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Amec still hurt by construction arm

Amec today warned half-year results would be at the bottom end of hopes after further tough trading in its UK construction arm.

While its investment business and oil and gas divisions showed continued strength, the company said trading remained poor in UK construction, resulting in a first half 'weaker than previously anticipated.'

Amec said it still expected to meet market forecasts for the full financial year. The firm also said profits from the disposal of its French business will be in the region of £295 million.

The group announced the sale of Amec Spie - a specialist provider of services in the energy and rail industries - last month as part of a major restructuring, which will see it separate its core energy and process management operations from its construction activities.

The UK company is to sell SPIE to PAI Partners, a European private equity firm with investments including car parts specialist Kwik-Fit for £707 million.

Chief executive Sir Peter Mason said he was delighted with the result of the sale of Amec Spie.

He said after one-off charges, the gain of £230 million after tax in 2006 gave Amec 'flexibility for future investment' while also allowing the possibility of a return of cash to shareholders.

Amec said a better-than-expected performance in mining and a recovery in its North American industrial unit had helped offset weak trading at its UK construction operations.

The construction business in the UK is being refocused to concentrate on design and build activities in areas such as education and healthcare.

Amec added its full-year forecasts depend on the recovery of £7 million in costs relating to the cancellation of a private finance initiative project at Colchester General Hospital.

The group currently employs around 45,000 people in more than 40 countries, generating revenues of around £5 billion.

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