WYG has spent money building up its UK capacity in anticipation of work that it thought was about to start, only to find that it didn’t.
As the firm approaches the end of its 2016/17 financial year on 31st March, it has disclosed that revenue for the year will top £150m as expected, representing year-on-year growth of 13%, but operating profit will be below £9m. Although this is 25% up on the previous year, it is less than had been expected.
In a trading update today, WYG said: “Although revenue during the fourth quarter, traditionally the group's strongest trading period, is expected to be higher than in the same period last year, a combination of programme deferrals on existing contracts and some delays in the confirmation of new contracts has led to weaker than anticipated profit performance. Frustratingly, the group's higher margin service lines have seen a greater incidence of project delays. This, together with the investment we have made in building our UK capacity in anticipation of even higher activity levels that have not materialised, is expected to result in UK profitability for the year being lower than in 2016.”
On the positive side, the performance of WYG’s international operations is ahead of expectations in both revenue and profit. All regions are performing well, except for Poalnd where a £2.5m restructuring charge is being booked.
Chief executive Paul Hamer said: "Whilst our profit performance in the UK will not be as strong as we expected, growth across the group and particularly the performance of our international operations provides tangible evidence that the group's strategy to build a more broadly based, resilient and balanced business is starting to bear fruit."