This was the week the mood darkened for the consultancy sector. After White Young Green’s profit warning last week, analysts whipped out their calculators and revised forecasts downwards for everyone.
David Brockton at Arbuthnot Securities reduced his “buy” recommendation to “neutral” on Hyder Consulting, Scott Wilson and WSP.
He said: “There was a realisation in the City that growth forecasts were wrong. Things have got materially worse in the past two months and it’s all very uncertain.”
Francesca Raleigh at Numis was also re-crunching her numbers. She said of WYG: “It will need to be rigorous on cost cutting, and the chief executive needs to deliver on the promise of his public sector credentials.”
It will be a tough few months for boss Lawrie Haynes, who used to be in charge of British Nuclear and the Highways Agency. Rumours of further goodwill writedowns after last November’s £10.5m purchase of consultancy AKT must also be a worry.
Analysts were particularly unimpressed with companies exposed to the UK commercial market but not the Middle East– although some even questioned whether work in the UAE would continue at current levels. “Nobody is immune,” said one, “not even a giant like Atkins.”