Balfour Beatty joint venture secures £1.3bn Hong Kong airport deal
Construction firm Balfour Beatty this morning announced that its south-east Asia joint venture has won a HK$12.9bn (£1.27bn) contract to expand Hong Kong International Airport’s Terminal 2.
Under the four-year deal, Gammon, of which the FTSE 250 company owns 50 per cent, will increase the size of the main terminal building and construct the surrounding architecture of bridges, roads and electrical works.
The contract, which was awarded by Hong Kong’s Airport Authority, is the single largest contract Gammon has ever won.
It is also the second deal the semi-autonomous state’s airport operator has awarded it this year, after it secured a £760m tunnel building deal at Hong Kong International earlier this year.
The expansion project forms part of the “Three-Runway” programme at the airport, which when completed will allow for both arrivals and departures from one terminal and increase overall passenger capacity.
Balfour Beatty’s chief executive Leo Quinn said: “Through leveraging wide-ranging engineering expertise and offsite and modular construction approaches Gammon has secured a material share of the Hong Kong market which continues to look favourable with significant infrastructure opportunities ahead.”
The firm purchased its stake in the Hong Kong-based engineering firm from rival infrastructure giant Skanska in 2004.
Shares in the construction firm rose over one per cent in the morning’s trading.
News of the new deal comes just weeks after the company announced a £24m loss in the first half of 2020, as the coronavirus pandemic forced it to shut many of its construction sites.
Despite the loss, Balfour Beatty said that it expected its performance to recover through the rest of this year, with profit forecast to return to 2019 levels next year.
Largely due to £3bn in new contracts related to the HS2 rail link, the firm said that it had increased its order book by 20 per cent in the first half.
It now stands at £17.5bn, up from £14.3bn at the end of last year.
As of the end of June, around 95 per cent of Balfour’s sites are now open again, with the firm aiming to return to pre-Covid levels of productivity as fast as possible.
This month’s GDP figures from the Office of National Statistics showing construction output dropped 35 per cent in the last quarter, as lockdown forced many firms to suspend the majority of their activity.