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Atkins revenue flat in tough market

Atkins has told the City that conditions remain challenging as it delivered a trading update which showed the company currently to be performing well.

It said market conditions since April were as anticipated and that the Group has begun the year in line with expectations with revenue in the first quarter broadly flat year on year.

It said it had continued to “flex the business” to reflect the challenging trading conditions in a number of our markets and that it had reduced headcount accordingly.

The firm has indicated headcount will settle for now at around 17,400 with a 600 reduction having occurred in the first quarter - 300 through redundancies and 300 through natural attrition.

With net funds in excess of £200M, the Group’s financial position remains good.

By sector, the trading statement confirmed that water has experienced the biggest slowdown since April.

“In Design and Engineering Solutions our water business has experienced a more significant slowdown than in previous years in the period between the AMP cycles,” it said. “The market for the UK building design business remains soft. In contrast, our energy business has begun the year well.

“As anticipated, the rail segment has started the year well,” it added, despite the loss of a £10M structures maintenance contract with Network Rail at the beginning of May which represents 5% of division’s turnover. “Our rail business remains robust, underpinned by a number of major contracts,” it said, referring to significant work won on Crossrail.

The highways and transportation segment has also started the year well. “Good progress has been made on the design work for the M25 widening project and, following financial close in May, the mobilisation of the operations and maintenance contract is proceeding towards its September start date. Elsewhere, the detailed design contracts on the N6 Galway and M74 are nearing completion,” said the statement.

In the Middle East, the client liquidity issues experienced in the latter half of the last financial year have continued to dominate the agenda. Although some cash payments are now being received and bidding activity is starting to increase, the overall market remains challenging, said the statement.

Further restructuring costs have been incurred in the region as resource levels have been reduced to meet anticipated demand. The Europe and China operations are making progress in line with expectations. In particular, the firm’s rail business in Hong Kong remains strong.

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