Weak construction weighs on Balfour Beatty

Balfour Beatty said its construction revenues declined 11% year-on-year in the first quarter, driven mainly by a 23% fall in UK construction.

However, it said construction revenues in the US were stable, with a strong order book reflecting pockets of opportunity in regions such as the Northwest, Texas and Florida and in segments such as commercial buildings, data centres and leisure facilities.

“As we progress through the year, our business is expected to benefit from the cost efficiency programmes we have in place, a recovery in operational performance in UK construction and the on-going implementation of strategic initiatives,” the contractor said.

Based on these dynamics and the first half weighting of the profit shortfall in UK construction, Balfour Beatty said it expected profits to be more heavily skewed to the second half than in previous years.

The interim statement follows a trading update at the end of April, in which the contractor said a warned that a deteriorating outlook from its UK construction business will see profit from this unit fall 20% in 2013.

The company said 2013 profit from its UK construction business was expected to be £50 million (€59 million) lower than management had expected.

The company’s order book stood at £16 billion (€19 billion) at the end of March, represents a 5% increase since the year-end.