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Balfour Beatty today shrugged off fears it would suffer from the next government's slashing spending as it continued to defy the gloom in the construction industry.
The building and engineering giant has been reaping the rewards of increased public sector spending as the Labour Party throws cash at projects in a bid to kickstart the economy. But concerns that it would be hard hit if the Conservatives win the next general election have weighed on its shares.
“Of course we are anticipating changes in government spending, but we have a broad portfolio and many large infrastructure contracts with utility companies, as well as those with the Government,” chief executive Ian Tyler said. “Our geographic spread has also widened, with 30% of our business now coming from the US.” Balfour's forward order book stands at £12.5 billion, down slightly from the £12.8 billion recorded at the end of last year. It includes a major schools building project in Southwark, work for BAA at Heathrow and on widening the M25. It will take over management of the motorway for a 25-year period.
The company is also building the Aquatics Centre for the Olympics, which Tyler says is “progressing well — on budget and on time.”
Headline pre-tax profits jumped 14% to £108 million for the first six months of the year, slightly ahead of analysts' forecasts. This pushed the shares up 28.1p to 347.7p. Revenues rose from £4.3 billion to £5.1 billion in the period. Balfour also announced today that it has won a contract with South West Water, estimated to be worth more than £100 million, for work on treatment plants and networks. “The South West Water project is a good indication of the type of work which will be coming with the new regulatory cycle,” Tyler added.
Balfour has hiked up its interim payout to shareholders by 8% to 5.5p.
While the rest of the sector has floundered, Balfour Beatty was recently promoted to the FTSE 100.
