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Amec pleases investors with dividend hike and £400m share buyback

Company’s profits rise 12% and it announces plans to return cash to shareholders

News of a jump in profits, a rise in the dividend and a £400m share buyback has pleased investors in engineering group Amec.

Full year profits rose 12% to £299m, and its order book has risen from £3.1bn to £3.7bn, with the results helped by £263m worth of acquisitions during the year. Earnings per share climbed 13% to 70.5p and it said it expected to meet its target of 100p before 2015. The company has benefited from growth in the oil, gas and mining sectors, and it has its eye on a number of further acquisitions. But this has not stopped it returning cash to shareholders. Chief executive Samir Brikho said:

We are announcing a 15% increase in the dividend for the full year and, given the strength of the group’s balance sheet, we are commencing a £400m share buyback programme, which is expected to be completed over the next 12 months.

The outlook for 2012 is underpinned by the positive industry backdrop and the strength of the order book.

Amec’s shares have added 5p to £11.13, and Keith Morris at Investec said:

[The company's] results are in line with our expectations and the increased backlog underpins revenue growth prospects for 2012. The new buyback programme should ensure strong earnings per share growth despite margin headwinds.

The rating of the shares is undemanding in our view, and given the risk-averse contract type and geographical mix, is a low risk option in the oil service sector. Reiterate buy with price target increased to £13 [from £12.87]. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds