22nd Jan 2020 09:07
(Alliance News) - Geotechnical engineering firm Van Elle Holdings PLC reported a sharp drop in profit on Wednesday following a weak first quarter.
Shares were 11% lower on Wednesday in London in early trade at 48.64 pence each.
Van Elle reported pretax profit of GBP919,000 in the six months to October 31, down 62% from a year before. On an underlying basis, which strips out share-based payments and exceptional costs, the figure was 61% lower at GBP1.1 million.
Nottinghamshire-based Van Elle said profitability was hindered by a weak first quarter as well as an adverse sales mix across the whole interim period. The company has slashed its interim dividend by 80%, to 0.2 pence per share from 1.0p a year before.
The weaker first quarter was blamed on two "challenging" contracts which suffered delays and higher costs.
Van Elle did manage to increase revenue in the half, however, by 13% to GBP48.5 million. The firm said this was achieved despite a "challenging" market.
"The business continues to improve and, despite challenging market conditions through the first half, we have made progress. We have a clear strategy focused on three core markets, housing, infrastructure and regional construction, where we offer a broad range of end-to-end technical capabilities through our extensive and well-invested rig fleet. Good progress continues to be made in building long term and strategic relationships with our key customers in all sectors," said Chief Executive Mark Cutler.
"Operational performance is stable with previous challenges now substantially addressed. The simplified divisional structure with motivated, co-located teams under strengthened leadership means that we are more efficient and joined-up. This allows us to focus even more intently on customer service, operational excellence, margin improvement and cash generation," Cutler added.
Van Elle said current activity and prospects in the Housing and Highways units remain positive.
In rail and commercial building, the company expects a "modest" improvement in the two markets over its second half, which could be bolstered if major infrastructure projects in the UK such as high-speed rail line HS2 are approved.
"Whilst mindful of the ongoing volatility across construction markets, the board expects the group to make further progress in the second half, supported by the benefits of ongoing improvements under the group's transformation programme. Consequently, the board expects to deliver results for the full year within the range of market expectations," said Van Elle.
By George Collard; [email protected]
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