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Atkins cools on 25% UK revenue plan

Atkins has pushed out plans for the UK to represent just 25 per cent of group turnover in the medium term after mixed fortunes in 2012.

The engineer’s UK chief executive David Tonkin told Construction News that the 25 per cent target the company announced last year as it looked to overseas growth is a “long-term aspiration”.

Twelve months ago, the company said it was adjusting the geographic balance of its operations and “in the medium term” was aiming to generate more than 75 per cent revenue from non-UK and energy businesses.

Instead, UK revenue edged up to 52 per cent in 2012 (to £900.3m) after the firm saw a fall in revenue and profits in north America – in part due to legacy costs on projects in the Peter Brown construction management at risk business – and in the Middle East division, which saw delays to project starts.

The firm’s energy business had a good year, with revenue and profits up 18 per cent and 21 per cent respectively. Asia Pacific profits rose as turnover stayed flat.

Mr Tonkin said that while his division was doing some overseas projects from the UK, most projects were in the domestic market.

He said: “25 per cent is a long-term aspiration, and clearly with the sale of the highways services – which will see £180m of revenue pass over to Skanska in the early part of this year – we will see a bit of a shift from that.

“But really it demonstrates our ambition for growth and what we can achieve in the UK.”

Mr Tonkin pointed out that the plan was to grow overseas, rather than decrease market share in the UK, which he said improved “across all sectors” in 2012.

Atkins saw a 10 per cent rise in UK operating profit, following a 16 per cent fall a year earlier.

It also meant the Atkins’ UK boss forecast an upturn for contractors and said his firm was looking for more joint ventures in water and rail.

Describing the market as “a lot more positive” than a year ago, he added: “I think then it’s just a matter of how long it will take to flow through to construction.”

Mr Tonkin said he was “very keen” on the collaborative approach with contractors, highlighting Network Rail’s pure construction alliance with Atkins, Laing O’Rourke and VolkerRail.

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The consultancy has also done design work on High Speed 2, was the main Olympics design and engineering consultant and has continued to see growth in highways and water.

The firm, which is already on Hinkley Point C, also joined EDF Energy’s UK strategic supply chain partnership and is in a joint venture with Areva to compete for more nuclear work.

But Mr Tonkin said not all clients were looking for a bundled approach, and the disposal of its highways services to Skanska meant the consultancy could focus on higher-margin consultancy work.

He said highways services had been a good business and had served a purpose of “pulling through consultancy” work in the early days.

But he said as the Highways Agency and other clients separated out procurement across departments, “they are increasingly looking at it not necessarily as a bundled service”.

“Our opportunity to take in consultancy through that [highways services] has become less and less and it fits more with a company like Skanska, which does that kind of work,” he said.

Atkins has continued to focus on efficiencies and cost base reductions in the UK, but Mr Tonkin stressed this was a long-running programme rather than a swathe of cost-cutting.

Mr Tonkin said Atkins had nearly 1,300 vacancies “across most of our sectors”, highlighting highways, rail and water in particular.

He added that Atkins will make the “right acquisitions” that can add skills and “improve the UK offering”.

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