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Balfour Beatty announces interim results

Balfour Beatty has posted resilient interim results despite facing cuts in public spending in its UK and US construction markets.
The company has reported a growing order book and an increase in underlying pre-tax profits from continuing operations to £138 million for the first half of the year, up from £133 million previously.

The company warned that reduced UK and US construction activity will impact its performance and hold back revenue growth. A shortage of specialist projects is also likely to restrain margins.

The firm has recently delivered the A3 Hindhead dual carriageway and the Olympics Aquatics Centre and is on programme to complete Blackfriars Bridge Station and the widening of the M25. Meanwhile, it says the commercial markets in London are showing signs of recovery, although it is too early to call it a trend.

The company has grown construction revenue in Hong Kong although Middle Eastern revenue remains at a low level. Its rail business put in a resilient performance.

Elsewhere, the group's US construction markets are being affected by a lack of federal and private funding although a significant intake in orders last year puts it in good stead. It has recently completed the acquisition of Howard S. Wright which expands its reach in northern California and the growing Pacific Northwest market.

Meanwhile, the group's diversity has enabled it to shift resources to more promising areas. The group has opened an office in India and is building on its presence in Australia and Canada. It has become preferred bidder on its second OFTO asset and is taking advantage of the substantial UK power market. The group is also finding the Australian market is buoyant, helped by the mining sector and it is pursuing opportunities in Qatar, Kuwait and Saudi Arabia.

Balfour Beatty's support services order book has risen 7 per cent to £4.8bn helped by growth in building and local authorities and boosted by the renewal of a facilities management contract for the Royal Mail. Profits from support services were unchanged at £25m.

Profits from the group's professional services arm fell by 22 per cent to £38m, although the order book is stable at £1.6 billion, helped by growth in Australasia. In addition profits from infrastructure investments rose to £22m from £6m previously and the company has been appointed preferred bidder on the £317m Greater Gabbard Offshore transmission asset.

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17 August 2011

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