Balfour Beatty reinstates dividend as turnaround plan bears fruit and cuts losses by 86 per cent
Balfour Beatty has hugely cut its losses under new chief executive Leo Quinn's turnaround plan, it said today.
The company's share price jumped over five per cent in early morning trade on the news.
The figures
Balfour Beatty reported underlying revenue marginally down to £4.02bn, from £4.09bn in the first half of the year. Total revenue was £4.1bn.
In the six months to 1 July, the company reported its underlying pre-tax profit rose to £7m from a loss of £130m a year prior. Total pre-tax loss was £21m, down from a loss of £150m a year prior.
The company's order book for the period rose to £12.4bn, up seven per cent at constant exchange rates.
Still, the company paid a dividend per share of 0.9p.
[charts-share-price id="483"]
Why it's interesting
The infrastructure group has taken big strides to mitigate its half year loss. Its total pre-tax loss of £21m was reduced by a mammoth 86 per cent.
In the last few months Balfour Beatty has won a £170m contract at Heathrow Airport and was awarded the contract to electrify a Caltrain rail link between San Francisco and San Jose, in the largest US contract its ever won.
Read more: Check out Balfour Beatty's massive contract
Yet some contracts were won on small margins and reportedly mismanaged.
But the company managed to reinstate its dividend as it strives further into recovery led by chief exec Leo Quinn who joined last year.
His plan, "Build to Last", has been bearing fruit, according to the company's financial report. Measures include greater staff engagement on safety, continued simplification of the group, further actions to upgrade leadership a "maintained focus on a cost and cash-conscious culture".
Read more: Balfour Beatty wins £170m Heathrow Airport contract
It has now been 18 months into the first phase of Build to Last and the company is confident its underlying profitability remains on track to achieve initial target of £200m cash in and £100m cost out.
Quinn said: "By concentrating on our selected markets, we are growing our order book within a controlled environment which ensures that our business decisions lead to sustainable profit and cash growth."
The company also said that as it operates across multiple geographies and segments, it is less exposed to a downturn in a single market, and there is little sign of impact from Brexit.
What Balfour Beatty said
Leo Quinn, group chief executive, said:
We are now starting to see tangible benefits from the transformation of Balfour Beatty.
We have maintained a strong balance sheet and expect Balfour Beatty to make further solid and measurable progress. As a result we are able to reinstate the dividend as planned.
By the end of 2016 we will have successfully completed Phase One. Over the following 24 months, I am confident we can reach industry-standard margins and then build on the foundations Build to Last has put in place to deliver a Balfour Beatty with market-leading strengths and performance over the longer term.