Design and engineering giant WS Atkins says it sees “no signs of a recovery” in the British building market.
The Epsom-based group, which has axed around 1,200 staff since Christmas, flagged up problems with the domestic market two months ago.
The firm, which has offices in Birmingham and Telford, is still winning work in the Middle East, but said “confidence across the region has yet to return”.
Atkins added that most markets remained “stable” and results for the year will be in line with market hopes, after a £10million hit for redundancy costs.
Atkins is a major developer on London’s Olympic Park project and is part of the team which will carry out a £5bn widening of the M25 motorway.
The firm added that orders remained solid and said it was well-placed to meet challenges ahead in the coming year.
But the group also noted that cash collection from clients had become more difficult – especially in the Middle East, where its position has worsened by £25m in the past three months.
Although its cash generation remained strong thanks to foreign exchange benefits from a weaker pound, Atkins’ pension deficit widened to £224m after tax due to falling asset prices.
Investec analyst John Lawson said the “quality and breadth” of Atkins’ business meant it was trading at a premium to rivals, but has a sell rating on the stock. He added: “In general, earnings visibility for the sector is limited and, whilst Atkins refers to a strong order book, most firm business is only booked a few months in advance.”
Last year, the group racked up pre-tax profits of £91.9m on revenues that were 11 per cent ahead at £1.3bn. Consensus forecasts put the current year’s profits at £98m before sliding back to £91.8 m in 2010.