AMEC'S UK operating margins dropped by 20% during the first six months of the year, with the contractor warning of worse to come.
Announcing the firm's interim results last week, chief executive Peter Mason revealed that UK operating profits had fallen by pounds1.6M to pounds23.9M on a turnover up pounds159.6M at pounds1.1bn compared to the first half of 1997.
'The UK economy is less encouraging than it was six months ago,' said Mason. Overall group operating profit was up pounds6.1M at pounds24M on a turnover pounds208.7M higher at pounds1.7bn, but this improvement was down to a dramatic improvement in the company's overseas operations.
Losses from Amec's German contracting arm were dramatically reduced, and the French contractor Spie Batignolles - in which Amec has a 42% stake - had a good year.
Overall, operations in the rest of Europe produced a loss of just pounds800,000, compared to losses of pounds8.1M between January and June 1997. Operating profits from the rest of the world were up pounds300,000 at pounds2.9M.
Cuts in the losses incurred by the German arm also gave the contracting operations a better look. Turnover stayed relatively stable at pounds575.5M, but losses were reduced from pounds3.2M to pounds1.1M.
Stars of the show were process and energy, with profits up 253% at pounds6.7M, and Spie, up 93% at pounds5.6M. The biggest fall occurred in the mechanical and electrical division, where profits plunged by pounds5.2M to pounds7.3M.
Mason claimed Amec was now 'more selective in the types of business it is willing to undertake and the markets in which it operates'.