Balfour profits rise despite drop in construction orders

BALFOUR Beatty continued to realign its business away from construction in the first half of the year as government cutbacks south of the Border squeezed the sector.

The group’s chief executive for UK construction, Mike Peasland, said that the building market in Scotland had been more robust than the English regions, but globally it was the professional services division which had “picked up the slack”.

The operation has a wider geographical spread and is less dependent than construction on economic cycles.

Balfour grew group revenues and profits by 7 per cent, to £4.8 billion and £95 million respectively in the first six months of 2012, results yesterday revealed.

But its construction arm, which has worked on high-profile projects including the Olympics Aquatics Centre in London, saw a 9 per cent decline in its order book to £8.3bn as public projects dried up and private sector work failed to take off as expected. Peasland said: “While construction has suffered to an extent through the government austerity programme, our professional services business has picked up the slack.”

He now expects to see few signs of improvement before 2014. But he noted that London still had a healthy commercial market, while activity in Scotland was ahead of other areas thanks to the Scottish Government’s infrastructure spending.

Student halls of residence is one area that is still providing building work under private finance initiative (PFI) deals, Peasland added, but a hoped for boom in energy infrastructure has yet to materialise.

Balfour Beatty has been selling off some of the PFI assets it had built up when the system was used under the previous government to fund a wide range of public building projects. It made a £52m gain on the disposals in the six months to 29 June.