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Atkins seizes on sustainability to grow profit margins

Atkins chief executive Keith Clarke today set plans to use the growing carbon agenda to further boost the company's profitability.

Clarke said that he firmly expected the company to further grow its operating margin from the current 6.3% on the back of projects made increasingly complex by the global sustainability agenda.

"[The] carbon [agenda] will add a complexity in all work in the immediate future. In the next two years we will see a fundamental change in to design questions.

"Our operating margin has been increasing because we have been improving our product. I do think there is a way to go, which we haven't disclosed, but it is about improving out product."

Clarke was speaking after the company announced its half-year results to the six months ending 30 September showing revenue up by 11% to £633.8M and, significantly, operating margins up from 4.8% to 6.3%. Profit before tax from continuing operations increased by 46% to £42.7M.

Clarke said that the good results were down to having a good business model focused on engineering and design. "We don't need to be in any other segment. The more technical, the more complex the questions, the better we are," he said.

"I am totally convinced that engineering in our main markets - the UK and the Middle East - are sustainable and scalable," he added.

The Middle East business was particularly strong with revenues in that region up 35% compared with the same period last year. Clarke said that he saw the Middle East as being the first to truly embrace the sustainable agenda, as it bids to improve its image.

Staff numbers increased by over 1,000 in the first six months of the year. At just over 16,900 people, this is 1,900 more than the same time last year. Staff numbers have grown particularly in the Middle East where staff numbers are up by more than 40% over last year.

Clarke added that the Metronet saga was "now behind us" and has freed up "an enormous amount of management time". On 18 July the Metronet infrastructure companies entered PPP Administration and Atkins' contracts with Trans4m and Trans4m’s contracts with Metronet were subsequently terminated
on 30 August.

"We still do a huge amount of work for London Underground and Transport for London but in a role that they understand what we are doing for them," said Clarke.

The company has also announced a share buyback programme to return up to £100M to shareholders. Clarke said that the move reflected the firm's strong balance sheet and need to be efficient and added that the firm would continue to look at bolt-on acquistions.

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