In its interim results, Balfour Beatty recorded stable growth in its underlying revenue for H1, rising from £4,072m in the first half of 2014 to £4,085m in the first half of 2015. However, due to issues with old contracts and costs associated with restructuring and reorganisation, total revenue actually fell during the first half from £4,225m to £4,191m.
The construction company’s total loss of £150m compares to a £43m loss recorded in the same period last year.
First half profits were reduced by approximately £152m due to ‘historic issues’ in its UK, US and Middle East construction profits. Balfour Beatty said it expects somwhere in the region of 90% of historic UK problem contracts to be at practical or financial completion by end of 2016.
Leo Quinn, group chief executive, said: “Inevitably the headline numbers set out the consequences of the historic issues that are now being tackled. However the continuing confidence of our customers in Balfour Beatty’s expertise, the positive response of our people to change, demonstrated by our excellent net cash performance, and the underlying strength of our balance sheet, supported by the Investments portfolio, all reinforce my conviction that over the medium term we can provide our customers, employees and shareholders with superior returns.”
Earlier this year, the group implemented the Build to Last programme, which intends to restore Balfour Beatty to “industry standard performance and profitable growth”.
Balfour Beatty said the programme is beginning to have an impact on business operations and actions to achieve £100m of cost cutting by the end of 2016 were in progress. It said the programme is expected to deliver annual savings of £25m by 2016.
Quinn added: “Six months in, our Build to Last transformation programme is gaining traction throughout the business. We have a new senior leadership team and an organisation re-aligned with key customer sectors. We are on course to meet our 24-month targets for £200m cash in and £100m cost out.”
