Balfour Beatty’s financial performance for the year ending 31 December 2018 will beat its previous forecast, the company announced this morning.
A strong trading update ahead of the end of its financial year led analysts to upgrade profit and cash targets for the firm.
Infrastructure investment sales have brought in more than expected, with profit from the disposals in 2018 forecast to be around £65m.
The company said road maintenance activities carried out by its support services division had also done better than expected.
Its construction business in the UK is expected to achieve a margin in the range of two to three per cent for the second half of 2018.
The adjusted margin for the first half of the year, excluding costs on the Aberdeen Western Peripheral Route, was 2.1 per cent.
The company said this morning that its problem AWPR project would be completed by the end of the year and added that it was in talks with Transport Scotland over the value of claims on the job.
Good performance across its various operations combined with the paying off of a £253m bond earlier this month meant the group’s average monthly net cash is forecast to be around £185m.
A previous forecast from the company put its net cash position between £140m and £170m.
Analysts upgraded their expectations for the firm off the back of the positive update. Peel Hunt raised its adjusted pre-tax profit target for 2018 from £138m to £165m, while Numis has forecast £170m.
Chief executive Leo Quinn (pictured) said the good results were thanks to the Build to Last turnaround programme he introduced three years ago.
“We are on track to deliver our Build to Last phase two goal of achieving industry standard margins in all earnings-based businesses in the second half of 2018.
“The actions we have taken since the start of 2015 have created a strong foundation for the future.
“We have consistently invested in our capabilities, systems and leadership while de-risking the business, strengthening the balance sheet and selectively building the order book.”
Analysts suggested the changes made under the turnaround plan could set the company up for continued strong performance in the coming years.
Balfour Beatty’s share price was up 4 per cent in early trading.
There was no mention in this morning’s update of a planned restructuring of its ground engineering business, which Construction News understands is being worked on.