Hyder Consulting

Engineering design consultant Hyder increased profits and margins in a tough year to March and moves forward with highly visible orders.

Led by astute CEO Ivor Catto, Hyder is broadly-based both internationally (over 80% of operating profits are earned overseas) and across market sectors, which range from property, to utilities, to transport and infrastructure. This diversity helped Hyder deliver forecast-busting financials last year, growing operating profits 7% to £18m despite lower turnover of £308.6m (2009: £319m).

Pre-tax profits, before restructuring costs, perked up 8% to £16.3m and the cash-generative group reported a swing from £5.7m net debt to £3.6m net cash. Buoyed by balance sheet improvement, the board increased full year dividends by a third to 6p, comfortably covered by earnings.

Geographic performances were a mixed bag, with operating profits more than doubling to £10.5m in Asia-Pacific following a restructuring bout, with high profile transport and infrastructure projects in Australia being among the regional highlights. In the Middle East, where Hyder, architect for the recently opened Burj Khalifa, the world’s tallest building, has cut staffing levels in response to Dubai slowdown, profits still came in at a respectable £7.2m (2009: £8.3m) on a 12% sales decline to £94m.

Profits plummeted to £3.4m (£7.7m) in Europe due to the poor economic climate and redundancy costs, although there were bright spots, with the UK transport operations doing well in the rail sector and major contracts won at Berlin, Munich and Frankfurt airports.

Since the bulk of its business is conducted overseas, Hyder has relatively little to fear from UK government austerity measures and boasts formidable visibility in the form of a £346m order book, with more than 60% of this year’s budgeted sales already bagged.

Hyder shares, whose attractions were highlighted by Growth Company Investor at 310.75p back in 2006, still represent terrific long-term value.