Firm says it has reduced number of problem contracts on its books to just a handful
The firm said it is now reaching the targets it set itself under chief executive Leo Quinn’s revamp of the business called Build to Last which he began after joining in 2015.
Quinn (pictured) arrived at a business that was haemorrhaging money and had close to 100 problem contracts on its books but which the firm says now only five remain.
Margins at its UK, US and support services businesses were all within Quinn’s target ranges in the second half of the year with UK construction turning in an underlying margin of 2.4% during the last six months of 2018.
Its UK construction arm saw revenue slip 5% to £1.9bn with underlying profit up £12m to £28m while margins for the year doubled to 1.8%.
The firm, whose portfolio of contracts in the UK includes work on the HS2 and Crossrail railways along with the Hinkley Point nuclear power station, said it lost £29m on the Aberdeen bypass it has been building with Galliford Try and which was finally handed over to Transport Scotland last month – more than a year late.
Balfour said £10m of the charge was attributed to fulfilling the obligations of Carillion – which was also part of the joint venture building the road – after it went bust last year.
Its largest business is in the US where revenue fell 8% to £3.3bn but underlying profit was up £3m to £44m with underlying margins edging up from 1.1% to 1.3% for the year – although they hit 1.5% in the second half.
The firm’s clients in the US include tech giant Microsoft and media firm Disney while Balfour Beatty is carrying out work at Los Angeles airport and a new 43-storey residential tower in San Francisco called 500 Folsom.
Balfour Beatty said the Build to Last programme had racked up £11m of restructuring costs while it was having to set aside a further £12m for the disposal of Heery International, its US project management and architecture arm, which it sold to CBRE for £42m in October 2017.
But the firm said it was recouping £13m it had put aside to settle health and safety claims.
The firm improved its cash position, boosting average net cash last year from £42m to £194m.
Group revenue at the business fell 5% to £7.8bn while underlying pre-tax profit was up close to 10% to £181m. Statutory pre-tax profit edged up 5% to £123m.