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WSP warns of more redundancies to come

WSP said today that it continued to trade in line with expectations but warned that it could not rule out further job losses.

The firm has already announced plans to shed around 1,000 jobs in the first half of the year, but today said that it could not rule out more losses.

“Although we are hopeful that further action will only need to be limited, we remain watchful,” it said in a trading statement.

The statement added that across all markets the firm continued to watch its cost base and, as previously reported, expected to incur”reorganisation” costs of around £4M in the first half of the year, due to redundancies principally in the UK and the Middle East.

In March WSP chief executive Chris Cole said 500 job cuts will be made by the end of the second quarter, in addition to the 500 job losses announced just before Christmas.

“There will be around 1,000 job losses by the end of the second quarter,” said Cole. “Around 75% of the job cuts will be split evenly between the UK and the Middle East with the remainder spread around other countries.”

Today’s statement was in advance of its interim results for the six months ended 30 June 2009 which will be announced on 27 July.

It said that WSP’s public sector activities remain stable with businesses in the UK, Northern Europe and the US all trading well. But it added that the private sector continues to be difficult across all territories with a marked slowdown since this time last year in businesses in the UK and US and, in particular, in the Middle East.

The ongoing lack of liquidity in Dubai is affecting both the resolution of existing contracts, it said, which remains extremely slow, and conversion of the pipeline of future projects.

“We operate across the wider region where significant bidding opportunities still exist and where our efforts are being focussed,” it added, “however these are competitive and can be slow to progress.”

It said its environment and energy business has found the UK challenging although its global reach is providing some support to its performance with solid trading in the US and Scandinavia.

The statement added that the Group remains well financed with a £150M committed to its credit line to 2013. Net bank debt, whilst higher than at last year end, is at expected levels and the firm is “comfortably” within its banking covenants. The liquidity issues that are materially impacting receipts from its Middle East clients are also being felt more widely across private sector markets, it said, and this has resulted in slower receipts generally. Working capital management continues to be a high priority.

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