Britain's largest engineering consultancy, WS Atkins, which employs 900 people at its office in Birmingham, has predicted that its full-year pretax profit before exceptional items is likely to be "significantly ahead of expectations"
The bullish announcement, which came despite facing a loss of £36 million due to delays in the controversial Metronet project, buoyed investors yesterday and shares in the group jumped eight per cent at one stage.
The company, which holds a 20 per cent stake in the troubled London Underground scheme, said that Metronet's day-to-day performance had been "variable" and the costs of delivering its capital programme would be greater than expected, largely due to continued delays, higher-than-anticipated costs and uncertainties around the ability to recover extra costs.
However, analysts said yesterday that while the Metronet situation continued to be 'pretty awful', its effects were more than offset by the performance of Atkins in other more reliable markets. They said this should ensure that share prices kept moving ahead.
Bridgewell Securities said the company's strong pre-close statement showed all its core businesses were performing well, with good progress in design and engineering and also in highways.
The broker added that the group's Middle East and China segment was also significantly ahead of expectations.
On Metronet, it said it was not surprising that this continued to be troublesome, but Bridgewell also noted that the magnitude of the problem was clearly greater than expected given the size of the exceptional charge.
The broker concluded that it would be adjusting its forecasts and anticipated retaining its 'neutral' stance on the stock.
Numis Securities stuck with its 'buy' recommendation and said the trading update had prompted it to raise its full-year diluted earnings-per-share estimates for Atkins by 18 per cent to 60.1p for 2007 and by 14 per cent to 63.5p for 2008.
The Metronet consortium, which also includes Balfour Beatty, is looking to speed up performance for the remaining £1 billion of station improvement work by bringing in other firms to work on more than half of the 143 stations in the first period of the 30-year deal.
A spokesman for transport authority Transport for London said an extraordinary review of Metronet's performance was the only way to achieve clarity about any cost overruns and resolve the problems which were cropping up.
Shares closed up 10p at 754.5.
