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UPDATE 1-Atkins reviewing options for U.S. construction unit
April 10, 2013 / 12:50 PM / in 5 years

UPDATE 1-Atkins reviewing options for U.S. construction unit

* Review of Peter Brown could lead to closure, sale

* Sees full-year profit slightly ahead of expectations

* Solid performance in UK offsets tougher U.S. market

* Shares up 0.9 percent

By Christine Murray

LONDON, April 10 (Reuters) - Britain’s WS Atkins is reviewing options for its loss-making North American construction business, which could include its closure or sale, as part of a drive to focus on more profitable work in engineering and design consultancy.

The group said on Wednesday trading in the United States was suffering as the government cut back on infrastructure spending, but that was more than offset by strength in its UK business, meaning full-year results would be slightly ahead of forecasts.

Atkins said it was looking at options for North American construction unit Peter Brown, which accounts for about 3 percent of group revenues and is expected to make a loss of about 6 million pounds ($9.2 million) for the year ended March.

“We’re hoping to be in a position in the summer when we announce our results to be clear about the future of Peter Brown,” Finance Director Heath Drewett told Reuters in a telephone interview.

Numis analyst Will Wallis said turning Peter Brown around would be hard. “They do have to win a considerable amount of new work to fix it,” he said.

Wallis added the cost of closing the business wouldn’t be enormous but that it has lots of customer responsibilities and contracts which the firm would need to cover.

Atkins makes about a quarter of its revenues in North America and employs around 3,000 people there. It has not provided a separate staffing figure for Peter Brown.

Since Chief Executive Uwe Krueger took over in 2011, Atkins has been implementing a strategy of focusing on higher-margin businesses, such as in the Middle East and in energy markets.

In February it sold the maintenance part of its UK highways division, which earns a lower margin than design and engineering-focused planning work, to Swedish-based construction group Skanska for 18 million pounds.

Atkins said in 2011 that acquisitions would also form a core part of its growth strategy, though so far it hasn’t struck any big deals under Krueger.

Drewett said the group preferred to grow organically, but was looking at opportunities in the United States and Asia-Pacific in defence, aerospace and energy.

Prior to Wednesday’s trading update, analysts expected a full-year pretax profit of 100 million pounds, according to a Thomson Reuters poll, slightly lower than the 102 million pounds made the year before.

At 1215 GMT, Atkins shares were up 0.9 percent at 895.5 pence. They have risen 34 percent so far this year, compared with an 11 percent increase in the FTSE All Share index.

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