We have today updated the market on our trading for the current year.
Our financial performance remains relatively resilient – we have announced that our underlying scope revenue* year-to-date is in line with our expectations at £3,871m and that our order book stood at £6.5bn at the end of September.
As many of our customers over recent weeks have been saying, it is going to be “tougher for even longer” and we are sadly not immune to these ongoing tough market conditions. Continued reduction in capital expenditure by our customers and more pricing pressure on the supply chain mean that we now expect our margins of the second half of the fiscal year to be below those in the first half.
So we have decided to intensify our actions to adapt to these challenging markets and to stay lean and efficient. We have identified, and continue to seek, further cost savings – increasing our group cost savings target by $55m, to $180m, by 2017.
We are also committed to increasing our focus on higher growth markets. In parts of our business we need to do better. So as a direct consequence, we are reviewing the low growth parts with a view to driving an underlying improvement or an exit from those positions.
We have also announced today the prudent step of cutting our ordinary dividend payments by 50%.
So, in summary, next year we expect to see the same trends impacting our business as in 2015.
We have a high quality and diversified business, and the actions we have announced are designed to reinforce our position in the current difficult environment.
As we have experienced this year, we all need to find new lean ways of working, to be more innovative in our thinking and build efficiency into everything we do.
We are a great company and have already achieved many successes. However, the key to continuing that lies in moving from being a responding organisation to becoming an engaging organisation and that shift only comes from within us.