Construction heavyweight Balfour Beatty has seen first-half profits quadruple with cost-cutting and divestment gains boosting the bottom line.
The jump in earnings came despite statutory revenue dipping from £3.5 billion to £3.2bn while the group also took a £44 million hit from the collapse of infrastructure and construction rival Carillion.
The charge is linked to the delayed Aberdeen Western Peripheral Route – a joint venture between Balfour, Carillion and Galliford Try.
Pre-tax profits lifted from £12m to £50m in the six months to the end of June as the firm hailed its “Build to Last” transformation programme.
Balfour reaped £22m from disposals, and its US construction arm reported a profit from operations of £17m. It also flagged “reducing costs and raising productivity across its operations” as being behind the solid performance.
Investors are set to benefit from a 33 per cent hike in the interim dividend payment to 1.6p per share.
Chief executive 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 per cent and plan to repay the outstanding convertible bonds this year.”
Quinn is leading an overhaul of the company. Underlying profit from operations rose to £66m from £39m, while the order book increased from £11.4bn to £12.6bn.
During the first half of the year, the group’s “regional” business completed a string of projects including the Aberdeen South of the City school, which is a £47m scheme delivering a 1,350-pupil academy on behalf of Hub north Scotland and Aberdeen City Council, and the £20m Radisson Red Hotel in Glasgow.
New contract awards in the period included Dundee Sports Centre – a £27m deal to construct a new sports centre in the city.
John Moore, senior investment manager at Brewin Dolphin in Scotland, said: “These results show why it’s good to be the survivor. The company has watched many of its competitors struggle or fold in the past few years, which has reminded many of its customers why they picked it in the first place.
“It has also meant that today Balfour Beatty can look to win business not just focusing on price, but on aspects such as operational delivery and stability. In time, this position offers the potential to boost its market presence and, ultimately, profitability further.
“While it can be difficult to quickly change big businesses, there is solid evidence that the turnaround plans Leo Quinn put in place are beginning to bear fruit. There appears to be real momentum behind Balfour Beatty and its direction of travel is sound. The share price is up around a fifth in two years and, if it continues on its current journey, there could be room for further growth.”