Balfour Beatty profits slide as spending cuts bite

Aaron Morby 11 years ago
Share

Balfour Beatty’s long run of strong profit and margin growth has been halted by the downturn in the UK and US.

Britain’s biggest contractor said that nearly a year on from the government’s Comprehensive Spending Review, the impact of the reduction in public investment was evident in infrastructure markets and its order book.

Overall group revenues were flat at £5.2bn in the first half of 2011, as acquisitions and growth in Australia compensated for the downturn in UK orders, but pre-tax profits fell 9% to £91m.

Operating profits at the group were down by a fifth to £89m, compared to last year.

Margins and profits were eroded at both the construction and professional services division, with only support services holding its ground in tougher market conditions.

    Divisions trading in first six months

    Construction services: turnover £3,270m, 0%; profit £67m, down 15%; margin 2% (2.4%)

    Professional services: turnover £840m, up 1%; profit £38m, down 22%; margin 4.5% (5.9%)

    Support Services: turnover £757m, up 2%; profit £25m, 0%; margin 3.3% (3.45%)

Ian Tyler, chief executive, said: “Looking ahead, we will continue to manage the business on the basis that market conditions will remain tough.

“The clear strategy we have put in place, the scale and capabilities we have built over the last several years, the actions we have taken in individual markets and the cost measures we started implementing in 2010 will stand us in good stead.”

He added: “We expect recovery in our markets in the medium term, and we have positioned ourselves to take advantage of the growing demand longer-term for infrastructure across the globe.”

Margins are expected to be held at current levels as the firm’s back office streamlining programme remains on target to deliver £30m savings by 2013.

Around £10m of this saving will be utilised to improve competitiveness at project level, while £20m will impact the structural cost base underpinning margins.

Balfour said there was now evidence that commercial markets in London were showing signs of recovery, although it is too early to call this a trend.

Tyler said that the firm’s acquisition strategy, global spread and cost-saving programme would offset downturns in its traditional key markets.

Over the first six months Balfour bought US west coast contractor Howard S Wright, opened an office in India and ramped up operations in Australia and Canada.

Latest news

Costain and Mott MacDonald win £60m Stonehenge deal

New tea in to oversee construction once scheme gets planning green light
8 hours ago

Seven metre roof fall from “makeshift” access system

Contractor fined £80,000 after employee fell through fragile roof
8 hours ago

Self-employed labour rates hit record high

Average weekly pay tops £1,000 in London, the South East and East of England.
3 days ago

Network Rail chief takes finance reins at Skanska

Meliha Duymaz is new Chief Financial Officer
3 days ago

Construction Manager of the Year crowned

Kier's Joe O’Connell lands top prize. Full list of winners
4 days ago

Hochtief starts pulling down Welsh pylons

Construction starts on National Grid project
3 days ago

Kier wins London life sciences job

Contractor lands innovative landmark lab development at ARC West London
3 days ago

Social housing bidding opens for £1.5bn energy retrofit cash

First upgrades of social housing stock could start from early next year
4 days ago

Construction arm propels Mace to record profit

Revenue expected to top £2bn this year despite project delays
5 days ago

Fire destroys conveyor belt at Silvertown Tunnel site

Forty firefighters battle blaze at huge London site
4 days ago

Plan for £58m Bristol pharma R&D facility approved

Willmott Dixon in line to build the R&D facility at Bristol & Bath Science Park
4 days ago

Bond Street Elizabeth line station to open next month

Final station on delayed line will welcome passengers in October
4 days ago

Sisk fixes price on £227m Quintain flats job

Quintain signs single-largest contract so far at Wembley Park
5 days ago

Green light for St Helens town centre revamp

English Cities Fund to start phase 1 next April
4 days ago

Rising costs tip William Hare to £3.6m loss

Specialist contractor falls into the red despite near 60% revenue rise to £220m
6 days ago

Safety blitz on “aches, pains and strains” on site

1,000 site visits planned in coming months to check how workers are moving heavy or bulky materials
6 days ago

Drones sent flying underground to check sewers

Traditional inspection teams replaced with latest technology
5 days ago

Plan submitted for 470 Preston flats scheme

Stoneygate Central scheme on Dryden Mill site will rise to 16 storeys
5 days ago

Graham starts £124m M25 Junction 28

Work on the 36-month Junction 28 upgrade includes constructing a major two-lane loop road
5 days ago

Keltbray bags brace of energy infrastructure wins

Civils work on huge converter stations worth £30m to specialist
6 days ago

Balfour Beatty sole winner for £4bn Scape civils deals

Contractor reappointed to England, Wales and Northern Ireland and separate Scottish deals
6 days ago

PR expert Baroness Rock to chair Costain

Kate Rock will take up senior board role at the end of the year
6 days ago

Billington profit upgrade after strong first-half

Steelwork contractor says weaker pound will allow it to reignite its old export markets in Europe
6 days ago

Green light for £120m Liverpool “super restaurant”

Historic Pumphouse at Stanley Dock to be transformed
7 days ago

Tolent bags £15m Sunderland skills academy

Work to start later this year on Housing Innovation and Construction Skills Academy
6 days ago

Government launches net zero review

Pro-growth and pro-business review of net zero 2050 target launches
7 days ago

L&G Modular wins 400-home Wolverhampton job

Modular specialist wins 17-acre Canalside South regeneration scheme
7 days ago

£1.2bn A12 upgrade accepted for planning

15-mile Essex road upgrade between Chelmsford and Colchester aims for 2023/24 start
7 days ago

US consultant trumps WSP bid for RPS Group

Tetra Tech swoops but WSP could come back with new offer if bidding war breaks out
7 days ago

Sisk hands staff £900 cost of living cash boost

Firm also promises staff £400 Christmas voucher in November
7 days ago

Contractor services