Balfour Beatty has reported a strong increase in profit for the first half of its financial year, as the effects of its Build to Last turnaround programme started to show.
The company’s underlying pre-tax profit for the half year to 28 June 2018 was £64m, up from £56m the year before. Revenue for the group was nearly £3.9bn, up from just over £3.8bn in the same period a year before.
Balfour’s UK construction division saw a significant increase in its underlying profit from operations, rising to £17m, up from £5m in the first half of 2018. That meant its underlying profit from operations margin jumped to 1.7% in H1 2019 from 0.5% in H1 2018.
The company claimed its Build to Last programme has now delivered cumulative annualised cost savings of around £185m, helping to bring its first half average net cash to £290m, which it said was ahead of previous guidance.
While it said the outlook for its business was “favourable”, Balfour said the decisions to proceed with HS2 and Heathrow expansion would “significantly improve the outlook”. The company is in joint venture with Vinci to deliver detailed plans and costs for HS2. The estimated value of this work for Lots N1 and N2 and Old Oak Common, worth around £1.7bn to Balfour Beatty, is not yet included in its order book, with the early contractor involvement (ECI) stage now expected to conclude by the end of 2019.
Chief executive Leo Quinn said: "This is another strong set of results – increasing profits backed by a strong cash performance, plus carefully managed growth in our order book.
"Today, the Group’s geographic and operational diversity underpins our risk management, with over 50% of our business and Investments portfolio assets outside the UK.”
