Balfour recovery plan ahead of schedule
Balfour Beatty’s Build to Last programme is well ahead of schedule with the company reporting an underlying pretax profit of £60m for 2016, up from a £123m loss a year earlier.
In the group’s latest results for the year to December 2016 it reported underlying group revenue rising 4% to £8.5bn, while the firm’s order book increased 15% to £12.7bn.
Chief executive Leo Quinn said that his Build to Last turnaround plan was running ahead of schedule after the first two years, with £439m cash in and £123m cost out. The target had been £200m cash in and to reduce annual costs by £100m.
In its UK construction arm, Balfour narrowed its annual loss to £64m, compared with a loss of £187m the previous year, while revenue slid 6% to £1.89bn.
In the US, underlying operating profit in 2016 was £33m, compared with a loss of £22m the previous year. Underlying revenue rose 11% to £3.4bn.
The group is continuing to deal with the fall-out from problem legacy contracts.
Looking ahead, Quinn said phase two of the turnaround programme will see a return to “industry-standard” margins and they were targeting 3%.
Quinn said: “The transformation of Balfour Beatty is well underway. We have returned the group to profit and significantly exceeded our Build to Last Phase One targets. We have upgraded leadership, processes and controls while continuing to invest in the group’s unique strengths. As a result, we have improved not just the quality of our order book but our customer satisfaction scores.
“Having simplified the group, we are focused on our core markets in the UK and US, where governments are committed to large scale expenditure on infrastructure.
“All this positions us for future profitable growth. During the next two-year phase of Build to Last, we expect to achieve industry standard margins and over the medium term, industry-leading performance.”