Balfour Beatty has declared itself “increasingly confident” of returning to industry-standard margins next year.
The infrastructure giant said in a trading update today that chief executive Leo Quinn’s Build to Last turnaround programme was delivering “fundamental change”.
Balfour Beatty suffered a pre-tax loss of £199M in the 2015 calendar year but returned to the black with a pre-tax profit of £8M in 2016.
It then made a pre-tax profit of £12M in the first six months of 2017, the start of the two-year second phase of Quinn’s Build to Last programme.
By the end of 2018 Balfour intends to hit “industry-standard margins”, described earlier this year as 2-3% in UK construction and 3-5% for support services.
Phase three of the Build to Last programme is then designed to produce market-leading results.
“Group performance in 2017 remains in line with board expectations,” said the update. “The second phase of the Build to Last transformation programme is continuing to deliver fundamental change to the group, with the business increasingly confident of achieving industry-standard margins in the second half of 2018.”
Balfour said its 2017 year-end net cash was expected to be in line with the previous year’s.
“The group continues to win new business in its chosen markets on terms and at rates which reflect the bidding discipline and risk management introduced under Build to Last,” said the update. “The 2017 year end order book is expected to be broadly in line with the half-year, post disposals.”
Quinn said: “The actions that we have taken during the first three years of Build to Last have laid a solid foundation for long term profitable growth. We continue to invest in our capabilities while de-risking the business.
“The order book increasingly consists of projects bid and delivered under our enhanced transparency, governance and controls and I remain confident that the group will achieve industry-standard margins in the second half of 2018.”
Balfour Beatty will publish its full year results on 14 March 2018.