The average value of Balfour Beatty鈥檚 UK construction new contract awards in 2012 was just 拢10m. By contracts, Laing O鈥橰ourke鈥檚 average value was 拢150m and for Sir Robert McAlpine it was 拢114m. However, Balfour Beatty won more than 100 contracts in 2012, compared to only about a dozen for Laing O鈥橰ourke and McAlpine.
Total revenue for Balfour Beatty in 2012, worldwide, was down 1% to 拢10.9bn. Excluding the impact of foreign exchange and acquisitions, the like-for-like decrease was 4%.
Pre-tax profit of 拢74m, down from 拢243m in 2011, includes a one-off hit of 拢104m incurred from getting of the rail business in mainland Europe. Balfour Beatty has decided to quit rail in Mainland Europe because it is its only activity in this region.
Balfour Beatty鈥檚 cost efficiency programme, started in 2010, achieved 拢36m of savings in 2012 at a non-underlying cost of 拢61m, the company said. The UK construction business has been reorganised into three business streams and 75 offices are being cut back to just 37. The plan is in line to hit the target of 拢80m annual savings by 2015.
Chief executive Ian Tyler听said of Balfour Beatty鈥檚 2012 performance: 鈥淲e have delivered a set of results for the full year that demonstrated resilience in underlying earnings and a stable order book in the face of continuing challenging conditions in the construction markets in the UK and USA. We have also made good progress in the implementation of measures designed to increase organisational efficiency and are on track to realise the anticipated benefits. Furthermore, our growth strategy of focusing on key market sectors and geographies is making headway, and is reflected in the continuing shift in our order book towards economic infrastructure.
鈥淲hile we still believe that construction markets in 2013 will be challenging, our actions to date and ongoing strategic focus on growth markets position us well for the medium term.鈥�
Group results
|
(拢m unless otherwise specified) |
2012 |
2011 |
Change (%) |
|
Revenue |
10,896 |
11,035 |
-1 |
|
Group revenue |
9,483 |
9,494 |
-- |
|
Profit from continuing operations |
听 | 听 | 听 |
|
-听 underlying |
309 |
331 |
-7 |
|
-听 reported |
74 |
243 |
-70 |
|
Pre-tax profit from continuing operations |
听 | 听 | 听 |
|
-听 underlying |
310 |
334 |
-7 |
|
-听 reported |
75 |
246 |
-70 |
|
Earnings per share from continuing operations |
听 | 听 | 听 |
|
-听 underlying |
35.0p |
35.5p |
-1 |
|
-听 basic |
6.5p |
26.7p |
-76 |
|
Dividends per share |
14.1p |
13.8p |
+2 |
|
Financing |
听 | 听 | 听 |
|
-听 net cash before PPP subsidiaries (non-recourse) |
35 |
340 |
听 |
|
-听 net borrowings of PPP subsidiaries (non-recourse) |
(368) |
(332) |
听 |
Construction Services
The construction order book finished the year at 拢8.0bn, down 6% from a year ago. The most significant decrease was in the US, down 17% from the end of 2011. In the UK the order book was up 1%, with a significant shift from major works to smaller contracts. The order book for less profitable regional building and civils business was up 15% from the end of 2011 while the order book for more profitable major construction work dropped by 24%. UK revenue was down by 6% in the year, with most of the decline occurring in the second half. Based on the order book profile, construction revenue is expected to fall 20% in the UK this year, Balfour Beatty said.
Mr Tyler attributed the reduction in profitability of the UK construction business not just to lower margins in the regional business but also to "delivery margins being impacted by rising subcontractor defaults".
He added: 鈥淲e continue to believe that 2013 will be a difficult year for Construction Services notwithstanding the benefits of the cost reductions we are achieving.鈥�
|
Construction Services |
2012 |
2011 |
Actual听 growth (%) |
Constant currency growth (%) |
|
Order book (拢bn) |
8.0 |
8.5 |
-6 |
-4 |
|
Revenue (拢尘) |
6,959 |
7,050 |
-1 |
-1 |
|
Profit from operations (拢尘) |
122 |
169 |
-28 |
-28 |
|
Margin (%) |
1.8 |
2.4 |
听 | 听 |
Professional Services
The Professional Services division improved its order book by 5% despite uncertainty in the USA where it generates half of its revenue. Strong growth in the rest of the world, particularly Qatar and Canada, contributed to revenue. Performance was mixed in Australia, with a revenue decline in transportation offset partly by growth in mining. The UK remains a difficult market, but recent restructuring has improved financial performance.
|
Professional services |
2012 |
2011 |
Actual听 growth (%) |
Constant currency growth (%) |
|
Order book (拢bn) |
1.6 |
1.6 |
+5 |
+9 |
|
Revenue (拢尘) |
1,668 |
1,645 |
+1 |
+1 |
|
Profit from operations (拢尘) |
98 |
87 |
+13 |
+12 |
|
Margin (%) |
5.9 |
5.3 |
听 | 听 |
Support Services
Support Services order book improved by 12% from the end of 2011 to 拢5.7bn. Order intake was particularly strong in power, which ended the year with its order book up 65% from the start of the year. Revenue was up 3% at 拢1.63bn, with a 24% increase in the power sector.
A reduction in profits to 拢52m (2011: 拢67m) was attributed to start-up costs on new contracts and 拢10m of one-off cost increases on a small number of power sector contracts in Australia and New Zealand in the first half of the year. Second half profitability was in line with that in the same period in 2011.
|
Support Services |
2012 |
2011 |
Actual听 growth (%) |
Constant currency growth (%) |
|
Order book (拢bn) |
5.7 |
5.1 |
+12 |
+12 |
|
Revenue1 (拢尘) |
1,633 |
1,584 |
+3 |
+3 |
|
Profit from operations2 (拢尘) |
52 |
67 |
-22 |
-22 |
|
Margin2 (%) |
3.2 |
4.2 |
听 | 听 |
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