Balfour Beatty has spent £17m on restructuring its UK business in the first half of 2013, it announced today, as pre-tax profit shrank by 70 per cent.
The UK’s biggest contractor announced a £50m profit warning in April and, despite order book growth of 7 per cent on H1 2012, has seen revenue decline and experienced a 70 per cent profit hit.
Group revenue was £4.32bn, down from £4.4bn (excluding joint ventures) – a reduction of 3 per cent on H1 2012.
Underlying pre-tax profit was down 70 per cent at £45m (H1 2012: £150m).
Construction Services saw a loss of £41m, compared with a profit of £59m in H1 2012.
Balfour Beatty announced the sale of its FM division last week, for £190m.
The firm put the profit hit down to the decline in Construction Services and Professional Services, but insisted that its action plans were “delivering the intended results in the UK construction business”.
The contractor announced plans to close three offices and appointed Nick Pollard as its new UK chief executive in June.
Construction News revealed last month that a fourth office in Northampton would stay open after consultation with staff.
It said: “In recent months, we have focused our attention on operational delivery in the UK construction business and the impact of the further worsening in the environment for our professional services business in Australia.
“We are pleased to report that, while it is early days, our action plans are delivering the intended results.
“In the UK construction business, we have strengthened our management with the engagement of new leadership, closed some regional delivery units with weak future prospects and aligned the organisation more closely with customers.”
The firm’s Construction Services arm reported an underlying loss from operations of £41m.
In its update, the contractor said that its “regional order book is stable with improving margins” as mitigating measures are implemented.
The firm said: “In the major projects business, our work winning has been impacted by continuing delays in the power market, exacerbated by operational issues in building. Divisional management are working towards deliverable targets.”
Balfour Beatty chief executive Andrew McNaughton said: “In the longer term, our goal is to capitalise on the growth in global infrastructure from an international footprint of local businesses.
“The benefits from this focus combined with the impending recovery in some of our mature markets position us well for the future.”