In his firm’s latest half-yearly results statement, Ian Tyler, chief exective of UK developer Balfour Beatty, says it has planned and structured its business to address “significant challenges” in many markets. He said the firm was anticipating that conditions would remain tough over the next couple of years, with recovery expected in the medium term.
The firm reported an order book up 6 percent (from the same period in 2010) at £15.5 billion (€17.6 billion; $25.4 billion) in the first six months of 2011 and revenue up 1 percent at £5.2 billion, while pre-tax profits fell 9 percent to £91 million.
The accompanying interim management report said that the negative impact of the UK government’s Comprehensive Spending Review on its UK order book meant that the business had “shifted focus to where we see opportunities”.
The statement also cited problems in the US market, where “the delay in the re-authorisation of a six-year transportation bill and the lack of bank financing in commercial markets are adversely impacting our business”. The firm says a pick-up in commercial activity in the US is not yet a discernible trend and fiscal contraction may delay recovery further.
Elsewhere, the firm sees its business “developing favourably”. It cites Australia, where the order book is being boosted by natural resource-related activity; Middle Eastern countries such as Qatar, Kuwait and Saudi Arabia, where governments are focusing on improving domestic infrastructure to support growing economies; and India, where the firm opened a new office during the reporting period. It has also further developed its presence in Canada.
Aside from focusing on these markets, the firm outlines other ways in which it has been seeking to shape its business recently. It points, for example, to the launch of an infrastructure funds management business. In December last year, the firm announced it would be raising a debut infrastructure fund headed by former European infrastructure head Rob Gregor. The fund, which has a target of between £500 million and £750 million, will invest primarily in brownfield assets in core economic infrastructure such as toll roads and airports.
Other key recent developments include the $93 million acquisition of Howard S Wright in June this year to “fill the gap” in the firm’s US construction coverage on the West Coast; and a cost efficiency programme the firm started last year involving “procurement and back office initiatives”, which has a cost reduction target of £30 million by 2013.