Construction firm Balfour Beatty sees profits QUADRUPLE as cost cutting and sell-offs boost the Crossrail builder’s books
- Balfour Beatty has seen its profits quadruple from £12 million to £50 million
- Cost-cutting drive and gains from sell-offs are the principle reasons
- Shares in the company are up 2.9 per cent on Wednesday to 298.6p
Balfour Beatty has seen its profits quadruple from £12million to £50million for the six months to the end of June, it revealed today.
A cost-cutting drive and gains from selling-off some parts of the company are the principle reasons for its rapid profit growth.
The firm, which is in the midst of completing the London Crossrail project, has dubbed the raft of measures designed to improve its fortunes as the ‘Build to Last’ transformation programme.
The firm is in the midst of completing the London Crossrail project
Balfour reaped a total of £22million from disposals of assets, and its US construction arm reported a profit from operations of £17million.
Underlying profit from operations rose to £66million from £39million, while Balfour’s order book increased to from £11.4billion to £12.6billion.
The profit lift came despite revenue dipping from £3.5billion to £3.2billion in the period and the firm also took a £44million hit as a result of the collapse of Carillion.
The delay to the Aberdeen Western Peripheral Route joint venture between Balfour, Carillion and Galliford Try was the main issue.
Balfour Boss Leo Quinn said: ‘All our businesses are now either achieving industry standard margins or on track to do so in the second half.’
‘The disciplines installed under Build to Last are also enabling us to increase the order book with key infrastructure projects to translate Balfour Beatty’s expert capabilities into future profitable growth.’
‘Given the strength of our balance sheet and the board’s confidence that the group’s full-year earnings will meet expectations, we are raising the interim dividend by 33% and plan to repay the outstanding convertible bonds this year,’ Quinn added.
Shares in the company are up 2.86 per cent on Wednesday to 298.6p.
Russ Mould, investment director at AJ Bell commented: ‘You can sum up the market reaction to Balfour Beatty’s results as ‘what have you got up your sleeve for your next trick?’
‘The modest share price response to the construction company’s numbers seemed out of sync with a 69 per cent jump in underlying profit and the dividend being increased by a third.’
‘The only fly in the ointment being an increase in the cash outflow associated with the troubled Aberdeen Western Peripheral Route where doomed Carillion was a partner,’ Mould continued.
‘Chief executive Leo Quinn has a well-earned reputation as a turnaround specialist, a role he performed with aplomb at defence firm QinetiQ and printing outfit De La Rue in the past.’
‘He has done a good job of fixing Balfour’s balance sheet, bringing costs under control and boosting profitability.’