A mixed bag
Last week was no exception. Shares in consultant WSP rose 7% after it increased its dividend for the first time in three years and pre-tax profit leaped 38% to £15m.
The confident tone of chief executive and founder Chris Cole was echoed in the City, as high-profile projects such as New York’s Freedom Tower and lead consultancy roles gave a firm impression that it is progressing onwards and upwards after tough times three years ago.
While Balfour Beatty managed a 15% hike in pre-tax profit to £150m, “substantial” losses in the USA tinged success with sorrow, just as Mowlem’s Australian subsidiary kicked it in the bottom line two weeks ago. Shares in Balfour dropped just 2% to 315p and long term it remains a favourite in the City, but in the short term there is concern that cash could be put to better use than expansion in the USA.
Among the housebuilders, Redrow was last week championing the government’s cause and more specifically the deputy prime minister John Prescott’s call for a £60,000 house. It reported an interim pre-tax profit of £69m, up 22%, and it is considered by many in the City as a well-managed company destined to perform well in a slower market.
However, in a week when Prescott lambasted housebuilders’ response to the £60,000 house idea, others in the City suggested that Redrow’s efforts may be in vain if Prescott leaves the Cabinet after the election. Other housebuilders are privately hoping that this will turn out to be the case …
Among the building materials firms, Travis Perkins fared poorly. Despite reporting a 17% rise in pre-tax profit to £190m for 2004, shares dropped 9% to 1750p last week. The performance of Wickes, which Travis Perkins bought for £950m in January, was not included, but the fact that trading in the DIY chain dipped in January and February overshadowed Travis Perkins’ results.
The sector overall had a poor week, with shares in construction and building materials dropping 2% to 3472. This reflected the All-Share Index, which fell about 1% to 2503.
Angela Monaghan is business editor