11 February 2014 – trading update
A disappointing trading update has been released covering the year to 31 March. It is anticipated that full year profit before tax will be materially below current market expectations. Second half revenue, for ongoing businesses, is now expected to be around 15% lower than for the first half. The Energy division has seen lower demand from its customers as a result of continuing weakness in the mining and, to a lesser extent, power generation sectors. In the Transportation division, the increase in new customer revenues in the second half for the US business, has not offset the business lost towards the end of the first half. Slightly lower second half revenues from the UK Transportation business are expected to be in part compensated for by the growth in product revenues from China. Action has been taken to restructure the business in response to the lower revenue levels but results for the current year look like being disappointing. Nevertheless, these are not the only challenges faced by the business in recent times and we have faith in the management team to deliver over the longer term. On balance we rate the shares as a BUY and see recovery in the coming months.