Balfour Beatty today posted half-year results showing a strong improvement in profits and an order book worth £17.7bn.
In the UK, Balfour Beatty has a construction order book worth £5.8bn. The value of the US order book is even higher, at £6.3bn.
Revenue for the first six months of 2022 was £4,147m, down less than 0.2% on last year’s £4,154m.
Half-year pre-tax profit was up nearly 140% to £83m, compared to £35m in the first half of 2021.
Underlying operating profit was up 42% at £85m (2021: £60m).
Helped by involvement in the UK’s three biggest infrastructure projects – HS2, Hinkley Point C and Thames Tideway – Balfour Beatty’s UK Construction business has returned to profitability, making an £18m underlying operating profit, compared to a £23m loss last time. The 2021 H1 result was impaired by write-downs on private sector property projects in central London.
Revenue from UK Construction Services was down 2%, however, at £1,237m due to the deferral of a number of highway projects.
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Revenue from the Support Services business was down 10% to £499m (2021: £555m) as higher volumes at power were more than offset by a reduction in gas and water following the company's decision to withdraw from this sector. Underlying profit from operations was down 33% at £36m (2021: £54m) but the 2021 result was boosted by £20m of one-off items.
Profits from the US Construction business, from Gammon (the Hong Kong joint venture with Jardine Matheson) and from Infrastructure Investments were all slightly above the first half of 2021’s results.
Chief executive Leo Quinn said: “Balfour Beatty continues to see inflationary pressures across the group's construction and infrastructure markets both in relation to labour and materials. Whilst the group is not immune to these pressures, Balfour Beatty is currently mitigating these risks through contractual protection and early buyout using the group's scale and supply chain management and does not expect a material impact on the full year results.”
He said: “Balfour Beatty's transformation into a sustainable, well-balanced group is demonstrated by its strong financial performance in the first six months of 2022. The group's diversified portfolio – both geographically in the UK, US and Hong Kong; and operationally across Construction Services, Support Services and Infrastructure Investments – and balance sheet strength, have provided the resilience to maintain its expert capabilities and market positions through the challenges of the last two years. Balfour Beatty emerges with a larger order book, including a higher proportion of long term and lower risk contracts, and all business units delivering expectations. In both the short and medium term, this provides clear visibility to deliver significant returns from profitable managed growth and cash generation.”
He continued: “The need to drive post-pandemic economic recovery has led governments in the group's three chosen markets to boost spending on infrastructure and sustainability. This significant expansion of state-backed infrastructure provides a positive operating landscape for the group. Given its proven track record of delivering world-class projects, Balfour Beatty is particularly well-placed to benefit from the growing focus on infrastructure which can mitigate climate change. Net zero targets dictate a redesign of energy infrastructure from renewable electricity generation and storage, smart grids and carbon capture to hydrogen and nuclear.
“At the same time, new global challenges have arisen, in the form of higher energy and raw materials prices, inflation and knock-on wage pressures and supply chain issues. Against this backdrop, the group's financial and operational strengths and its mix and nature of order book provide stability, while its leadership and disciplined processes ensure proactive management of performance.”
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