Consultant says it will 'substantially exit' the rail sector as it warns results will be below expectations

Consultant Mouchel has warned its performance this year will be below its previous expectations and plans to “substantially exit” the rail sector after failing to make in onto Network Rail’s civil engineering framework.

In a trading update this morning it also said it faced problems getting paid in the Middle East due to the economic problems in the region.

It said: “In the Middle East, we continue to be impacted by the adverse economic conditions in Dubai, as a result of which we have continued to see a marked slowdown in activity levels and the timing of the collection of receivables compared to earlier years. We are making progress in agreeing payment terms and recovering sums due.”

On the upside, it said prospects were brighter in other parts of the region including Abu Dhabi and Kuwait.

In the UK, it expressed concern at the prospect of reduced public sector budgets in the future.

It said: “The increasing pressure that will be placed on government spending from 2010 offers both a threat and an opportunity for the group, but we expect our enhanced capability in business change, transformation and efficiency, together with our portfolio of long-term relationships, to leave us well placed to weather the current recession.”

Its order book stood at £1.9bn at the end of May and it said a renegotiated credit facility of £190m gave it “certainty of funding” for three years.

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