Welton told City analysts at a presentation on Monday that he had targeted Balfour Beatty’s capital projects, rail, facilities management and US businesses for growth. But with engineering conglomerate Wassall poised to make a formal bid for the group, the audience was divided over Welton’s prospects of success.
Some expected Wassall, which already owns 9% of BICC, to make its move before BICC’s 4 May extraordinary general meeting, called to consider the disposal of the bulk of the group’s cable interests. This would mean that Welton would not get the chance to implement his strategy.
A Wassall spokesman said: “We are talking to BICC shareholders but have taken no firm view on the future.”
Future for BICC bosses in doubt
Other analysts at the presentation found Welton’s proposals attractive, seeing a BICC stripped down to Balfour Beatty as a good way to win high-margin rail maintenance contracts.
They were also impressed by the strong earnings potential of Balfour’s seven roads, hospitals and power private finance initiative projects.
But there is confusion over the future of BICC’s senior management if it exits cables. Chief executive Alan Jones, whose background is in electronics, is the subject of most speculation – many analysts are hoping Welton will replace him. One said: “I suspect this group [BICC senior management] may not have had its eye on Balfour Beatty for a number of years. The body language between the people from Balfour Beatty and the rest of BICC wasn’t happy. They obviously don’t get on. Something will have to happen to all the hangers-on.
“Ultimately, what will make this company will be the people who drive it from the top, and we would be happier seeing changes.” Analysts also want to see BICC rebranded Balfour Beatty, and were surprised to find that this decision had not been made.
There is a chance that a completely new name may be adopted, or that the firm could retain the BICC brand, even when reclassified by the stock exchange as a construction company.
Welton’s strategy in detail
Speaking after the presentation, Welton would not go into details about management changes but he said: “We are obviously going to be a much smaller company, so we will have a much smaller corporate overhead.” He said he wanted to see the capital projects business grow because it could offer secure work to all areas of Balfour Beatty.
He said the planned public-private partnership to revive the London Underground was vital to Balfour Beatty and could play a crucial part in the future of the firm.
Facilities or asset management accounts for 20% of Balfour Beatty’s £2.1bn turnover, and Welton said he would like to see this reach 30%.
He is particularly optimistic about the firm’s rail prospects, pointing to Railtrack’s huge spending plans. Welton said: “We are a big international rail contractor who have been in rail forever.
“Whatever the circumstances, whether Railtrack manages to carry out all its planned spending or not, there has got to be an upturn.” Despite being hit by a series of major fines for accidents on transport-related projects, Welton insisted that Balfour was capable of stepping up its rail work.
He said: “We are the last people to be complacent about safety. It would suit competitors to say otherwise, but our safety record is as good as anyone’s.”