Renew restructures to focus on specialist engineering

RENEW Holdings, the specialist engineering and construction services group, announced today it is withdrawing from building non-specialist projects in the North as it moves its focus into specialist engineering.

The group, which bought Barnsley engineering business Amco Group for £19.8m last month, said its presence in the non-specialist and discretionary public spending building markets is “unable to provide acceptable and sustainable returns at an appropriate balance between risk and opportunity”.

Renew said: “The balance of activity in the group will be transformed in 2012 when the board anticipates that specialist engineering will account for over 60% of revenue with 85% of activity being in non-discretionary regulated markets in energy, including nuclear, environmental and rail.

“Over 80% of 2012 group operating profits before central costs are expected to be realised from specialist engineering.”

Renew said it will withdraw when its existing contracted commitments are complete by the end of this financial year with the exception of the £44m Kirklees Waterfront Campus Project, which is scheduled for completion in July 2012.

The group said the restructuring is in line with the board’s policy of contract selectivity and management of risk.

Renew will incur an exceptional charge in the second half of the 2011 financial year of up to £3.5m for redundancy and restructuring costs.

The restructuring will reduce 2012 building revenue by approximately £60m with no impact on group profits.

Going forward, Renew’s specialist building activity will be based in the South.

Renew said: “The board remains committed to its established strategy of moving the balance of the group’s activities to specialist engineering.

“In specialist engineering, the market and forward order books remain stable. The integration of Amco is progressing in line with expectations.”

Renew’s interim results for the six months ended March 31 will be announced on May 24.