Balfour wants more cost cuts as profits surge

Grant Prior 13 years ago
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Balfour Beatty enjoyed a boost in construction profit and margins last year which helped the group to an overall improvement in pre-tax profits of 20%.

Headline figures show Balfour boosted profit to £319m from £265m last time on turnover up 2% to £10.5bn.

Balfour is now looking to improve its margins to 3.5-4% by cutting costs at head office and across the supply chain.

The company said: “We have plans to increase our group operating margin to the 3.5%-4.0% level over this period by improving business mix, utilising our resources more effectively and generating £30m annual gross savings from procurement and back office initiatives in the UK, £20m of which are expected to go through to the bottom line.”

Balfour’s worldwide construction division currently has a secure order book of £9.2bn.

The firm said: “In the UK, despite a weak first half and uncertainty in the market following the Comprehensive Spending Review, we have had good project wins, completed milestones with success and maintained progress on cost efficiencies.

“There was a strong operational performance from the building business, and a good overall performance from civil engineering work.”

Balfour confirmed that it had paid up to £7m during the year for contracts from the collapsed Rok group which involved the transfer of 381 workers.

Chief executive Ian Tyler said: “We have started 2011 with a record order book and a focus on cost and operational delivery.

“While we do not expect, in the short term, a meaningful recovery in the UK infrastructure market, we expect to make progress this year.”

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