Balfour Beatty buoyed by construction profit rise

Cornelia Mascio
Marzo 14, 2018

British construction group Balfour Beatty Plc (BALF.L) said on Wednesday its annual underlying profit nearly tripled, as its United Kingdom construction unit bid more selectively to win profitable contracts.

Balfour Beatty, which has offices and schemes on site across the North West, has been working through chief executive Leo Quinn's "build to last" recovery plan since the company's profit dropped dramatically by £350m in 2014, due to 89 problem contracts.

"I wouldn't brand the industry like Carillion", he added.

"The business increased bid margin thresholds. coupled with a lower risk profile, so that the group wins work at appropriate terms and conditions", the company said in a statement.

The company's underlying pretax profit rose to 165 million pounds ($230.41 million) in the year ended December 31, from 62 million pounds a year earlier.

Its UK construction business reported an operating profit of 16 million pounds past year, recovering from a 65 million pound loss in 2016.

Balfour Beatty has overhauled operations, in a turnaround dubbed "Build to Last", after losses at its British construction division led to multiple profit warnings.

Its order book fell 8 percent to 11.4 billion pounds in 2017 and it said it saw a strong commitment from the British government towards the new high speed railway (HS2) project and Highways England road programmes.

Balfour recognised a one-off provision of £44mln past year stemming from the liquidation of Carillion PLC (LON:CLLN), one of the group's joint operations partners in the Aberdeen Western Peripheral Route project.

Balfour said it was on track to achieve industry-standard margins in all of its earnings-based businesses in the second half of 2018 as it continued to complete historical contracts, cut costs and raise productivity across operations.

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