Keith Clarke, the chief executive of Atkins, was adamant this week that he was not considering selling its stake in Tube consortium Metronet, despite its effect on the firm’s bottom line, writes Angela Monaghan.
Clarke said Atkins was “in it for the long term” and that the firm had performed well overall in the six months to 30 September, despite Atkins making a £400,000 loss on its Metronet stake in that period. Atkins has also made a £4m provision for the late delivery of station upgrades.
Clarke would not disclose how much profit Atkins was expecting to make from its 25-year contract but noted that it was not as much as anticipated in April 2003, when the contract was signed. “In the original plan, profit would have been going up and up at this point,” he said.
He said Metronet, in which Balfour Beatty is also a stakeholder, was unlikely to make a profit by the end of the financial year. However, he added: “This is not a one-year ‘can I sell the equity?’ game. This is long term. I’d never rule out any possibility, but we’re saying that this is the best way to get shareholder value.”
Clarke said Atkins’ major shareholders, including Schroders, Standard Life and Legal & General, were understanding about the problems with Metronet. “Although they would like us to make money, of course.”
Atkins has attributed its problems with Metronet to the worse-than-expected state of London Underground’s infrastructure and problems on the District Line caused by the summer heat.
Clarke would not disclose when he expected Metronet to become profitable but in a presentation to analysts he said it would have to be successful by September 2010.
In response to press reports last week in which Metronet was quoted as saying that Clarke would be replaced, although not imminently, as chairman, he said: “The strategy was always that the owners of Metronet would support the management we put in for somewhere between one and two years.”
Overall, in the six months to 30 September 2006, pre-tax profit at Atkins rose almost 10% to £31m. Turnover increased 17% to £606m. Atkins does not break down results for Faithful + Gould, its QS arm, but Clarke said it was “performing well”.
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