Balfour Beatty H1 profit underpinned by UK construction arm

Infrastructure group Balfour Beatty backed its full-year expectations on Wednesday as it posted a jump in first-half profit, underpinned by its UK construction business.

In the half year ended 27 June, pre-tax profit rose to £132m from £112m in the same period a year ago, on revenue of £5.2bn, up from £4.7bn.

Balfour said the UK construction arm delivered profitable underlying growth to achieve its 3% margin target one year ahead of expectations. The division achieved a 3.6% PFO (profit from operations) margin.

The US construction business posted a first-half loss, however, with a strong Buildings performance offset by cost overruns at one Civils project.

Balfour said the order book grew 6% to £19.5bn, with growth in each segment, and "continues to give clear visibility in the short and medium term".

Chief executive Leo Quinn said: "Our continuing strong cash generation is underpinned by a growing order book with improved margins and lower risk contract forms. This provides the board with increasing confidence in significant future cash generation that supports our ongoing dividends and share buybacks. This is demonstrated by the momentum in our key growth areas in the first half.

"Support Services has delivered a 35% profit uplift driven by the power transmission business, UK Construction has achieved its long-standing 3% margin target earlier than expected and, in US Construction, Buildings reported strong revenue growth from its strategy of focused expansion.

"Furthermore, recent UK Government announcements confirm a deep pipeline of major infrastructure projects which closely align with the group's unique expert capabilities and will further enhance the quality of the future order book."