Balfour pegs back half-year loss to £21m

Balfour Beatty has continued to stem its losses in results for the first half of 2016, posting a pre-tax loss of £21m for the period.

The half-year loss is an improvement on a series of eye-watering losses over the past two years, including a £150m pre-tax loss for the same period last year and a £199m pre-tax loss for 2015 overall. In 2014 Balfour posted a £304m pre-tax loss.

However, the UK construction business continued to struggle, posting a £66m operating loss for the first half of 2016, although this was an improvement on a £145m operating loss the year before.

The firm was also hit by a £25m writedown prompted by a “reassessment of potential liabilities on historical health and safety breaches” following the introduction of stricter sentencing guidelines earlier this year. Under these guidelines, Balfour was fined £2.6m in May for health and safety breaches that led to a fatality on a Balfour windfarm project in Lancashire in 2010.

The group’s overall revenue declined marginally to £4.12bn, down from £4.19bn. The firm continued to pare back its UK regional construction business - which now has just 250 live jobs, down from 400 - as part of a change in strategy to focus on major, complex jobs.

Balfour said it has closed 81% of the 89 problem contracts it identified last year, with 21% closed in the first half of this year. It has set a 90% target for the end of 2016.

Balfour reinstated a dividend for shareholders as planned, of 0.9 pence per share.

Its order book ticked up to £12.4bn, up from £11bn.

Balfour’s chief executive Leo Quinn restated his target of returning the firm to “industry-standard margins” within two years, which he has previously said meant 2-3% in UK construction.

Quinn added: “We are now starting to see tangible benefits from the transformation of Balfour Beatty.

“Eighteen months into the first phase of Build to Last we have delivered our second successive half of underlying profitability and remain on track to achieve our initial targets of £200m cash in: £100m cost out. By concentrating on our selected markets, we are growing our order book within a control environment which ensures that our business decisions lead to sustainable profit and cash growth.”