Balfour Beatty on track for 2012

published 10 July 2012

Balfour Beatty said it was confident it would perform in line with expectations this year, as it updated the market ahead of its six month results.

However, the statement painted a mixed picture as economic headwinds, cost pressures and government cutbacks impact the company.

The construction group said there had been no material change in trading conditions since its first quarter statement in May and its order book had remained stable at £15bn.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

This gave the firm good visibility for the remainder of the year, it said, adding that overall group trading performance continued to be consistent with expectations.

Balfour said its PPP asset disposal programme had netted £10m more than originally expected from planned disposals for the year.

But it said this gain would be offset in the group's overall result by cost increases in a small number of contracts in the utilities sector.

As a result of this shortfall, it warned that support services profitability would be further skewed to the second half of the year.

In its construction services arm the company said a weak performance in the rail division, mainly in Europe, would be largely offset by strong performance in its joint venture businesses.

"Our order book remains strong despite the continuing uncertainty around governments' investment decisions and the absence of larger, more complex projects," the firm said.

"We continue to take action to mitigate the impact these market conditions have on our business while positioning the group to take advantage of the positive medium and long-term prospects for infrastructure markets."