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Balfour Beatty profits up despite tough conditions

Balfour Beatty has reported a 32 per cent rise in pre-tax profit this year as declines in underlying revenue were offset by a strong performance from newly acquired Parsons Brinckerhoff.

Pre-tax profit for the first half of this year rose to £141 million, compared to £107m last year, boosted by a £35m contribution from the US project management firm which Balfour acquired last October.

Despite strong results, Balfour Beatty said it plans to make savings of around £30m a year through cost efficiency and procurement savings. The scheme will include a support centre which would be responsible for ‘managing and delivering transactional accounting services and payroll processes’ across the UK business.

Balfour Beatty chief executive Ian Tyler said: “We have created a group which is uniquely well-placed in major markets to benefit from the long-term, global growth in investment in infrastructure.  While the timing of short-term movements in individual markets is difficult to predict, we now have significant capabilities across the infrastructure lifecycle and operate in diverse markets and geographies, which gives us strength and resilience.”

The firm also today announced it had secured a £230m PPP street lighting contract for Coventry City Council, and a £460 million contract to deliver the second phase of a satellite building to support Heathrow Airport’s new Terminal 2 for BAA.

The lighting contract will involve the design, installation and maintenance of33,000 street lights and 6,000 signs and bollards, during a five-year capital period, and the ongoing maintenance of all existing and new equipment.

Balfour Beatty delivered the first phase of Terminal 2 in November 2009. The second phase will include a facility with 10 new aircraft gates in the area to the east of Terminal 1.  It will incorporate an underground link from the satellite to the main building of the new Terminal 2 development and a large baggage facility in the basement which will be subject to fit-out in the future. 

Construction work is due to begin in October.