Shares in engineering and environmental consultancy RPS (RPS) sink 37% to a 10-year low of 106p after the company warns that profits for the year to 31 Dec will miss market estimates by a wide margin.

The firm has pinned the miss on its significant exposure to the Australian economy, which is experiencing its slowest growth in a decade affecting both public and private sector work.

RPS is predominantly involved in public works, where spending has been delayed by state elections, but the private housing sector has also been subdued with building approvals well down on last year.

Also the national elections last month caused a slowdown in major defence projects being awarded. RPS is big player in this space.

READ MORE ABOUT RPS HERE

The company expects its full year results to be ‘materially below management and market expectations’, which as we explained here means that earnings may be 20% or more below forecasts.

Before today’s warning the consensus for this year was for fee income to hit £549m and pre-tax profits to hit £49.9m. RPS is due to report its first half results on 1 August.

This is the second time in less than nine months that RPS has warned. Last October in its third quarter trading update it said that full year fee income and pre-tax profits for 2018 would be ‘slightly below’ analysts’ forecasts.

That prompted a 28% one-day fall in the shares as analysts and investors re-based their expectations for last year and this year.

The firm also flags weak market conditions in the UK and Ireland, as companies delay investment decisions due to the ongoing political uncertainty, as contributing to this year's miss.

Also its North American business has been hit by the departure of a team meaning that revenue expectations for that unit have had to be lowered.

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJBell logo

Issue Date: 26 Jun 2019