T Clarke issues profit warning

M&E specialist T Clarke issued a profit warning today and warned 2011 could prove tougher for the business.

Bad weather helped knock T Clarke off course in the fourth quarter as work was disrupted at a “large number” of sites.

The firm said its margins remained under “extreme pressure” and predicted market conditions would remain challenging in 2011. The group said its performance for 2011 could be below that of 2010.

In a trading update to the city this morning the firm said: “The board believes that results for 2010 will be below current market expectations.

“The board also expects the trading environment and consequently the outlook for 2011 will be challenging and as a result the group’s performance for 2011 could be below that of 2010.”

But the company said it was well-placed to take advantage of a pick-up in market conditions. “T.Clarke is well positioned for the eventual upturn, particularly in the London commercial sector which is seeing significant activity with several large office development schemes progressing.

“The group is confident that it will win a number of these new projects, albeit we will see limited revenue benefit until 2012 on any schemes that we are successful in securing.”

In a sign of caution, T Clarke management said they will rebase the firm’s dividend. It will be lowered this year and remain around that level in the near future. This indicates the firm wishes to retain cash within the business, rather than pay it out to shareholders.

Despite the negative statement, there was one positive - its order book actually climbed from £160m last year, to £190m at the end of December. While this will take time to work its way through the system, growth is still positive, as long as work has been secured with profits in mind, rather than at any price.

By 10:00am, T Clarke shares had fallen by 23%, to 97p.

It will announce its preliminary results for the year ended 31 December 2010 on Friday 18 March 2011.