Balfour Beatty plc toughing it out

While acknowledging that markets remained “tough” for the first half of 2013 (ended June 28), international infrastructure firm Balfour Beatty plc (BBY-LON, 282.90p) confirmed that trading conditions “weren’t getting any worse” outside of the group’s Australian professional-services business.

In terms of UK Construction, Balfour provides services ranging from finance and development, through design and project management to construction and maintenance), first-half performance was “weak as expected.”

Not helping these results was a previously-announced profit shortfall of £50 million plus ongoing weakness in the earmarked-to-be-sold Mainland European Rail businesses. But those first-half U.K. construction losses were expected to be made up in the second half, with the result being (when combined with benefits from cost-savings) a “broadly break-even divisional position” on whole for the year. Add in higher U.S. construction orders, and expectations are looking up for a second-half revenue increase.

For this advisory, there was little surprise in the fact that the actual numbers produced by the company “weren’t too hot.” If anything, they were a bit better than expected. Still, the balance sheet isn’t looking quite as strong as before. So, if that’s the current lay of the land, what lies ahead for BBY?

Well, there’s some good news in the shape of £5 billion in new orders, which lifts the company’s order book up to £13.9 billion. That’s up three per cent since the beginning of the year, and up seven per cent on the same period last year. Other divisions in the firm had their ups and downs, but the key to Balfour Beatty’s overall profitability remains the company’s UK building business. Overall, Fleet Street figures that “Balfour is in a sector that looks poised to return to growth, which we believe will boost the share price over time. Balfour Beatty is “buy.”

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