BALFOUR Beatty has reported an underlying pre-tax profit of £7 million for the half-year ended July 1 – a dramatic improvement on the £130 million loss over the same period last year.
Underlying revenue is down 6% to £4,024 million while the order book is up 7% to £12.4 billion.
The UK construction business reported an underlying loss of £66 million (compared to a loss of £145 million last year). Balfour Beatty said the loss was due to three main factors – additional losses incurred on historical contracts, lower overhead absorption due to the lower revenue base, and gross margin not being recognised on newer projects in the period. The group added that good progress was being made on closing out the 89 “problem contracts” identified last year.
The UK order book grew from £1.9 billion to £2.1 billion – the first growth since 2013.
Leo Quinn, group chief executive said, “We are now starting to see tangible benefits from the transformation of Balfour Beatty. Eighteen months into the first phase of Build to Last we have delivered our second successive half of underlying profitability and remain on track to achieve our initial targets of £200m cash in: £100m cost out. By concentrating on our selected markets, we are growing our order book within a control environment which ensures that our business decisions lead to sustainable profit and cash growth.
“We have maintained a strong balance sheet and expect Balfour Beatty to make further solid and measurable progress. As a result we are able to reinstate the dividend as planned.
“By the end of 2016 we will have successfully completed Phase One. Over the following 24 months, I am confident we can reach industry-standard margins and then build on the foundations Build to Last has put in place to deliver a Balfour Beatty with market-leading strengths and performance over the longer term.”