.
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Anonymous | 25-Nov-2009 12:18 pm
too many consultancies -too much internal politics -too many managerial levels -too many procedures to no avail.
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Anonymous | 26-Nov-2009 10:40 am
Still hiring, good redeployment, good resultsl. Yet there are 100s who've lost their jobs from the company....
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Anonymous | 30-Nov-2009 8:37 am
Re outsourcing: It doesn't mention that Atkins are planning on increasing staffing levels in Bangalore 500% over the next few years does it. This is to cover the graduates that have been made redundant when the work picks up. Effectively moving jobs from UK to India.
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Anonymous | 30-Nov-2009 9:55 am
Re post at 08:37.
What's your source for that titbit?
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Anonymous | 30-Nov-2009 11:47 am
Mick Foote himself on his roadshow. Discussed further here on the comments: http://www.nce.co.uk/home/water/atkins-sheds-water-jobs-as-industrys-cyclical-spending-cycle-bites/5209790.article
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Anonymous | 30-Nov-2009 11:56 am
So let me get this straight - the CEO of one of the largest and most famous engineering consultancies in the UK is telling us that they have to outsource their work because of 'cost pressures' and getting 'cost efficiency' - i.e sack all their UK staff.
I am assuming he is not going to outsource his job in the name of 'cost efficiency'.
Remind me again why I am in this industry?
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Anonymous | 1-Dec-2009 10:47 am
Where is ICE and Nce editor when you truly need them? Any comment about outsourcing here?
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Anonymous | 1-Dec-2009 11:48 am
Fat chance. They wouldn't criticise their masters.
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Anonymous | 2-Dec-2009 10:44 pm
I find it laughable that Clarke claims that even with outsourcing, the quality of work will be maintained. I have firsthand experience with reviewing the work undertaken by Bangalore staff, and I found is consistently to be of a very low quality.
Even with the financial benefits afforded by outsourcing, I found that the cost of the work was at least equal if not more than if it was done in the UK, when you include all the rework required by the UK staff to bring it to an acceptable standard. This may not be the case in all of the outsourced departments, but it was certainly the case where I worked (Distribution Networks).
I hope that all of Atkins clients are aware of this, and do not expect to get quality work from Atkins.
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