UK鈥檚 biggest contractor expects normal profit to return next year

The country鈥檚 biggest contractor has become the latest firm to see profits wiped out by covid-19 with Balfour Beatty sinking into the red in the first half of the year.

The firm racked up a 拢26m pre-tax loss in the six months to June from a 拢63m profit for the same period last year. The last time it went into the red was a 拢21m pre-tax loss it recorded in its 2016 half year results. Revenue in the first half of this year was up from 拢3.9bn to 拢4.1bn.

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Balfour Beatty has racked up a loss for the first time since the six months to June 2016

Chief executive Leo Quinn said he expected the second half to be stronger but warned it would be next year before figures improved to pre-covid levels.

The firm said it expected to 鈥渞eport a more normalised operating profit in 2021, broadly in line with 2019鈥�. Last year it turned in an operating profit of 拢159m.

In the six months to June, the firm said its UK construction arm made an underlying loss of 拢23m from a 拢17m profit last time with the firm laying the blame on the impact of the UK lockdown introduced by the prime minister in March.

It added: 鈥淐ovid-19 had a material impact on operations as: Scotland was effectively closed for the second quarter of 2020; London has seen limited productivity due to public transport availability; the South region has been affected by the slowdown in aviation; and lengthening site programmes triggered a reassessment of the Group鈥檚 contract end forecast positions.鈥�

Revenue in the UK fell 3% to 拢986m although it was up 11% to 拢1.9bn in the US. The firm said 96% of its sites were open at the end of June 鈥� with the exception of hospitality work in Florida and aviation schemes in the UK.

Quinn added: 鈥淪ince the covid-19 crisis broke, our mission has been to safely manage through it while protecting the Group鈥檚 strengths. We have kept sites open wherever safe to do so, prioritised supply chain payments and supported staff. The financial impacts of covid-19 are unavoidable; but they will pass.鈥�

Balfour Beatty said most of the staff it had furloughed, for which it had claimed 拢15m, had now returned to work.

It said half year net cash stood at 拢563m with average month-end net cash at 拢507m, up from 拢290m for the same period in 2019, while its group order book was up 20% to 拢17.5bn largely due to its HS2 deals being signed during the period.

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