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Trading statements

Cape operating margins in line with forecasts

10 May 2017 07:40

Cape's operating margins were in line with expectations with a robust performance in Asia Pacific offsetting lower margins in the Middle East where, as the group expected, the business experienced increased pricing pressure.

UK margins were in line with forecasts.

A trading update for the first quarter ahead of today's annual general meeting said: "As expected, the Group delivered a strong trading performance in the first quarter, largely driven by increased project volumes and excellent operational performance in the Asia Pacific region.

"The group order book at the end of the first quarter was £797m (31 December 2016: £918m) with the reduction from the prior year-end being largely driven by the timing of key contract awards.

"The group anticipates securing a number of significant prospects in the second quarter of 2017."

Looking ahead it said: "The UK North Sea and coal power generation sectors continue to be challenging, with reducing demand and increasing pricing pressures, while the general industrial and downstream sectors remain solid.

"Despite these mixed market conditions, the UK business is expected to deliver improved margins compared to the prior year due to a combination of improved contract performance and the benefit of the restructuring carried out in 2016.

"As previously highlighted, market conditions in the Middle East region are challenging with a number of new projects being deferred and increasing pricing pressure.

"Nonetheless, bidding activity remains high and the business is expected to deliver a solid performance in 2017, largely driven by increasing volume on existing projects in the Kingdom of Saudi Arabia and Kuwait.

"As previously disclosed, activity levels in the LNG sector in the Asia Pacific region are expected to be materially higher in the first half of the year, leading to a strong first half weighting to earnings for the region in 2017.

"The business continues to target project activity across the region to mitigate the effect of the expected volume reduction in the second half of the year.

"The board's expectation for the Group's full year performance remains unchanged, with, as anticipated, the balance of earnings weighted toward the first half."

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