Pick-up in the Middle East lifts Atkins’ shares

Shares in design and engineering firm WS Atkins rose 7 per cent after it announced its earnings will exceed analysts’ forecasts of £92.5m in the year ending March 31.

Its operations in the Middle East have seen a pick-up in activity after it started work on a project at Jeddah airport in Saudi Arabia and a rail scheme in the United Arab Emirates. It has also managed to recover payments that had previously been written off.

But the Surrey-based company also revealed it has cut another 200 jobs across its global business since it last updated the market in February. It now has 17,500 employees, of which some 10,000 are in the UK.

The company, which like others in its sector was badly hit by the recession as construction projects were cancelled, reduced its headcount by 10 per cent last year when profits fell to £96.6m from £102.7m a year earlier.

Although its business in the Middle East is benefiting from a recovery, conditions in the UK, where the group is working on the Crossrail project in London, have remained challenging but should meet expectations, the group said.

It is helping to design numerous other Olympic projects, including the beach volleyball at Horse Guards Parade, an equestrian centre at Greenwich and an archery centre at Lord’s Cricket Ground.

The group said it is well placed to grow in the year ahead with net funds of more than £120m.

Andy Smith, an analyst at Charles Stanley Securities, expects operating profits at the group’s UK business to have declined by 18 per cent over the past year.

He believes the group will continue to face challenging conditions in a number of markets as funding for projects becomes increasingly tight.

Atkins is reckoned to be the largest engineering consultancy in the UK and the world’s eleventh largest international design firm.

Shares closed up 38.50p last night at 727p, a climb of 5.59 per cent.