Aquatics Centre

'No pick-up in sight' for construction says Balfour Beatty

Balfour Beatty says it cannot forecast when there will be a pick-up in its home market where its own order book was down 3 per cent, outperforming a 10 per cent fall across the industry.

The UK construction company also said on Wednesday its focus in recent months on winning contracts in industries such as transport and mining, particularly in emerging markets, meant it should meet its own full-year expectations.

Balfour Beatty, which operates in more than 80 countries and built the Aquatics Centre for the London Olympics, posted a 12 per cent rise in underlying first-half pre-tax profit, lifted by a one-time gain from the sale of infrastructure investment assets.

"We do not anticipate any significant further reduction (in Britain) ... But in terms of recovery of volumes, it is difficult to see, in the very short term, where recovery is coming from," deputy chief executive Andrew McNaughton said.

"The business is on track for where we expect it to be this year," McNaughton said, adding that while the £52m gain from the asset sales provided boost, overall trading was in line.

The global construction sector has struggled to recover from the financial crisis, weighed down by government spending cuts and recession, particularly in Britain and the US.

Investec analyst Andrew Gibb said that without the asset sales, profit on a comparable basis was down 17 per cent.

"There is nothing in this statement which compels us to alter our negative stance. Cash again is extremely weak and risks remain ahead, particularly in the UK," he said in a note.

Balfour Beatty shares were up 2.1 per cent at 200.6 pence at 0920 GMT, valuing the company at £2bn.

Its order book at the end of June was £15bn, helped by £5bn of new orders in the first half, and compared with £15.2bn a year earlier.

US construction markets appeared to have reached a stable state, Balfour Beatty said, with meaningful recovery still 12-18 months away.

Underlying first-half pretax profit rose 12 per cent to £154m on revenue up 6 per cent to £5.5bn.

The interim dividend was raised 6 per cent to 5.6 pence.

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