TIDMBBY
RNS Number : 4565K
Balfour Beatty PLC
14 December 2018
News Release
14 December 2018
BALFOUR BEATTY TRADING UPDATE - ON COURSE TO DELIVER INDUSTRY
STANDARD MARGINS
Balfour Beatty, the international infrastructure group, provides
a trading update covering the period to 13 December 2018.
GROUP
Group performance for the year will be above previous
expectations as a result of an additional Infrastructure
Investments sale in December. The Group now forecasts that the 2018
Infrastructure Investments profit from disposals will be around
GBP65 million.
The Group continues to drive fundamental transformation under
the Build to Last programme, as evidenced by the fact that it
expects to deliver on its key Phase Two targets, with all earnings
based businesses successfully achieving industry standard margins
for the second half of 2018.
Balfour Beatty continues to strengthen its balance sheet. In
December, the Group paid down the remaining convertible bonds,
delivering a 45% reduction in the gross debt over the last 12
months. The year end net cash is expected to be broadly in line
with prior year, with 2018 average monthly net cash now forecast at
GBP185 million, ahead of the previous GBP140 million to GBP170
million guidance range.
As expected, Group revenue in the second half of 2018 will be in
line with the first half. Looking ahead, Balfour Beatty is
selectively winning work in all its chosen markets, both on the
right terms and at appropriate margins, which reflect the bidding
discipline and risk management introduced under Build to Last. The
forecast year end order book is around GBP12 billion, higher than
the 2017 year end (GBP11.4 billion).
CONSTRUCTION SERVICES
UK Construction is expected to achieve industry standard margins
in the second half of 2018 in the range of 2-3%. At the Aberdeen
Western Peripheral Route project, completion of the full route is
expected in 2018, with the construction joint venture continuing
its dialogue with Transport Scotland on a commercial agreement in
relation to associated claims.
US Construction has made progress during the year with the
business now on a positive trajectory under its new structure and
leadership. In line with prior guidance, revenue in the second half
of the year is expected to be similar to the first half. Profit
from operations is forecast to grow showing further improvement
within the industry standard target range of 1-2%.
Gammon, the Group's 50:50 Far East joint venture, is expected to
deliver a strong 2018 performance with increased profit from
operations. It is also expected to grow its order book following
the recent award of the HK$5.5 billion (c. GBP550 million) L2 Works
Contract at the Lyric Theatre Complex.
SUPPORT SERVICES
Profit from operations is expected to grow, with the margin
showing further improvement within its 3-5% industry standard
target range. Outperformance in Transportation, particularly the
road maintenance business, has been partly offset by Utilities
where the Group continues to restructure and reduce the cost base.
The Group was awarded, in October, a seven year, GBP103 million
contract by Telford and Wrekin Council for the maintenance of
highways assets.
INFRASTRUCTURE INVESTMENTS
Infrastructure Investments continues to deliver a strong
performance, whilst selectively investing in new opportunities. In
line with its strategy of optimising value through the disposal of
operational assets and following the sale of its interest in Fife
Hospital for GBP43 million in September, the Group expects to
complete a partial sale of 80% of its Edinburgh University student
accommodation project for GBP24 million. Both transactions exceed
the Directors' valuation as at 30 June 2018.
MARKETS
The Group primarily operates across three chosen geographies (UK
& Ireland, US and the Far East) and three core sectors
(Construction Services, Support Services and Infrastructure
Investments). This provides resilience as the Group is less exposed
to a downturn in a single geography or sector. Overall, the trading
environment for Balfour Beatty's chosen markets and capabilities
remains favourable.
Leo Quinn, Balfour Beatty Group Chief Executive, said: "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.
"Going forward, we aim to drive market leading performance by
using the disciplines we have instilled to translate Balfour
Beatty's expert capabilities into long term profitable growth."
The Group's full year results will be published on 13 March
2019.
ENDS
Analyst/investor enquiries:
Angus Barry
Tel. +44 (0)20 7216 6824
angus.barry@balfourbeatty.com
Media enquiries:
Louise McCulloch
Tel. +44 (0)20 7216 6846
louise.mcculloch@balfourbeatty.com
Notes to editors:
-- Balfour Beatty (www.balfourbeatty.com) is a leading
international infrastructure group. With 28,000 employees, we
provide innovative and efficient infrastructure that underpins our
daily lives, supports communities and enables economic growth. We
finance, develop, build and maintain complex infrastructure such as
transportation, power and utility systems, social and commercial
buildings.
-- Our main geographies are the UK & Ireland, US and the Far
East. Over the last 100 years we have created iconic buildings and
infrastructure all over the world including the London Olympics'
Aquatic Centre, Hong Kong's first Zero Carbon building, the
National Museum of the Marine Corps in the US and the Channel
Tunnel Rail Link.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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