好色先生TV

Balfour Beatty expects its UK construction revenue to fall by 20% this year to around 拢2.55bn as the industry heavyweight withdraws from bidding on 鈥渦neconomic鈥� jobs.

Reporting its results for the year to 31 December 2012 last week, Balfour Beatty Group posted revenue of 拢10.9bn, down 1% on the previous year, with pre-tax profit falling 70% to 拢75m.

The construction business reported revenue of 拢6.96bn, down 1%, of which 拢3.18bn was from the UK 鈥� a drop of 6% on 2011. The firm said it had incurred a one-off cost of 拢104m because of the decision to sell its European rail business, which when combined with 拢61m in restructuring costs and 拢25m in other underlying items meant that a profit of 拢141m in 2011 fell to a loss of 拢37m last year.

But the firm also said it expects its revenue for its UK construction business to fall 20% in 2013, leaving it with revenue of around 拢2.55bn, down 35% on the 拢3.89bn the firm posted in 2009 (see graph).

We don鈥檛 want to be busy fools. It鈥檚 a strategic decision to cut back on things that are not economic

Mike Peasland, Balfour Beatty

Speaking to 好色先生TV, Mike Peasland, Balfour Beatty UK Construction Services chief executive, said the projected fall in revenue was not simply the outcome of the shrinking market, but the result of a strategic decision to withdraw from bidding on low-margin work. He said the firm expected revenue to fall to a base of around 拢2.5bn in 2013, and then grow at around 5% over the three years from 2014.

He said: 鈥淲hen we looked at our budget last year, we decided we could be at 拢3.2bn [revenue in 2013] but then you look at the margins available for those kind of revenues, which would be flat compared to 2012, and there鈥檚 no way we want to be there.

鈥淲hat we鈥檙e doing is looking at what we should be focusing on. We don鈥檛 want to be busy fools. So it鈥檚 a question of detuning the revenue to actually improve the margin take. It鈥檚 a strategic decision to cut back on things that are not economic for us.

鈥淲e鈥檒l be focused on where the margins are 鈥� if we can see markets that are growing and where we have specific competencies and we can see the margins, then obviously we will go for them more.鈥�

Peasland said the business would focus less on general building work, including commercial work and social housing, and more on 鈥渞estricted markets鈥� with operating margins of 2%-3%, such as energy-from-waste projects, student accommodation, PF2 schools, and civil infrastructure.

鈥淲e don鈥檛 want to be slipping down in the range of less than 1% [operating margin], where the construction markets are,鈥� he said.