Contractor boss hails ‘turnaround’ at firm that was ‘haemorrhaging cash’ two years ago
Balfour Beatty boss Leo Quinn has admitted the company’s survival “could have gone either way” in his first few months as chief executive.
Speaking to analysts after the firm finally returned to a slim profit for 2016, Quinn said that when he joined the business at the start of 2015 “survival was not mandatory” as “we were haemorrhaging cash”.
Balfour Beatty this morning posted £8m pre-tax profit for 2016 after two years of deep losses, when it lost £199m and £304m in 2015 and 2014 respectively.
The firm also confirmed it had hit its interim ‘Build to Last’ turnaround targets to generate £439m of additional net cash and strip £123m of cost out of the business in two years.
Quinn hailed a “dramatic turnaround” in UK construction, which edged back into the black with £2m operating profit for the second half of last year, although it still made a £64m operating loss for the year - 90% of the divison’s problem legacy jobs have now practically completed, with 70% financially complete.
Quinn stressed the UK business had “become much more selective in the last 18 months” when bidding and he was “very comfortable” with the regional division shrinking further - it is now working on just 250 jobs, down from 400 at the end of 2015.
Quinn said that Balfour - which earlier this year sold its Middle East joint venture business and in recent months has exited markets like Indonesia and Chile - would consider further disposals, although it has no current plans to sell its stake in Far East JV Gammon Construction.
He said: “We will simplify the business as far as we can… We are not stopping there, we’ll be taking more actions in the future.”
Balfour reiterated its target to hit “industry-standard margins” by the end of next year - which it said meant 2-3% in UK construction, 1-2% in US construction and 3-5% in support services.
Quinn said: “[We’ll take margins] one step at a time, we don’t want to get flashy about this.”
Quinn said he believed Balfour had better results to come: “We are only just starting to build momentum… We now have thousands [of our staff] pointing in the right direction…
“It’s not a quick fix - it’s a step-by-step transformation to build a company back to greatness.”