Balfour Beatty ‘strongly positioned’ despite orders dip amid US office project delays
By Neil Gerrard16 August 2023
UK-based civil engineering company Balfour Beatty remains ‘strongly positioned’ thanks to national plans to transform critical infrastructure in energy and transport.
That’s according to the company’s chief executive Leo Quinn who unveiled a 9% increase in revenue to £4.5 billion (US$5.7 billion) for the first half of 2023 (to 30 June).
Pre-tax profit for the period was flat at £82 million ($104.5 million), compared to £83 million ($105.8 million) in the same period a year before.
Its order book dipped slightly to £16.4 billion ($20.9 billion), down from £17.7 billion ($22.6 billion) at the half year 2022. Balfour Beatty described it as a “large, lower risk” order book.
Revenue for Balfour Beatty’s US construction arm was flat at £1.7billion ($2.2 billion), down from just under £1.8 billion ($2.3 billion) over the same period in 2022. It maintained operating profit of £21 million ($26.8 million).
It saw a strong increase in revenue at its UK construction business of £1.5 billion ($1.9 billion), up from £1.2 billion ($1.5 billion). It increased underlying profit to £30 million ($38.2 million), up from 18 million ($22.9 million), boosting its operating margin to 2%.
Gammon, headquartered in Hong Kong, also enjoyed an increase in revenue to £583 million ($742.9 million), up from £411 million ($523.7 million) in the same period a year ago. Operating profit rose to £14 million ($17.8 million) from £10 million ($12.7 million).
Overall, the construction services business generated £3.8 billion ($4.8 billion) of revenue and increased its profit margin to 1.7% in the first half of 2023, up from £3.4 billion ($4.3 billion) and 1.2% in the same period in 2022.
Chief executive Leo Quinn said that the high interest rate environment meant that there have been delays in some projects going to contract, largely in the US commercial office sector “as customers wait for economic stability”.
But he added that the order book gave “clear visibility” in the short and medium term. He added, “the group’s awarded but not contracted position remains high, having added notable airport and major road contracts in the first half”.
Quinn also pointed to governments’ commitments to driving economic growth through infrastructure investment in all three of Balfour Beatty’s core markets.
“Balfour Beatty is particularly well placed to benefit from the growing focus on infrastructure, which can mitigate climate change and improve energy security, with the group pursuing a broad range of opportunities across the energy landscape that will drive growth,” he said.