Sales heading towards £800m at Newcastle company

Sep 3 2009 by Peter McCusker, The Journal

The company says performance in the first quarter of this year is in line with expectations and says it is comfortable with analysts’ projections that sales will top £800m this year, with profits in the region of £53m. All areas of the group performed well, with the contract to deliver the Warm Front programme for the Government being a major revenue generator in its Managed Services division, which accounted for £439m of the group’s sales.

The Installation Services division saw sales volumes rise by 37% to £341m and the company sees further growth here.

The division is contracted by utility companies and social housing providers to achieve household carbon reduction targets by installing low-energy bulbs and other initiatives.

Eaga is also expecting future rapid growth from work it is currently undertaking in a joint venture with Newcastle City Council under its Business Process Outsourcing (BPO) operations.

The partnership may lead to the council hiving off some of its support functions to Eaga’s call centre operations and it has high hopes for this division.

Finance director Ian McLeod said: “Government spending cuts could provide a big opportunity for the company, as public bodies look to outsource work.”

The company now employs 5,000 people across the UK, with 1,500 of these based in the North East at its head office and call centre operations.

Michael Parkinson, head of research at Brewin Dolphin Investment Banking, in Newcastle, said: “The regulatory drivers in Eaga’s end markets continue to strengthen and present huge growth opportunities for the business.

“In particular, we would highlight BPO and renewables, which we expect will be the key areas of growth over the next two to three years.”