15th Aug 2018 08:36
LONDON (Alliance News) - Balfour Beatty PLC on Wednesday reported a drop in interim revenue but increased profit, boosting its interim payout as a result.
Shares in Balfour Beatty were up 2.1% Wednesday morning at 296.36 pence each, making the stock among the best performers in the FTSE 250.
The construction company multiplied its pretax profit to GBP50 million from just GBP12 million the year before. Revenue decreased 9.4% to GBP3.84 billion from GBP4.20 billion.
The FTSE 250-listed company's underlying pretax profit increased to GBP52 million from GBP23 million. The company said a reduction in overhead costs to GBP11 million from GBP18 million led to increased profitability.
An increase in profit from infrastructure investments to GBP33 million from GBP15 million also boosted the first half outturn.
Balfour Beatty increased its order 11% to GBP12.6 billion from GBP11.4 billion.
Non-underlying items were a net credit of GBP17 million for the period compared to a GBP8 million net charge the year before. This was driven by "significant" gains in the company's main pension fund. The recognition of a deferred tax liability led to the recognition of additional UK deferred tax assets of GBP20 million.
Balfour is proposing an interim dividend increase of 33% to 1.6p per share from 1.2p last year.
Looking ahead, the company expects its second half revenue to be in line with the first half. Balfour expects to achieve its underlying profit from operations margin targets in the second half.
In UK Construction the target is 2% to 3%. In the first half, Balfour delivered a profit from operations margin of 0.5%. Excluding the Aberdeen Western Peripheral Route project, where Balfour had to pick up construction duties from Carillion, its UK construction margin was 2.1%.
Chief Executive Leo Quinn said: "All our businesses are now either achieving industry standard margins or on track to do so in the second half. The disciplines installed under Build to Last are also enabling us to increase the order book with key infrastructure projects to translate Balfour Beatty's expert capabilities into future profitable growth.
"Given the strength of our balance sheet and the board's confidence that the group's full year earnings will meet expectations, we are raising the interim dividend by 33% and plan to repay the outstanding convertible bonds this year."
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