Balfour Beatty made further progress in its turnround efforts at the start of 2017, with the FTSE 250 construction group reporting its first profit for the start of a year since 2014.
Revenues fell 5.7 per cent due to company’s efforts to be more selective with the contracts it takes on, but profitability increased across all of its businesses, and the company reported a pre-tax profit of £12m, from a £15m loss in the same period last year.
Balfour has been rebuilding its business after a difficult period during which it issued seven profit warnings and was forced to fight to maintain its independence. However, it returned to a small profit last year, while its erstwhile suitor Carillion has been left fighting for survival after a serious profit warning of its own.
Having spent two years working to simplify its business and improve controls over how it pitches for new contracts, Balfour is now focusing on improving profit margins, and said it expects to reach industry-standard margins by the second half of next year.
The company had been hoping to take advantage of a mooted ramp-up in US infrastructure spending under Donald Trump, but the new president has so far failed to follow through on his election pledge. Shares in the company have slipped 2.5 per cent since the start of the year, compared to a near 9 per cent increase in the wider FTSE 250.
Leo Quinn, Balfour Beatty chief executive, said:
These results demonstrate the transformation being driven by focusing Balfour Beatty relentlessly on its chosen markets and capabilities.
Under stronger leadership and much improved bidding disciplines, the businesses are booking new orders at improved margins and reduced risk. Our infrastructure pipeline in the US and UK remains buoyant and the group continues to win landmark contracts such as the Dallas Southern Gateway and HS2.
Photo: Bloomberg