Infrastructure group Balfour Beatty recorded a jump in profit for the first half of the year after a bumper performance in its UK construction.
The London-listed firm posted a £20m rise in pre-tax profit for the first six months of the year to £132m, up from £112m last year.
It came as the business’ UK construction arm “achieved its long-standing three per cent margin target earlier than expected”. The division netted a profit from operations margin – which indicates how much profit a business makes from its core activities for every pound of revenue it generates – of 3.6 per cent.
The company benefited from a steady stream of work announced by the UK government with major infrastructure projects including new and ongoing contracts for the Sizewell C nuclear power station, Net Zero Teesside Power and work on the HS2 railway project.
Support services, which provides outsourced maintenance, upgrade, and management services for national infrastructure, helped power the construction arm’s gains with a 35 per cent increase to profit from operations topping £46m.
This helped offset a first-half loss in US construction after the civils business, which accounts for a smaller portion of the US division’s revenue, was negatively impacted by “cost overruns and schedule delays on a single joint venture highways project in Texas.”
Balfour Beatty is in discussions with the US Department of Justice to extend a plea agreement and monitorship for its military housing business until June 2026.
Balfour Beatty backs profit targets
Infrastructure investments suffered a bruising in the period with the valuation of the firm’s investments portfolio decreasing by eight per cent to £1.2bn.
The company cited the “increased discount rates and sterling strengthening against the US dollar” for the downturn.
Still, Balfour Beatty said it expects a gain of between £30m and £40m on disposals in its infrastructure investments.
Profit from operations remained “on track” for full-year targets with the firm expecting an increase after the performance of its UK construction arm.
The business said its order book had grown to £19.5bn, from £18.4bn last year, and expects it to top £20bn for the full-year.
Leo Quinn, Balfour Beatty’s chief executive, said: “Recent UK Government announcements confirm a deep pipeline of major infrastructure projects which closely align with the Group’s unique expert capabilities and will further enhance the quality of the future order book.”