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Balfour Beatty construction revenue hit by 'weak' M&E and rail markets

11 Nov 10 Balfour Beatty's construction revenue has continued to shrink in the third quarter of 2010, due partly to “weakness” in its UK M&E and rail markets.

A trading update from the firm said that although year-on-year construction revenue was down during the period, “the rate of decline reduced from that in the first half, and the period saw very strong order intake”.

It added: “In the UK, continued strength in the civil and construction markets has been offset by weakness in the mechanical and electrical engineering and rail markets. Operational performance has continued to be good with continuing focus on cost efficiency.”

“The medium and long-term prospects for infrastructure markets in the Group's geographies remain positive, while contract wins during Q3 have increased the order book to more than £15bn.”

In support services, Balfour Beatty reported that “reduced volumes at the beginning of the AMP5 water utility cycle seen in the first half have continued through the period”.

However, it expects a recovery, and said “prospects continue to look healthy, particularly with UK Government and local authorities increasingly looking to outsource to the private sector”.

Overall, the firm said: “Performance has been consistent with the outlook given at the time of the half-year results, demonstrating the resilience of our business in the current economic environment derived from our geographic spread, diverse capabilities and end-markets, and our continuing focus on cost efficiency.

“The financial position of the Group remains good with a strong balance sheet to support our growth ambitions. Average net cash for the third quarter remained strong, exceeding £400m.

“Balfour Beatty is strategically well-placed in major markets to benefit from the long-term, growth in global infrastructure spending. The Group's order book and its capabilities across the infrastructure lifecycle and its operations in diverse markets and geographies give the business strength and resilience.”

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