Balfour Beatty swings to loss as coronavirus shuts down construction in UK
Shares in construction firm Balfour Beatty fell 4.4 per cent this morning after the company posted a £24m loss for the first half.
The FTSE 250 firm said that the coronavirus pandemic, which hampered work at its building sites, was behind the loss.
The figures
Balfour Beatty swung from a £64m underlying profit for the same period last year to a £24m loss this year.
However, underlying revenue increased to £4.1bn, up from £3.8bn last year.
The firm said that it had increased its order book by 20 per cent. It now stands at £17.5bn, up from £14.3bn at the end of last year.
This is largely due to about £3bn in new contracts related to the HS2 rail line.
Cash flow performance was also positive with an increase in net cash to £563m from £425m.
This was helped by various cost saving measures, including the up to 20 per cent temporary salary reductions for senior management.
Balfour Beatty said it would look to reinstate its dividend, which it pulled earlier this year, as soon as possible.
It added that it expected overall operating profit returning to levels roughly equivalent to that for 2019 next year.
Why it’s interesting
This morning’s GDP figures from the Office of National Statistics showed that construction output dropped 35 per cent last quarter as the UK slumped into recession.
Although some construction sites were quickly reopened – at least partially – after the initial lockdown, social distancing requirements have slowed work on many sites.
Balfour Beatty took the decision to keep as many sites open as it could, in line with government guidance.
However, sites were closed in London and Scotland, while aviation projects were paused during the lockdown period.
The firm said that the easing of lockdown across the geographies in which Balfour Beatty operates means that around 95 per cent of the group’s sites were open at the end of June.
“The challenge is now to return sites to pre Covid-19 productivity as soon as possible”, it added.
What Balfour Beatty said
Chief executive Leo Quinn said: “The financial impacts of COVID-19 are unavoidable; but they will pass.
“Since the start of Build to Last, our balance sheet, order book and expert capability are at record levels.
“We have preserved the disciplines, expert capability and financial strength we will need as markets move back to normal and then beyond, driven by fiscal stimulus for infrastructure.
“We look forward with confidence to returning to profitable managed growth, and to delivering ongoing value for all our stakeholders.”