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Mon May 27 2019

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Delayed starts prompt Van Elle profits warning

26 Apr Van Elle, the publicly quoted geotechnical contractor, has warned shareholders that its annual profits will be below expectations because of clients stalling on project start dates.

Van Elle's order book is at a new high
Van Elle's order book is at a new high

On the plus side, Van Elle’s order book is at a record high and the restructuring announced in January is bearing fruit.

Van Elle’s financial year runs to 30th April. In a trading update today, the board said: “The group has experienced a level of uncertainty in its markets, particularly in the infrastructure sector, in the latter part of the year. This has meant that, despite encouraging progress in winning work, some contract award and start dates have been delayed by customers. As a result, whilst volumes in the fourth quarter have been the strongest of the year to date, sales for the full year are expected to fall short of levels previously expected by circa 3%. This reduction in forecast sales for the current year is expected to result in the group delivering full year adjusted PBT [profit before tax] slightly below the lower end of the range of market expectations.”

It added: “The previously highlighted operational weaknesses in the Piling Division are being addressed, with the margins improving in Q4, as expected. A new, experienced director of the Piling Division will join in early June 2019. Further streamlining and business simplification across the group has resulted in annualised cost savings ahead of targets previously announced.

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“In addition, cash management has been good and will result in net debt at year-end improved against previous forecasts and below the £5.6m reported at the end of H1.”

The order book is at £35m (April 2018: £25m) and Van Elle is preferred bidder on a further £25m of contracts. This includes approximately £10m of smart motorway schemes, secured in the fourth quarter, and £12m of work in the housing sector.

The statement concluded: “Despite the uncertain market conditions, the board is very encouraged that the improvement actions being taken are generating tangible operational and commercial benefits. The momentum entering the new year underpins the board's confidence in the prospects for the group.”

MPU

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