Balfour Beatty to sell European rail arm as profits fall

Aaron Morby 11 years ago

Balfour Beatty is to sell its mainland European rail business after reporting a 70% fall in pre-tax profits to £75m.

The firm said the UK construction market remained tough and construction revenue was now expected to fall by 20% this year.

Group-wide Balfour said that underlying profits remained resilient, down 7% at £310m on turnover flat at £10.9bn, before restructuring costs of £61m and £100m in goodwill write-downs on its European rail business.

Britain’s biggest contractor said there had been a significant shift from major works to smaller contracts in the UK.

As a result the regional building and civils order book was up 15% since the end of 2011, but major projects declined by 24%.

This has impacted on working capital which fell from £1bn to £777m.

Overall UK construction revenue fell 6% in the year, with most of the decline occurring in the second half. Margins fell from 2.4% to 1.8%, causing profits to drop by a quarter to £122m.

Outgoing chief executive Ian Tyler said: “We are focused on shifting our business from construction in our home markets to our target geographies and chosen market sectors, which have better growth dynamics and return characteristics.”

The firm now plans to spread it wings to find major transport and energy projects in global growth markets.

He added: “The cost efficiency programme we started in 2010 has achieved £36m of savings in 2012, and we are confident of reaching our £80m target for annual savings by 2015.”

UK Construction has been reorganised into three business streams and is in the process of reducing the number of offices from 75 down to 37.

Balfour Beatty said maintaining rail operations in mainland Europe across different countries no longer fitted its strategy.

“In Mainland Europe, we essentially operate only in rail. Therefore, we will be divesting of all of our rail businesses through a process that ensures that the businesses and their customers continue to receive full support.

“As a first step in this direction, we have sold the Spanish business to its management.”

Divisional trading

  • Construction: turnover £6.99bn (-1%); profit £122m (-28%); order book £8bn; margin 1.8%
  • Professional services: turnover £1.67bn (+1%); profit £98m (+13%); order book £1.6bn; margin 5.9%
  • Support services: turnover £1.63bn (+3%); profit £52m (-22%); order book £5.7bn; margin 3.2%

Latest news

Willmott Dixon set for Manchester science park job

Contractor understood to be in final stages of talks to land £75m Greenheys building
1 day ago

Stewart Milne went down owing supply chain £153m

So far 1,375 firms have come forward with unpaid bills
2 days ago

Didcot disaster investigation enters its ninth year

Still no answers for families of quartet killed in demolition collapse
1 day ago

Mount Anvil wins £275m Westminster estate renewal

First phase of Church Street area regeneration will deliver 400 new homes and a library
2 days ago

Trio of A47 road upgrades to go-ahead as legal challenge fails

20-month delay adds tens of millions to dualling costs
2 days ago

Skanska and Morgan Sindall win £277m duo of Cambridge jobs

Railpen awards £200m Botanic Place and £77m Devonshire Gardens office jobs
2 days ago

Offsite specialist Merit sees profits grow

Contractor sees further growth in turnover and profits
1 day ago

Morgan Sindall delivers another record year of profit

Revenue tops £4bn as pre-tax profit soars 70% to £144m
2 days ago

Galliford Try nets two pipelines and road job worth £98m

Firm wins £64m of Thames Water pipelines and Halifax road improvements
1 day ago

HS2 viaduct blunder over wonky concrete segments

Align JV now drilling out concrete joint as part of week-long remedial work
3 days ago

City of London hots up as 9m sq ft under construction

Investors return to City as "10 Cheesgraters" of floorspace under construction
3 days ago

Four arrested in £140m property fraud probe

Serious Fraud Office investigating collapse of property developer Signature Group
3 days ago

McLaren gets green light for 31-storey student tower

Revamp of historic Birmingham site will provide 759 student beds and 189 apartments
2 days ago

BT Tower to become hotel

New owner MCR Hotels to transform iconic building
2 days ago

Plans in for first phase of £1.7bn ID Manchester

Plan to reinvent 1960s Renold Building as a new innovation hub
2 days ago

London £3bn housing framework out to tender

SMEs allocated slots on London Construction Programme housing framework refresh
3 days ago

BAM wins first major RAAC school rebuild

Contractor seals £46m deal for St Leonards school in Durham
3 days ago

Failed strip out specialist owes £1.5m to supply chain

More than 100 subcontractors and suppliers left with unpaid bills by Type Ten Limited
3 days ago

Councils to turn screw on building owners over fire safety upgrades

Government tells councils to step up legal action against rogue building owners
3 days ago

Green light for £300m Fenland energy from waste scheme

Wisbech incinerator will generate 50MW from half a million tonnes of waste
4 days ago

Multiplex starts on 50-storey Thames tower

Developer green lights construction of latest phase of £3bn Bankside Yards scheme
4 days ago

McLaren lodges fresh Reading Broad Street Mall plan

Town centre scheme will deliver 600 homes in four towers
4 days ago

Beard bags £24.5m Bristol office revamp

Construction to start in April
3 days ago

SMEs star in £3.2bn social housing upkeep deal

Around 85% of Efficiency North's framework winners are local firms
4 days ago

Scottish NHS new building projects delayed for two years

Spending clampdown hits over a dozen planned projects
4 days ago

Balfour M25 workers hold strike ballot

Motorway maintenance crews unhappy with 3.4% pay rise offer
4 days ago

Rainsford Contracts acquires M&E specialist

Expanded contractor will have turnover of £45m
4 days ago

Statom expands with launch of Northern HQ

RC frames specialist now targeting jobs in Scotland and north of England
5 days ago

High Court dismisses Stonehenge tunnel challenge

Judge quashes legal challenge against Government consent for £1.7bn job
5 days ago

£1.5bn Teesside carbon capture scheme consented

Final investment decision expected this year for construction start
5 days ago

Contractor services