WYG issues profit warning amid 'political uncertainty'
WYG has issued a profit warning ahead of March, citing “political uncertainty” in the UK as having stifled the growth of its consulting services. WYG’s consulting wing accounts for over three quarters of the firm’s turnover, but has been hit by the deferral or delay of a number of projects, as companies wait to see what economic conditions await following the culmination of Brexit.
International professional services firm WYG operates from more than 50 locations across the UK, Europe, Africa, and Asia. The firm helps its clients create value, protect value, and manage risk, serving them through six business streams: International Development, Infrastructure & Built Environment, Programme & Project Management, Surveying & Asset Management, Environmental, Planning and Transport.
In response to the changing demands of its client portfolio, WYG expanded its headcount in 2018, appointing former BBC Director Simon Marr as leader of the Risk & Security consultancy wing. The firm also created a new role of Planning Director to bolster the important service line, installing Anne Clements, a regeneration specialist with over three decades of industrial experience, as the first professional to take up the position.
Despite its efforts to diversify and boost growth, however, WYG has seen its share price slide on the back of a shock profit warning in mid-February. WYG stock saw its value fall by 60% after the Leeds-headquartered company warned that its profits were set to fall "materially below" expectations.
Brexit and the looming possibility of trade wars between the US and China have unsettled the European and global economies in recent months, something which has seen some consultancies cash in on the fears of clients keen to insulate themselves from potential turbulence ahead. Indeed, to that end, WYG had made efforts to strengthen its risk consulting offering, in anticipation of heightened demand. However, the firm cited these headwinds as potentially being the cause of its muted results.
WYG’s consulting business, which is dominated by UK work, accounts for more than three quarters of turnover at the firm, but it has seen work slow down across both the public and private sectors in the last year. In a statement, the firm said it was the victim of wait-and-see attitudes in the UK market, which has been impacted by the "current cautious business sentiment and political uncertainty", leading to delays in investment decisions, along with the deferral of activity on some existing projects.
Because of this, WYG has been forced to take a more cautious view on the outlook of its UK business. The company subsequently concluded that it does not expect to meet either of the net debt to EBITDA or interest cover covenants within its facility agreements for the end of March 2019. It has therefore opened discussions with its lending bank, in a bid to secure a deferral or waiver of those relevant covenant tests.
