Balfour Beatty 14% profit rise bolstered by infrastructure

Profits at the UK engineering and construction firm have shot up 14 percent in the first half of the year thanks in part to customer demand for infrastructure-related projects.

Balfour Beatty, the listed UK engineering and construction group, saw profits leap 14 percent in the first half of the year thanks in part to demand for infrastructure related projects.

Revealing pre-tax profits of £108 million, chief executive Ian Tyler said customers were increasingly seeking an “integrated” infrastructure partner, adding he saw significant opportunities in the medium and long term.

Infrastructure investments amounted to £9 million of profit, some £1 million more than in 2008.

Balfour’s current order book includes a £1 billion maintenance and operating work project for the M25 motorway that circles London, as well as a £150 million Public-Private Partnership (PPP) project with Fife General Hospital, and a £200 million schools programme in Southwark, South London. One of its most recent wins – though not included in its first half results statement – is being selected as an alliance partner for South West Water in a 5-year capital programme to replace some assets and supply infrastructure work on treatment plants and networks in Devon and Cornwall.

The firm has also been winning deals in Asia and the US, the latter accounting for 30 percent of its business.

According to Balfour, there is currently “intense” bidding activity particularly for educational-related projects – something that is likely to push up bid levels. Balfour thinks it can win more business by providing early planning work, design and management functions, as well as contracting and engineering services.

However, there was one blot on the copy book with a small loss from its investments in regional airports in Exeter and Blackpool, which were blamed on fewer passengers.

The upbeat assessment of the market helped shares in Balfour up 7.4 percent to 343.3 p shortly after publication of results.