UK construction boss says there will be 鈥渘o more nasty shocks鈥� after business posts 拢35m operating loss in first half of the year
Balfour Beatty鈥檚 UK construction boss has said the business is on track to break even this year, after posting a 拢35m loss in the first half of the year.
Speaking to 好色先生TV after Balfour Beatty , Balfour Beatty Construction Services UK chief executive Nick Pollard said the business was on track to post a strong performance in the second half of the year, after a difficult first half that saw the firm issue a 拢50m profit warning in April due to problems across a number of contracts in its regional and major projects divisions.
Balfour Beatty鈥檚 UK construction business posted an operating loss of 拢35m in the first half of the year, largely due to a 拢45m write down as a result of the problem contracts identified in April.
This contributed to a 拢41m operating loss in Balfour Beatty鈥檚 拢3.2bn turnover global construction business.
However, the UK construction business expects a much stronger performance in the second half of the year, with the business targeting an operating profit of 拢32m, which will help it to broadly break even at year end.
The performance over the second half will be impacted by a 拢5m write down on the problem contracts, which is has been carried over from the 拢50m hit identified in April, which will be offset by a 拢7m in savings from overheads, which come as part of the firm鈥檚 ongoing cost reductions.
Pollard said the firm had taken a 鈥渉it鈥� in the first half of the year, but said it was now in 鈥済ood shape鈥�.
He said: 鈥淭he business held up its hand - it said we鈥檝e not done this well, we鈥檙e taking the hit and we鈥檙e busy getting back on board and paddling hard through the second half.
鈥淚t鈥檚 a tough paddle but it鈥檚 a tough market.
鈥淭he second half improvement comes essentially from not having anymore unexpected losses - it is as crude and simple as that to tell you the truth.
鈥淭he overheads are gently falling and that was always planned 鈥� and long may it continue as we get slicker and more efficient.
鈥淭he critical part is there are no more big nasty shocks that come through to damage the business.
鈥淏ar anything that鈥檚 really unforeseen, we鈥檙e confident about our projects. There are some difficult projects that we must deliver on between now and the year end and we just need to get on and deliver and execute those properly.
The UK consturction business incurred 拢9m of restructuring costs over the first half of the year, a result of the firm鈥檚 ongoing restructure and the closure of a number of regional offices.
But Pollard said the business was now focused on improving operational delivery, rather than internal restructuring or office closures.
鈥淭he plans are in train, and I can see the business visibly strengthening and that journey will continue,鈥� he said.
Balfour Beatty half-year results - at a glance
- Balfour Beatty Group reported a pre-tax loss of 拢6m, down from a profit of 拢92m for the same period last year
- Group revenue, including shares of joint ventures, fell 3% to 拢4.97bn, of which 拢2.29bn (46%) was from the UK; 拢1.94bn from the US (39%); and 拢745m from Australia (15%)
- The global construction division reported revenue of 拢3.2bn, including share of joint ventures, down 6% on the same period last year, with an operating loss of 拢41m, largely due to a 拢35m operating loss in the UK construction business
- Revenue in the UK construction business was down 16% to 拢1.39bn. UK construction revenue is now broadly similar to US construction revenue, which rose 5% to 拢1.37bn
- The global construction services order book rose 9% to 拢8bn from the end of 2012. However the UK order book fell by 6% over the first half of the year to 拢2.7bn, considerably less than the US construction services order book, which rose 15% to 拢3.5bn
- The group incurred 拢32m in restructuring costs over the first half of the year, of which 拢17m was focused on the UK, including 拢9m on the restructure of the UK construction business. The 拢32m included 拢20m of redundancy costs. This followed 拢59m of restructuring costs over 2012, of which 拢34m was focused on the UK construction business.
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