14th Jan 2008 07:01
Balfour Beatty PLC14 January 2008 14 January 2008 BALFOUR BEATTY PLC TRADING UPDATE -------------- Balfour Beatty plc, the international engineering, construction, services andinvestment group, is providing this update on trading for the year ended31 December 2007 in advance of its preliminary results announcement on 5 March2008. Trading in the second half of the year in all parts of the Group has been strongand there have also been good settlements on some completed projects. TheGroup's cash position remains strong. It is anticipated that 2007 results will be at the top end of currentexpectations. Balfour Beatty's leading positions in its principal markets of healthcare,education, road and rail transport, utility systems, privately financed projectsand social housing were further strengthened during the year and we havecontinued to grow our portfolio of high quality, long-term business. Major, new,long-term contracts were secured with British Energy, National Grid, the USDepartment of Defense and the US Federal Bureau of Prisons, amongst others. At the year end, our order book stood at approximately £11 billion, 20% ahead ofthe level 12 months ago. In addition, almost £2 billion more work is atpreferred bidder stage. The earnings potential of the Group was further enhanced during the year throughacquisitions in US and UK building, facilities management, professional andtechnical services and international rail, and through investments in ExeterInternational Airport and five new UK PPP concessions. SECTORS Building Performance in the building sector moved ahead very strongly during the year.Progress in UK building construction has been good in all markets and ourregional coverage was further extended through the acquisition, in August, ofCowlin Construction, which is a major player in the south and south west ofEngland and Wales. Our mechanical and electrical engineering businesses continued to perform well.In UK facilities management, profitable growth has continued, enhanced fromOctober by the acquisition of Covion, the fast-growing integrated technicalservices company. In the United States, the performance of our professional and technical servicesbusiness was again good and its expansion continued through selectiveacquisition. Balfour Beatty Construction US, acquired as Centex Construction atthe end of March, has given us a very strong presence in regional US buildingmarkets and has performed above our expectations at the time of acquisition. Engineering Progress in the engineering sector has also been very strong in 2007. The UKcivil engineering businesses continued to deliver good results, augmented by afull year's performance from Birse, acquired in 2006. Our power, water and gasutility businesses made strong progress during the year. In the latter part ofthe year, they were merged to form Balfour Beatty Utility Solutions, with a new,customer-focussed structure designed to better meet utility customerrequirements. Our road management and maintenance business also continued toperform well in a changing market. Balfour Beatty Management continued to grow strongly during the year. It nowforms an integral part of the majority of the Group's major UK bids and acquiredtwo specialist UK consultancies during the year. Our engineering businesses outside the UK also made strong progress. In the US,Balfour Beatty Infrastructure Inc returned to profit, with all its constituentparts making good progress, and is well placed to grow from a stable base. InDubai, profits improved in a strong market and we secured a number of major newbuilding, civil, mechanical and electrical engineering contracts. Performance inGammon also improved significantly, with particularly good progress being madein Singapore and Macao. Last week, Gammon was awarded the £320 million projectto build the new government complex in Hong Kong. Rail We continued to make good progress in rail. Our UK rail projects, renewals,track systems and plant businesses performed well in a largely flat market. Wewere pleased to be confirmed as one of Network Rail's four long-term renewalscontractors and, despite Metronet's entry into administration, our work as LUL'srail renewals and maintenance contractor is continuing. Outside the UK, our high speed rail electrification and power supply businesscontinued to perform well and a number of small acquisitions and joint ventureagreements have extended the business's capabilities, particularly in signallingtechnology and in the Nordic Region, where we now lead the market. In the US,our performance improved and some further reorganisation has put the company ina good position for profitable growth. Investments 2007 was a year of good progress in the investments sector, although, aspreviously stated, results will be impacted by the absence of profits from theMetronet PPP contract. Preferred bidder status was achieved for the Building Schools for the Futurecontract in Islington and the Carlisle Northern Development Route. Preferredbidder positions on PPP hospital projects at Pontefract and Pinderfields,Tameside and Salford, a major schools project at Knowsley on Merseyside and theDerby street lighting project were converted to contract. Barking Power again performed strongly in 2007. The acquisition of ExeterAirport was completed early in the year, as the Group seeks to build a UK assetinvestment portfolio beyond the PPP concession market. During the year, we were appointed preferred bidder for the Institute ofTechnical Education College West project in Singapore, our first PPP projectoutside the UK. Substantial and increasing investment in establishing PPPbusinesses and bidding projects in the US, Germany and South East Asia willcreate substantial value to the Group in due course. EXCEPTIONAL ITEMS As announced in the half year results, there will be a number of exceptionalitems, most notably charges relating to the entry of Metronet intoadministration and credits arising from the sale of our interest in DevonportRoyal Dockyard and the crystallisation of US tax benefits. In aggregate, theseare likely to result in a small exceptional charge for the year. OUTLOOK Trading prospects in our key sectors remain positive. We anticipate that theGroup will continue to make good progress in 2008. ENDS Enquiries to:Tim SharpTel: 020 7216 6884www.balfourbeatty.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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