The fact that Balfour Beatty these days builds much more in the USA than in the UK is providing protection from the collapse of the pound. Or as chief executive Leo Quinn puts it: “Having over 50% of both the order book and the Investments portfolio dollar denominated reduces the group's exposure to political uncertainty in the UK.”
The word ‘uncertainty’ is mentioned eight times in Balfour Beatty’s 2019 interim results statement, released today. But despite all the uncertainty, Balfour Beatty managed to treble its underlying operating profits from its UK construction activities in first half of 2019.
UK Construction reported an underlying operating profit of £17m for the first half of the year (2018 H1: £5m) on revenue of £1.0bn, representing a 1.7% underlying operating profit margin (2018 H1: 0.5%).
For the first six months of 2019, the overall group reported pre-tax profit of £63m, up from a comparable £50m last year. Underlying profit from operations was £72m (2018 H1: £66m).
Average net cash increased significantly during the period to £290m (2018 H1: £161m) with net cash of £425m at the end of June, compared to £366m a year before. The average net cash guidance range for the full year has been increased to £280-£300m.
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. Combined with the strength of our balance sheet and cash flows, this positions Balfour Beatty to create and return future value to shareholders."