好色先生TV

Balfour Beatty expects its UK construction business to return to 鈥済entle鈥� growth this year after an 鈥渁wful鈥� 2013, when profit in the business fell 拢60m lower than expectations.

Speaking to 好色先生TV after Balfour Beatty published its results for the year to 31 December 2013, Nick Pollard, chief executive of Balfour Beatty Construction Services UK, described 2013 as a 鈥渄isappointing鈥� year, but insisted the business was on track to return to 鈥済entle鈥� growth in 2014 and improved profitability.

In its results, Balfour Beatty鈥檚 global construction business posted revenue of 拢6.6bn, marginally up on 拢6.5bn last year 鈥� with revenue in the US (拢2.9bn) overtaking revenue in the UK (拢2.8bn) for the first time (see chart, right).

However, after taking into account 拢55m in restructuring and finance costs, the construction business posted an operating loss of 拢34m, down from an operating profit of 拢58m in 2012.

Before accounting for those costs, the firm posted an underlying operating profit of 拢21m, down 82% on 拢119m the previous year.

Last year we worked through the tail end of a number of jobs that were clearly bid too cheaply 鈥� at the wrong price

Nick Pollard

Balfour Beatty said the decline was 鈥渕ostly due to the performance of the UK business鈥�, where revenue tumbled 12% to 拢2.8bn, and profit fell 拢60m short of expectations 鈥� 拢10m more than the firm indicated in a profit warning last April.

Pollard said 鈥渁ll of鈥� the additional 拢10m shortfall was because of underperformance in the firm鈥檚 M&E business Balfour Beatty Engineering Services, where 鈥渨orkloads are slower to pick up and the market is remaining incredibly tight鈥�. He said he expected to see a pick-up in work in the M&E business this year.

He said the firm鈥檚 regional construction business - where the vast majority of the 拢50m profit shortfall announced last year was located - had begun to 鈥渢urn around鈥� on the back of the recovery in the housing market, with the firm picking up housing-related work, such as roads, utilities, sewers and small-scale retail schemes.

However, Pollard said the firm鈥檚 major projects business was taking longer to recover due to a lack of large-scale infrastructure schemes coming to market.

Last year Balfour Beatty predicted revenue in the UK construction business would fall 20% to 拢2.6bn in 2013 鈥� down from 拢3.2bn in 2012 鈥� with revenue then beginning to grow again by around 5% from 2014.

Pollard said the fact that revenue declined by 12% to 拢2.8bn, rather than the forecast 20%, showed the business had bid for too many jobs during the downturn.

He said: 鈥淢aybe it should have gone down [20%] and maybe the business shouldn鈥檛 have bid as hard or as tight or as low on some of the work that it did in the past.

鈥淟ast year we worked through the tail end of a number of jobs that were clearly bid too cheaply - at the wrong price.

鈥淭hat has probably helped keep revenue up. Maybe the 20% forecast a year ago was where the business should have been.鈥�

Pollard said he did expect revenue growth to return this year, but said it would be 鈥渧ery gentle鈥� and that he expected only a 鈥渟light鈥� improvement in margins.

鈥淲e鈥檙e righted and are on a good path. The first half was when we saw an awful performance. The performance in the second half of the year was significantly better than the first half.

鈥淲e鈥檝e had a tough year, everybody knew it was a tough year, we鈥檝e diagnosed what the problems were and we鈥檝e been busy curing them.鈥�