Confidence for Balfour Beatty Despite Loss

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13 August 2015 | Updated 01 January 1970

Balfour Beatty reports a £150 million half year loss but remains certain it is on the right track for recovery.

The £150 half year loss to 26 June 2015 highlighted a difficult period for the construction conglomerate which has seen it having to put aside £6 million in redundancy payments.

In a statement the company acknowledges ‘historic’ problems leading to a poor performance that is still taking time to rectify. ‘As of June 2015, 31% of the historic projects are already at practical or financial completion. By the end of 2016 the number of these projects at practical or financial completion is expected to be greater than 90%.

‘In the UK there are a handful of very complex projects where the range of potential outcomes could result in a materially positive or negative swing, the most significant of which are in major projects.’

Steps being taken by Balfour Beatty include a radical shake up in its management, the way it bids for contracts and a £100 million cost cutting programme. 400 back-office jobs have already been lost this year.

This led to a more bullish prediction from its Group CEO, Leo Quinn. “Six months in, our Build to Last transformation programme is gaining traction throughout the business. We have a new senior leadership team and an organisation re-aligned with key customer sectors. We are on course to meet our 24-month targets for £200 million cash in and £100 million cost out.”

Quinn pointed out that the Group was winning important business now, including the awards of contracts or preferred bidder status for three “landmark projects” – Bergstrom Expressway in Austin Texas, nuclear new build Hinkley Point C power station electrical package and a UK smart motorway operation.

“Inevitably the headline numbers set out the consequences of the historic issues that are now being tackled,” admitted Quinn. “However the continuing confidence of our customers in Balfour Beatty’s expertise, the positive response of our people to change, demonstrated by our excellent net cash performance and the underlying strength of our balance sheet, supported by the investments portfolio, all reinforce my conviction that over the medium term we can provide our customers, employees and shareholders with superior returns.”

Picture: Winning contracts – like the electrical package for Hinkley Point C nuclear power station – is put forward by Balfour Beatty that it is regaining confidence in the market

Article written by Mike Gannon | Published 13 August 2015

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