Thursday July 3, 10:25 PM
Amec raises its earnings forecasts
By Michael Kavanagh
Amec (LSE: AMEC.L - news) , the engineering consultancy, shrugged off stock market gloom on Thursday and led FTSE 100 gainers after edging
up its earning forecasts for the year.The shares rose 24½p to 874p as the group increased its margin expectation for the year from 6 to 6.5 per cent and pointed to strong trading across its businesses. Amec, which operates across the oil, nuclear, utilities and power sectors, was benefiting from good trading across "end markets", according to Samir Brikho, chief executive. He added that Amec, with net cash hovering around the £600m mark, remained in acquisitive mode. "In current markets, our net cash position is an increasingly valuable asset. It will allow us to continue to make selective acquisitions that will enhance our market position," he said. So far this year the company, which has undergone disposals and restructuring since Mr Brikho's appointment in December 2006, has spent £110m acquiring four consultancy businesses. The shares are up 45 per cent over the year. During his tenure, the company has disposed of construction and support services businesses and shifted its focus to booming oil services. He denied on Thursday that the shift away from the construction sector into oil-related businesses had been fortuitous or based on opportunistic sector hopping. "Over the 10 years we analysed, on average that [construction] business made no money," he said. "In the sector, people are taking on projects on bad terms and conditions." Mr Brikho added that future decisions on restructuring and sectoral exposure would continue to be based on whether Amec had a sufficient skill base to win and deliver work at sufficient margins. Amec has set a target of achieving an 8 per cent margin on earnings before interest, tax and amortisation by 2010. Amec expects to hear this month whether it has won, with joint venture partners, a contract to decommission the Sellafield nuclear plant. On Thursday, Seymour Pierce shifted its recommendation from "sell" to "hold" while Merrill Lynch (NYSE: MER - news) reiterated its buy recommendation, predicting a jump from £87.8m to £142m in post-tax profits for the current year.
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