UK's Mouchel to sell ME unit
London, March 30, 2010
British infrastructure firm Mouchel is close to selling its Middle East unit after its poor performance and delays in the award of UK government work ahead of elections hit first-half profit.
'We hope to close the deal to sell our Middle East business in the second half and will be focused on the UK and Australia going forward,' chief executive Richard Cuthbert said in an interview on Tuesday, adding that the buyer was a Middle East-based company.
He said the company had already taken a total of 15 million pounds of charges and write-offs on the business, from cutting jobs and offices and on late-paying debtors, largely Dubai World.
Mouchel, which maintains Britain's highways and manages local government IT systems, said on Tuesday its pretax profit fell 28 per cent to 15 million pounds ($22.6 million) for the six months to the end of January as revenues dropped 14 percent to 365.6 million.
Shares in Mouchel, which have fallen a fifth this year, were down 4.2 percent at 199 pence at 0915 GMT, their lowest level since December 2009, valuing the company at around 230 million pounds.
Mouchel, which last month rejected a 330 million pound takeover approach from defence services firm VT Group, held the interim dividend at 2.25 pence and said its consulting division, which does most of its work for UK central government, had won less work ahead of an expected general election in May.
'Delays in the awarding of contracts have hit our management consulting business, and turnover there has been slower than expected,' said Cuthbert.
'That will take a while to turn around, and we are not expecting a significant upswing there until next year, but we see a raft of outsourcing opportunities as local authorities look to increase services and save money after the election.'
However, Investec analyst John Lawson expects 'political uncertainties to keep a dampener on the share price' until after the election, when spending decisions are made.-Reuters