Balfour Beatty has reported a £50M profit before tax for the six months to June this year, up from £12M for the same time the year before.
The profit surge has softened the hit the company has had to take following the collapse of Carillion in January. Balfour was working in a joint venture with Carillion and Galliford Try on the Aberdeen Western Peripheral Route (AWPR).
The figures show that the firm’s UK construction arm reported an underlying profit from operations of £5M after an underlying charge of £15 million for the AWPR. The project, which Balfour is now running in a 50:50 venture with Galliford Try, experienced schedule slippage and cost increases and saw the Balfour admitting it has lost an extra £23M on the project in the past six months.
The overall picture is a testament to the success of chief executive Leo Quinn’s Build to Last Programme, which aimed to transform the firm, which just four years ago snubbed a takeover bid from Carillion. Then, Balfour Beatty was facing serious financial difficulties after posting a £304M pre-tax loss for continuing operations for the 2014 financial year.
He said: “All our businesses are now either achieving industry standard margins or on track to do so in the second half. The disciplines installed under Build to Last are also enabling us to increase the order book with key infrastructure projects to translate Balfour Beatty’s expert capabilities into future profitable growth.
“Given the strength of our balance sheet and the Board’s confidence that the Group’s full year earnings will meet expectations, we are raising the interim dividend by 33% and plan to repay the outstanding convertible bonds this year.”
The global order book stands at £9.5bn, with the UK standing at £2.7bn, despite the firm’s selective bidding policy. The order book won’t include the £2.5bn worth of HS2 contracts awarded in a joint venture to Balfour until the conclusion of the Early Contractor Involvement (ECI) phase, now expected in mid-2019.
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