London: Business services group Mouchel said recent tough trading conditions would likely continue over the coming months as many of its clients slash budgets and UK government cost cutting measures kick in.
“The short-term outlook for the group continues to be very challenging and is heavily influenced by the steps the coalition government is taking to rapidly bring down the deficit in public spending,” the company said in a statement on Wednesday.
Mouchel, whose revenues have been hit by falling UK public sector and local authority spending, added that it does not “anticipate a significant improvement in trading conditions in the short-term” despite having recently refinanced and restructured the group.
The company, which earlier this year fought off takeover offers from Costain and Interserve, said its level of bidding activity had been impacted by the offer period.
However, it said the number of opportunities in its core markets would likely rise this year, following the soft market conditions it experienced in 2010 and the first quarter of this year.
Mouchel posted a 73% fall in first-half profit in March but said it expected improved trading and cost savings to boost full-year results.
The firm, which also constructs and maintains infrastructure such as roads, railways and schools, said its order book at the end of May stood at 1.5 billion pounds ($2.46 billion), down from 1.9 billion at the same time last year.
Its debt stood at 109 million pounds at the end of last month, up from 97 million at the half year.
The company also said Rod Harris - formerly finance director of Carillion Business Services - would succeed David Tilston as Mouchel’s finance director.
Shares in Mouchel closed at 68.5 pence on Tuesday, valuing it at around 77 million pounds, around half its value a year ago.