Balfour Beatty, which suffered a financial “near-death experience” three years ago, has reported a jump of more than £100M in pre-tax profit in just one year.
Although revenue dropped slightly from £6.923bn in 2016 to £6.916bn for 2017, the Tideway and HS2 contractor saw its underlying pre-tax profits jump from £62M to £165M. Its year end net cash rose from £173M in 2016 to £335M last year.
Last year it sold its Middle East and Indonesian businesses and its 12.5% stake Connect Plus, the company which operates the M25 London orbital motorway, gaining £103M from the sale.
In 2017 the firm incurred a one-off loss of £44M on the 58km Aberdeen Western Peripheral Route as a result of Carillion’s collapse. Carillion had been a joint venture partner on the scheme along with Galliford Try, which last month revealed it would raise £150M to cover losses incurred on the contract.
Balfour Beatty has taken on 150 of Carillion’s employees since its former rival went bust in January.
Balfour Beatty chief executive Leo Quinn told the BBC’s Today programme that Carillion’s collapse was a “failure of leadership”.
Quinn told the BBC: “We had our own near-death experience three years ago – eight profit warnings, £600M cash outflow in nine months from the company. These results today demonstrate an amazing transformation and turnaround.”
The company’s order book was down slightly at £11.4bn from £12.4bn, which Quinn explained as the group’s revised policy of more selective bidding at appropriate terms. The order book is also missing Balfour Beatty’s £2.5bn HS2 joint venture contract with Vinci, which will not be included until the early contractor involvement has finished at the end of this year.
Its construction services division returned to the black with an underlying profit of £16M in its UK business, compared to losses of £65M in 2016. Although underlying revenue in the UK fell 7%, overall its construction services turnover rose 2% to reach £6.6bn due to increases in the US and its Hong Kong-based joint venture, Gammon.