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WSP hurt by UK road spending cuts

WSP Group reported today that it has suffered due to weakness in the UK public sector. Its pre-tax profit has dropped by 48% on 2010, and staff numbers have shrunk by 4%.

WSP Group today reported its half year results for the six months to 30 June 2011. Profit before tax had dropped to just £8.9M from £17M in 2010.

In today’s statement, the group said government cuts in the UK road sector had a major impact on the performance of the business.

Operating profit before exceptional items dropped 17%, from £18.3M in 2010 to £15.2M in June 2011.

However, revenue grew from £354.4M in 2010 to £362.2M in 2011, a rise of 2%.

The company reported that it had spent £2M since December on restructuring that has reduced staff by 400 people (4% of staff), most of them in the UK.

The restructuring was necessitated by weakness in the UK public sector.

WSP said its order book reflects “a business environment where clients in some markets continue to be wary of making long-term commitments and instead tend to award work on a shorter-term incremental basis”.

The order book was £892M in June, slightly down from £908M in December.

The outlook for UK public sector work − particularly roads and education − remains uncertain for WSP.

Meanwhile, environment and energy profits were affected by “margin pressure and additional investment
in key management”.

WSP chief executive Chris Cole said WSP has gained resilience from its strategy of diversification across regions and sectors.

“We entered 2011 anticipating that our markets and trading patterns would be similar to those experienced in 2010,” he said.

“With the exception of the further significant tightening seen in the UK public sector this broadly remains the case.   

“Despite the current uncertainty in the UK market our traditional bias towards the private sector will serve us well as this sector progresses. 

“We remain encouraged by the economic outlook in Sweden which supports our significant operations, and elsewhere around the world our market standing, experience and financial strength will support our performance and position us well for the future as markets improve.”

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