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No change at Balfour Beatty as trading remains static

18 Nov 14 Balfour Beatty’s latest trading update says that there has been no material change since the previous report in late September when it issued a profit warning.

The trading up date for the period to yesterday said that the UK construction business continues to prioritise actions incluing further overhead reductions and additional supply-chain savings. The regional business continues to reduce both its exposure to smaller contracts and its number of delivery units. The independent review by KPMG of the contract portfolio within construction services UK is well under way, with the report expected by the end of 2014.

The remainder of the construction services division and the group's other operating divisions, support services and infrastructure investments, continued to trade as expected.

New CEO Leo Quinn will take up his new position and join the board on 1 January 2015. The processes to appoint a new non-executive chairman and chief financial officer are being progressed.

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At the end of the third quarter, the order book stood at £11.7bn, flat on the half year. The order book at the half year has been restated from the reported £13.0bn to £11.7bn from continuing operations, to take account of the Parsons Brinckerhoff disposal, which was completed on 31 October. The net cash consideration of US$1,242m (£753m) represented a multiple of 11 times underlying Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) for the year ended 31 December 2013.

The construction services order book increased to £7.9bn, driven largely by an increase in the USA, predominantly due to foreign exchange movements, and by contracts in the UK announced in the period. The growth was offset by an expected reduction in the support services order book to £3.7bn, as the company continued to complete on long-term contracts in both the power and water sectors.

Average net debt for the nine months to the end of September was £477m.  Balfour Beatty expects average net debt for the full year to be approximately £400m after taking into account the proceeds from the sale of Parsons Brinckerhoff.

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