Losses have narrowed at Balfour Beatty as the infrastructure giant continues to make progress with its turnaround plan under chief executive Leo Quinn.
Pre-tax losses for the first half ending 1 July in at £21 million, down from £150m in the same period last year. Balfour has been held back by onerous construction contracts that delivered poor returns.
Quinn, who has been cutting costs under his “build to last” turnaround programme, said: “We are now starting to see tangible benefits from the transformation of Balfour Beatty. Eighteen months into the first phase of Build To Last we have delivered our second successive half of underlying profitability and remain on track to achieve our initial targets of £200m cash in, £100m cost out.
“By concentrating on our selected markets, we are growing our order book within a control environment which ensures that our business decisions lead to sustainable profit and cash growth.”
Revenues were broadly flat at £4.1 billion and the firm reinstated its dividend – to be paid on 5 December – at 0.9p a share.
Balfour yesterday announced that it has secured its biggest US contract to date after signing a £524m deal to electrify 52 miles of California’s railway. It will lay the infrastructure for new high-speed trains along the Caltrain rail corridor, which runs across 17 cities between San Francisco and San Jose.
Balfour will build the overhead power systems and substations to support the new high-speed carriages for the network, which currently has 92 trains and shuttles 65,000 commuters daily. The deal is being hailed for opening the door to the US market just as the UK industry starts to falter.
In the UK, Balfour said its investment business continued to make “substantial” deals during the first half, including raising development finance with Investec Bank for the Kennedy Street student accommodation project in Glasgow. Targeted for completion in July 2017, the scheme will feature 536 bedrooms, split across two blocks.
The group is also working on the new £41m Portobello High School, the largest in Edinburgh, which is due to open in October.