Balfour profits up but group expects tough UK market

Construction giant Balfour Beatty hailed a surge in profits yesterday but warned it does not expect a meaningful recovery in its UK markets this year.

Balfour, which carries out upgrades on roads and railway lines and builds hospitals and schools, said it has a record order book of £15.2bn, up 8 per cent on a year ago, after a series of contract wins in the UK and abroad.

Underlying profits rose 21 per cent to £338m in 2010 following the integration of its recently acquired American project manager Parsons Brinckerhoff.

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Revenues increased by 2 per cent to £10.5bn as its acquisitions and growth overseas offset weak construction markets in the UK and the US.

The group expects its UK markets, which account for about half of its revenues, to remain difficult this year.

There was a series of contract wins for its construction services division in the year, including work on Heathrow’s Terminal 2B, Crossrail and Building Schools for the Future projects, as it recovered from earlier uncertainty surrounding the Government’s comprehensive spending review.

Its infrastructure investments division had an excellent year in the UK after winning four schools projects, including programmes at Ealing and Oldham, and is waiting to hear back on a number of other bids.

Balfour expects its support services division, which won a £250m contract from North East Lincolnshire Council to provide highways transportation and planning, to benefit as more local authorities outsource work to the private sector.

Although its professional services division, which helps design and manage construction projects, performed well overseas its revenues declined in the UK.

The firm’s recent projects include the widening of the M25, improvement works on the A3 near Hindhead in Surrey and the M74 near Glasgow, as well as building the aquatic centre at the London 2012 Olympic Park.

The group posted a 20 per cent rise in underlying pre-tax profits to £319m, which exceeded analysts’ consensus forecasts of £317m.