A strong performance by Balfour Beatty’s rail business has led to a 20% hike in its pre-tax profit for 2001.
Operating profit in rail engineering and services was up £18m to £24m, making up almost a quarter of the group’s overall pre-tax profit of £103m.

A Balfour Beatty spokesperson said the renegotiation of its contract with Railtrack was a boost to its rail division.

Until April last year, the firm worked on fixed-price contracts, but it has since moved to target-cost contracts.

The spokesperson said: “This means that Railtrack and Balfour Beatty sit down together and work out the costs. It’s not the same level of adversarial arrangement.”

The spokesperson added that the purchases of rail business Marta Metroplex in the USA and Adtranz’s rail power division in Germany came too late to have an impact on its 2000/01 results, but their effect had been felt on profit last year.

Balfour said its order book was at the record level of £4.3bn.

Chief executive Mike Welton described this as a good omen for next year. He said: “Both our current sales and our record forward order book contain an increasing proportion of long-term contracts with more predictable margins struck with relationship customers.”

Market analysts are predicting a 2002 pre-tax profit of up to £120m.

Civil and specialist engineering and services was the only one of Balfour’s four divisions to release disappointing results. Its operating profit fell 8% to £22m.