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Tue May 28 2024

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This too shall pass says Quinn, as virus sends Balfour Beatty into £24m half-year loss

12 Aug 20 Balfour Beatty made a pre-tax loss of £24m in the first six months of 2020, with the coronavirus being substantially blamed.

Leo Quinn, remaining optimistic
Leo Quinn, remaining optimistic

“The financial impacts of Covid-19 are unavoidable,” said chief executive Leo Quinn, “but they will pass.”

For the first six months of 2020, Balfour Beatty generated revenue of £4,118m, up 6% on the same period of 2019. But 2019’s interim pre-tax profit of £63m became a £24m pre-tax loss this time. At an operating level, the loss was £16m (2019 H1: £71m operating profit).

Despite making a loss for the period, the cash balance and order book increased in the first half of the year. Net cash midway through 2020 reached £563m, compared to £425m a year before. The order book grew by 22% during the first half of 2020, largely thanks to HS2 contracts being signed off, to reach £17.5bn.

For the Balfour Beatty group, the most significant Covid-19 impact was at Construction Services.  In the UK, sites were closed in Scotland, and London and projects have been put on hold in the aviation sector. In the USA, sites were closed in Washington State while the hospitality sector has been impacted in Florida as well as civil infrastructure projects in a number of states. In Hong Kong, there were minimal site closures, but the business operated below optimum productivity in the first half of the year.

UK Construction recorded an underlying loss from operations of £23m (2019: £17m profit) on £986m revenue.

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During the period Balfour Beatty claimed £15m from the UK government's job retention scheme.

Group chief executive Leo Quinn said: "Since the Covid-19 crisis broke, our mission has been to safely manage through it while protecting the group's strengths.  That meant balancing the needs of all our stakeholders. We have kept sites open wherever safe to do so, prioritised supply chain payments and supported staff. Our people's response has been outstanding, working tirelessly whatever the challenge, to enable Balfour Beatty to provide the daily infrastructure relied on by the public.

"We have preserved the disciplines, expert capability and financial strength we will need as markets move back to normal and then beyond, driven by fiscal stimulus for infrastructure. In achieving this, our systems, processes and leadership have all proved the value of our investments over the last five years.

"The financial impacts of Covid-19 are unavoidable; but they will pass... We look forward with confidence to returning to profitable managed growth, and to delivering ongoing value for all our stakeholders."

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