AMEC to post half-year results

BY STEVEN McKAY

AMEC, one of the world’s leading engineering, project-management and consultancy companies, posts its half-year results on Thursday.

We expect to hear further confirmation that market sentiment is buoyant.

The company had a strong order book of £3.25billion at the end of April, up from the £3.14billion reported at the end of December 2010.

In particular, we expect that the mining and the oil and gas sectors will continue to show strong growth driven by increased exploration and production expenditure on the back of high oil and gas prices and increased demand for commodities.

Momentum also seems to be picking up in Amec’s nuclear markets.

The company has a strong balance sheet, with net cash of £740.1million at year-end December 2010.

Share buybacks or one-off returns of capital could be forthcoming if no suitable merger and acquisition targets are identified.

Management has indicated that it would be comfortable spending up to £1billion on an acquisition.

We have pencilled in sales growth of 10% to £1.575billion in the first half of 2011, with operating margins increasing from 7.9% to 8.5%.

Consensus figures show projected pre-tax profits of £125-130million for the first half. This will give an indication of whether Amec is on track to meet the full-year forecast of £315-£325million.

Steven McKay is a divisional director at wealth manager and financial-planning specialist Brewin Dolphin in Aberdeen

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