Balfour Beatty expects to exceed expectations in 2013

UK-based contractor Balfour Beatty has claimed its group performance is in line to exceed market expectations for 2013, despite a mixed third quarter.

In an interim management statement, the company said third quarter trading had developed as expected in all of its divisions except professional services, where it reported further deterioration in its Australian business in both volume and pricing.

It said this weakness was likely to continue in the fourth quarter, reducing 2013 profits for this division by a further £10 million (€12 million).

But the contractor said the group as a whole was still expected to exceed current market expectations for 2013, due to a larger contribution from the investments division.

Balfour Beatty added that profitability in construction services had improved in the third quarter in line with its expectations.

In UK construction services, it said it expected an on-going recovery in the housing market to feed through into increased work for its regional business, but it said it would remain vigilant about cost escalation and the risk of subcontractor failures.

In its UK major projects business, Balfour Betty reported a continued absence of large infrastructure projects. It also said its UK Rail projects business remained difficult and it expected it to be “modestly loss-making” for the full year.

Meanwhile, it said its support services division was demonstrating resilience in a challenging economic environment.

The overall order book stood at £13.8 billion (€16.4 billion) at the end of the third quarter, compared with £13.9 billion (€16.5 billion) at the end of the first half.

The company said that while future prospects for its US building and UK construction businesses were improving as expected, some of its markets remained challenging.

In particular, it said it expected difficulties in professional services in Australia to continue to impact on its business in 2014.