* Says ample capacity for M&A, confident on securing debt
* FY earnings up 12 pct to 299 mln stg vs forecast 297 mln
* 400 mln stg share buyback to be completed in 12 months
* Ups dividend by 15 pct to 30.5 pence per share
By Sarah Young
LONDON, Feb 21 (Reuters) - British engineer AMEC is still looking for a big acquisition, even after announcing a 400 million pound ($635 million) share buyback programme and hiking its 2011 dividend by 15 percent, it said on Tuesday.
"The key thing about the buyback is it leaves us with ample capacity to continue to pursue, quite aggressively, acquisitions and there's plenty of opportunity out there," Chief Financial Officer Ian McHoul said on a call with reporters.
AMEC, which serves customers such as ConocoPhillips, GDF Suez and Centrica across the mining, oil and gas, nuclear power and renewable energy industries, said it was looking for deals in all of its sectors, as well as in Asia, Latin America and the Middle East.
Investors have been waiting for news on a cash return after AMEC said last March it would consider a buyback or one-off cash return should a major acquisition not materialise within 12 months, something which has not happened.
"Even after returning 400 million pounds, we will still have cash on the balance sheet. We don't feel constrained in any way. We've got the ability to take debt on board to finance acquisitions," McHoul said.
AMEC does not have any debt and McHoul was confident of being able to borrow "significant sums" from a large number of banks. He said he was already in touch with lenders.
AMEC, which said the buyback would take place over a 12 month period, also said it planned to lift its full year dividend to 30.5 pence per share from the 26.5 pence in 2010.
PROFITS JUMP
AMEC posted full-year earnings before interest, tax and amortisation (EBITA) of 299 million pounds, 12 percent higher than in 2010, and slightly higher than an average forecast of 297 million in a company supplied poll of 16 analysts.
A strong performance in the North Sea, a contract win on the decommissioning of the Sellafield nuclear plant in northern England, plus a 21 percent jump in earnings in the part of AMEC's business which provides consulting and engineering for environmental and water projects, helped boost profits.
The company said it was targeting earnings per share of more than 100 pence by 2015, topping the 100 pence goal it announced in 2009.
"The outlook for 2012 is underpinned by the positive industry backdrop and the strength of the order book," Chief Executive Samir Brikho said.
AMEC said profit margins would fall due to a shift in its business mix away from Canada's oil sands and towards the North Sea, and after it increasingly provided strategic customers such as BP with procurement services.
"Any disappointment here should be tempered by two factors. First, management focus has shifted away from margins and towards revenue growth in the recent period. Second, the company's EBITA margin in 2011 was 9.2 per cent, marginally above our expectations," Shore Capital analysts said.
At 1000 GMT, shares in AMEC, which have gained 23 percent in the last three months, were steady at 1,109 pence, valuing the company at about 3.7 billion pounds.
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AMEC (LON:AMEC) (HOLD) (AMEC LN, 1108, ▲ 1.1%): AMEC’s 2011 results were solid. Underlying revenue increased by 3%, driven by a strong performance within the oil and gas and minerals and metals markets, offset by a decline in oil sands and US federal activities. Reported EBITA increased 12% to £299M (2010- £269M) with margins broadly in line at 9.2%. Underlying EBITA increased by 6 per cent. Adjusted profit before tax was £311M, ahead of the previous year (2010: £280M) driven by volume growth and acquisitions. The final dividend of 20.3p, which together with the interim dividend of 10.2p results in a total dividend of 30.5 pence per share (2010: 26.5 pence), represents a 15% increase. The Group has decided to commence a share buyback programme of £400M, which is expected to be completed over the next 12 months.
The outlook statement was positive with the company stating: “AMEC is on track to deliver double-digit underlying revenue growth in 2012, despite the continued macro-economic uncertainty. The strength of the order intake during 2011, the continued demand for AMEC's services and the on-going customer investment in AMEC's core markets are driving growth expectations. However, overall margins are expected to reduce somewhat, impacted by a shift in business mix and an increase in procurement activities for strategic customers. Management remains focused on the Vision 2015 strategy and now expects to achieve earnings per share of greater than 100p ahead of 2015.”
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