Profits down at Balfour Beatty

Balfour Beatty reported a 7% year-on-year fall in underlying profit for 2012 to £309 million (€356 million) after growth in new markets failed to offset weakness in its UK and US construction business.

Revenues were down 1% compared to 2011 to £10.9 billion (€12.5 billion). The construction services division – the largest division by revenues – reported a 1% year-on-year fall to £7 billion (€8 billion), while the support services business recorded a 3% increase to £1.6 billion (€1.9 billion) and professional services reported a 1% increase to £1.7 billion (€1.9 billion).

Balfour Beatty said UK construction revenues fell 6% during 2012, and are expected to plummet a further 20% this year. In the US, construction revenues fell 1% last year but are expected to remain stable year-on-year in 2013.

The contractor also operates in Southeast Asia and the Middle East and said it continued to develop its business in key growth markets in South Africa, Australia, Canada, Brazil and India.

But it said an operational and strategic review of its mainland European rail business, which started in the fourth quarter, had concluded that maintaining a rail presence in this region was not consistent with its strategy. Therefore, Balfour Beatty said it would be selling of all of its mainland European rail businesses – a decision that has resulted in a goodwill write-down of £95 million (€109 million).

As a first step in this direction, the company has sold its Spanish rail business to its management.

Balfour Beatty chief executive Ian Tyler said the contractor’s results demonstrated resilience in the face of challenging conditions in the UK and US.

“Our growth strategy of focusing on key market sectors and geographies is making headway, and is reflected in the continuing shift in our order book towards economic infrastructure. While we still believe that construction markets in 2013 will be challenging, our actions to date and on-going strategic focus on growth markets position us well for the medium term,” Mr Tyler said.

Balfour Beatty’s order book was up 1% year-on-year at the end of 2012 to £15.3 billion (€17.6 billion).