Atkins still waiting for green shoots of recovery

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The Epsom-based group, which has axed around 1,200 staff since Christmas, flagged up problems with the domestic market two months ago.

The firm is still winning work in the Middle East, but said that "confidence across the region has yet to return".

Despite the difficulties, Atkins added that most markets remained "stable". Results for the year will be in line with market hopes - after a £10 million hit for redundancy costs.

Atkins is a major developer on London's Olympic Park project and is part of the team which will carry out a £5 billion widening of the M25 motorway.

The firm added that orders remained solid and said it was well-placed to meet the challenges ahead in the coming year.

But the group also noted that cash collection from clients had become more difficult - especially in the Middle East, where its cash position has worsened by £25 million in the past three months.

Although its cash generation remained strong thanks to foreign exchange benefits from a weaker pound, Atkins' pension deficit widened to £224 million after tax due to falling asset prices.

The group's shares edged lower following the update. Investec's John Lawson said the "quality and breadth" of Atkins' business meant it was trading at a premium to rivals, but has a sell rating on the stock.

He added: "We still believe that it is too early to be investing in this sub-sector.

"In general, earnings visibility for the sector is limited and, whilst Atkins refers to a strong order book, most firm business is only booked a few months in advance."

Last year the group racked up pre-tax profits of £91.9 million on revenues 11% ahead at £1.3 billion. Consensus forecasts put the current year's profits at £98 million before sliding back to £91.8 million in 2010.