Balfour on cost saving drive after strong profits

Aaron Morby 13 years ago
Share

Britain’s biggest contractor Balfour Beatty is on a major cost-saving drive despite delivering strong half-year profits ahead of City expectations.

The firm said it expects to make savings of over £30m a year. A third of this will come from improved competitiveness at project level, the rest from changes to group back office support.

Chief Executive Ian Tyler said pre-tax profits in the first half had soared a third to £141m, helped by a first full contribution from its consultancy arm Parsons Brinckerhoff.

He added that the rest of Balfour had performed well with underlying group profits 3% up.

Around half of Balfour’s £5.2bn turnover now comes from outside the UK.

While revenue was down 9% in the UK, Balfour Beatty’s building business put in a strong profit performance. But this effort was partly offset by a weaker performance on UK and international rail projects.

Balfour, which won BSF contracts with five local authorities and is preferred bidder with three others, said that the education cuts would not impact its order book or outlook as it represents only 2% of its business.

Tyler said: “While the timing of short-term movements in individual markets is difficult to predict, we now have significant capabilities across the infrastructure lifecycle and operate in diverse markets and geographies, which gives us strength and resilience.

“We have a high-quality order book of £14.6 billion at June and a number of opportunities in the second half of the year.

“This, along with the actions taken and proposed to drive efficiency, means we are well-positioned to manage any challenges in individual markets”

He said that the group was looking at further cost efficiencies through procurement savings and developing a support centre which would be responsible for managing all accounting services and payroll processes to its UK businesses.

Tyler added that half the targeted cost savings would be realised in 2011, with the full benefits from the end of 2012.

The one-off costs of implementation are approximately £25m in this year, plus around £10m in additional IT investment.

Divisions at a glance

  • Construction services: Profits rose 17% to £83m on revenue fall of £500m to £3.3bn. US turnover crashed by 22%. Overall order book up 4% to £8.5bn
  • Support Services: Growth in FM and outsourcing offset slow water spending due to AMP5 review. Profits fell £7m to £21m on sales steady at £735m. £4.5bn order book.
  • Professional services: Integration of Parsons Brinckerhoff ahead of plan. Profits ahead  £6m at £49m compared to 2009 on turnover £829m. Order book stands at £1.6bn, up 14%.
  • Infrastructure investment: Bid costs and overheads increased by £6m. Profits slide from £25m last time to £14m.

Latest news

Lonsdale went down owing £65m to supply chain

More than 600 firms owed money as reduced credit rating sinks M&E giant
1 day ago

Wates only bidder for £80m Cardiff estate rebuild

Council contacted 20 framework firms but received only one bid for 295-home Channel View estate rebuild
22 hours ago

£21m legal battle over flawed concrete at Salford flats job

Developer in compensation battle with Arcadis after new concrete core demolished
22 hours ago

Abu Dhabi developer Aldar Properties buys London Square

UAE giant swoops on resi specialist in vote of confidence for London market
22 hours ago

Hunt for delivery partner to revive New Hospital Programme

Programme delivery partner to get £600m fee to get plans back on track
2 days ago

Green light for new £780m Essex garden village

3,700 homes and four new schools to be built at Dunton Hills
2 days ago

Laing O’Rourke makes a £288m loss

Rampant inflation on fixed-price jobs and problem contracts blow hole in accounts
2 days ago

Keltbray, OCU and Clancy clinch £1bn electricity network upgrade

Scottish and Southern Electricity Networks awards biggest ever deals for central southern England
3 days ago

G&T enlisted for commercial review of HS2 main civils contracts

Phase 1 Main Works Civils Contracts to come under cost scrutiny
2 days ago

TClarke order books doubles to top £1bn for first time

M&E specialist on track to exceed £500m turnover this year
2 days ago

Wates signs Government safety remediation pact

Private builder belatedly signs fire safety developer remediation contract
2 days ago

Liverpool all-electric industrial park approved

McLaren and Caddick in chase for Sefton 800,000 sq ft Atlantic Park scheme
2 days ago

Former Buckingham Group MD to join John F Hunt

Simon Hyams is new Managing Director for Contracting
3 days ago

Three in race for retendered £150m A9 dualling job

Bidders take another look after client takes on more risk
3 days ago

Clancy tops £300m revenue in fifth year of growth

Civils contractor delivers £13.5m pre-tax from water and energy sector work
3 days ago

Tower crane collapses on Edinburgh resi site

Jib falls onto apartment block under construction: Video
4 days ago

Salboy drops office space from Viadux Phase Two

Developer to focus on Manchester residential towers of 76 and 23 storeys
4 days ago

Warwick Uni plan for science and engineering campus

370,000 sq ft science and engineering precinct submitted for planning
3 days ago

Morgan Sindall chalks up Greater Manchester schools treble

Bury, Stockport and Wythenshawe school jobs will create 1,600 pupil places
3 days ago

Plans in for £65m Blackpool multiversity campus

Council leads plan for Talbot Gateway learning campus
3 days ago

Laing O’Rourke wins first phase of £700m Oxford R&D district

Landmark Red Hall and two labs to be built in phase 1a of Oxford North scheme
5 days ago

Ardmore wins retrofit deal on £200m Chancery Lane office

Building will be transformed to provide 105,637 sq ft of office space
5 days ago

Construction’s “Leading Lights” recognised

More than 50 winners in latest Considerate Constructors Scheme awards
4 days ago

Balfour Beatty clinches £20m Norfolk coastal defence jobs

Firm will install rock armour at Cromer and Mundesley
4 days ago

Architects join construction union Unite

Section of Architectural Workers forms official branch
5 days ago

Boot to build £20m lightweight aviation composites factory

Work starts on Sheffield University's COMPASS R&D facility
4 days ago

GMI secures £27m Leeds City College job

Site clearance underway for new Mabgate campus
5 days ago

Balfour signs deal with Koreans for UK power transmission jobs

Contractor strengthens large-scale onshore power transmission capability
5 days ago

36 storey south London build to rent flats tower approved

Construction to start next year on £220m Croydon scheme
5 days ago

Hunt for firms for £400m volumetric offsite deal

Procurement for Housing aims to expand its pool of firms on major offsite framework
5 days ago

Contractor services