Order book boost for Balfour Beatty
Mar 6 2009 by Iain Laing, The Journal
THE UK’s biggest construction firm, Balfour Beatty has unveiled a fresh haul of major contract wins alongside forecast-beating annual profits.
The firm bolstered its £12.8bn order book with a trio of schemes in the US worth £341m in total and posted pre-tax profits of £249m for 2008, 24% ahead of the previous year and ahead of City hopes.
The company expects further progress this year as the Government steps up plans to spur on the economy with building projects, despite a “general slowdown” in private sector work.
Like rival Carillion, Balfour Beatty has seen a slowdown in the Middle East and said the more difficult economic climate creates “greater uncertainty”.
But the firm – which celebrated its centenary and joined the FTSE 100 Index for the first time earlier this year – has a broad geographical spread, and heavy presence in markets such as infrastructure likely to receive public support.
The firm’s civil engineering business saw operating profits lift 27% to £104m, helped by wins such as the A46 Newark to Widmerpool road in Nottinghamshire – a scheme brought forward under Treasury stimulus plans.
Balfour also has a 40% stake in the joint venture set to begin a £5bn widening of the M25 motorway later this year.
Its main building division was helped by several acquisitions which delivered a first full-year contribution to help lift operating profits 26% to £88m.
The firm, which is building the aquatics centre for London’s 2012 Olympics, also expects to close three public private partnership deals in the UK by the end of June and saw rail revenues top £1bn for the first time.
Across the overall group, revenues lifted 27% to £9.5bn. Balfour Beatty’s latest wins – in Texas, North Carolina and California – also reflect its increasing presence in the US. Two years ago it bought Centex, which is a major player in the US military housing market.
Numis Securities analyst Howard Seymour said: “Balfour Beatty results show a good level of activity growth in 2008, bolstered by acquisition benefits and we expect more of the same in 2009... it is clear that the group has the best exposure into UK and US infrastructure markets of its peers.”
