Shares down by a fifth as it announces £4m restructuring
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Engineer WSP issued a profits warning today after seeing a “significant” fall in public sector work and being forced to write off £5m for lost work in Libya.
The engineer said it would now restructure for the new market, incurring costs of £4m, which was mainly due to a worse than expected outlook for its transport business, which accounts for half its UK revenues.
The firm said: “Whilst we are seeing a gradual improvement in the UK private sector this will not compensate for the significant decline in the public sector which will impact on our financial performance in the second half. We will therefore be taking further restructuring action in the UK over and above that previously anticipated.”
In consequence the firm said “we now expect the Group results in 2011 to be below those achieved last year after incurring expected restructuring costs of around £4m.” The move is likely to send profits down by £5m at the end of the year, according to analysts Panmure Gordon.
Shares at WSP fell 19% on the announcement in early trading. It said it was nevertheless trading well within its banking covenants and credit lines.
WSP also announced the appointment of Ian Barlow as non-executive chairman. Barlow is a former chair of Think London, a director at the London Development Agency, and a non-executive director at Candy & Candy.
The move follows the announcement of financial restructuring at UK engineer White Young Green in the last month, which is being forced to raise money to reduce its debt levels.