Balfour Beatty's profits drop 37% amid tough conditions in UK construction

Construction giant Balfour Beatty said it was disappointed with its full year results which saw pre-tax profit fall 32% to £187m

Construction giant Balfour Beatty said it was disappointed with its full-year results which saw pre-tax profit fall 32% to £187m amid tough conditions in UK construction and a downturn in the Australian mining sector.

The business, which employs 850 people across Newcastle and Sunderland, said it faced challenging economic conditions in several markets but it would improve its supply chain management in 2014 to boost performance.

Revenue rose 2% to £10.1bn and underlying earnings per share dropped 37%, from 31.7p in 2012 to 20p.

The firm which constructs roads, rail, airport and port infrastructure as well social housing, water treatment facilities and hospitals, said its order book was stable at £13.4bn in 2013 compared to £13.5bn pounds in 2012.

Balfour Beatty undertakes a considerable amount of work in the North East region, with recent projects including the major electrical and mechanical refit of the iconic Eldon Square shopping centre in Newcastle, and the designing and management of a decentralized energy strategy for Newcastle and Gateshead.

And the company said it is projects like the North East contracts, combined with increased UK construction activity, which are improving its position.

Chief executive Andrew McNaughton said: “Looking ahead there are signs that some of our core markets, such as private US building and parts of the UK construction market are improving, although the long cycle nature of our business means that these will take time to feed through fully in our financial performance.

“In 2013 we faced challenging economic conditions in several markets and experienced operational issues in the UK construction business. The remedial actions taken in underperforming areas are delivering results and have positioned us better for the future.

“Continuing to improve operational delivery and supply chain management will remain a particular area of focus throughout 2014.”

The full-year dividend was maintained at 14.1p per ordinary share.

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