Profit slips at Balfour Beatty as firm faces £83m building safety bill

Balfour Beatty said an £83m hit to cover the cost of building safety provisions helped send pre-tax profit at the group into reverse last year.

Turnover was 4% to top the £10bn mark but pre-tax profit down 12% to £214m. Underlying profit was up 9% to £248m.

The firm is having to fork out £83m to cover its obligations under the Building Safety Act (BSA).

It said: “Since the introduction of the BSA, the Group has conducted investigations and due diligence on claims received to establish whether an obligation exists and if costs can be reliably estimated.

“The Group has recognised a provision where a probable obligation has been established and cost associated with the claim can be reliably estimated.” It added: “The provision does not include potential recoveries from third parties.”

The country’s biggest contractor also said it was facing a £52m charge for a US road scheme it completed in 2012.

The North Texas Tollway Authority (NTTA) served it and joint venture partner Fluor with a claim in 2022 alleging breaches of contract and negligence. Damages of $112m (£87m) were awarded in favour of the NTTA last November.

The firm said: “The Group believes that the jury verdict does not accurately reflect the evidence at trial and is evaluating all options to set aside or reduce the verdict and, if necessary, appeal any final judgement.”

It said it would recover £40m through insurance and added that it was trying to recover money from its design subcontractors. It said the £52m figure “represents the Group’s best estimate of the probable damages to be awarded”.

But the firm added that it had booked a credit of £64m which included a £43m insurance recovery on a scheme in London, completed between 2013 and 2016, where work to replace stone panels on the façade of the development is set to wrap up by the summer.

Although not named, Balfour Beatty has been carrying out repairs on a high-rise resi job called Providence Tower in east London.

The firm’s biggest business remains its US operation with revenue flat at £3.6bn but profit was down 22% to £40m. UK construction, whose jobs include HS2 and Hinkley Point C, also saw revenue flat at £3bn but profit was up 17% to £81m.

The firm’s order book was up 12% to £18.4bn.