* FY EBITA up 11 pct to 331 mln stg
* Sees low-to-mid single digit rev growth
* Proposes dividend of 36.5 pence, up 20 pct
* Sees 'enormous opportunities' in Japan
* Shares drop more than 7 pct
LONDON, Feb 14 British engineering firm AMEC
expects its margins to recover this year after they
were hit in 2012 by additional procurement activity for some of
its big customers at low or no margins.
Shares in Amec fell more than 7 percent on Thursday after
the company said its margins slipped to 8 percent from 9.2
percent, even as it posted an 11 percent rise in annual earnings
and a dividend hike.
The company's CFO Ian McHoul said the lower margins were
attributed to AMEC taking on more procurement activity for some
of its largest customers during the year. AMEC secures high
margins through its design and engineering work, but it also
procures supplies on large contracts with little or no margin
"Underlying there is a 60 basis point reduction," said
"Going forward we're flagging a gradual increase in margins,
we don't see it as any kind of permanent feature," he added.
AMEC, which designs and builds infrastructure for the oil
and gas, mining, nuclear and renewable energy sectors, added
that cost efficiencies are expected to come through during the
The company said its annual earnings rose 11 percent thanks
to a surge in revenue from oil and gas activity in regions such
as the Gulf of Mexico, which is set to continue this year it
But margin erosion and the recent completion of the
company's buyback programme disappointed investors.
"Margin guidance looks disappointing so forecasts will come
back a little," said analysts at Liberum Capital.
AMEC, which serves customers such as ConocoPhillips, GDF
Suez and Centrica, is also vying to pick up large nuclear
decommissioning work in Japan following on from the Fukushima
Chief Executive Samir Brikho, who will travel to Japan
within the next month, said there will be "enormous
opportunities" for AMEC, with a clearer picture on the time
frame of contracts after his visit.
The FTSE-100 company posted earnings before interest, tax
and amortisation (EBITA) of 331 million pounds ($514 million),
11 percent higher than in 2011, and in line with an average
forecast of 329 million in a company-supplied poll.
Saipem, Europe's biggest oil service group, shocked
investors last month when its newly-installed management slashed
2012 profit guidance and gave a grim outlook for this year,
triggering a 34 percent fall in its shares.
AMEC said it is on track to meet its targeted earnings per
share of more than 100 pence by 2015 with its order book at 3.6
billion pounds against 3.7 billion a year ago.
The company proposed a dividend of 36.5 pence per share.
Shares in AMEC, which have gained 10 percent since the start
of the year, were down 6.14 percent at 1122 GMT, the biggest
faller in a weak London share market.