Downturn in Libya and UK public sector hits structural engineer
Structural engineer WSP saw its profits almost halve in the first half of 2011 compared to the same time the previous year, its results have shown.
The firm, which issued a profits warning in June, saw its operating profit slide from £18.3m in the six months to June 2010 to £10.1m for the same period in 2011.
The slump was partly down to the £5.1m costs of reorganising its business in Libya and the £2.2m cost of restructuring to deal with the cuts to the public sector in the UK. The firm shed about 400 employees worldwide in the first six months of 2011 compared to the same time in 2010, largely because of a drop in public sector business. The company has restructured because of cuts in the public sector, especially roads and education, and said it would continue to diversify particularly into rail and water work.
The firm’s revenue was up 2% to £362.2m in the months to June 2011 compared to the same period in 2010.
WSP’s property divisions performed best, with a £13.8m increase in revenue, while transport did worst, with a fall of £8.5m, largely because of falls in spending on UK roads.
The firm said its foothold in the UK private sector and strength in Sweden, where the economy is strong, would help it in the future.
Chris Cole, WSP’s chief executive, said: “We entered 2011 anticipating that our markets and trading patterns would be similar to those experienced in 2010. With the exception of the further significant tightening seen in the UK public sector this broadly remains the case.
“The group’s strategy of diversification across regions and sectors is providing a platform of resilience and opportunity. Despite the current uncertainty in the UK market our traditional bias towards the private sector will serve us well as this sector progresses. We remain encouraged by the economic outlook in Sweden which supports our significant operations, and elsewhere around the world our market standing, experience and financial strength will support our performance and position us well for the future as markets improve.”