Balfour Beatty reports higher profits on flat revenues

Dive Brief:

  • London-based contractor Balfour Beatty revealed steady half-year results Wednesday amid a shaky global economic environment that potentially portends a recession.
  • The company posted flat revenue on the half-year results at $4.99 billion (£4.1 billion), a slight decrease from $5 billion in HY 2021. Underlying profit from operations rose to $102.3 million in the half year, up from $72.2 million year over year (YoY).
  • The company’s order book, or backlog, rose to $21.3 billion, up from $19.4 billion YoY for a 9.8% increase. The increasing backlog provides a roadmap for the firm in the short and medium term, according to the company, as the uncertain global economy is creating instability for builders.

Dive Insight:

During an earnings call with investors Wednesday, CEO Leo Quinn said that the company’s portfolio has been “significantly derisked,” an approach that many U.S.-based public contractors have also pivoted to in recent years. 

For example, California-based Granite Construction is moving away from bidding on mega projects that can last years.

Those projects, especially when pursued under design-build contracts, can often see cost escalations that are hard to predict due to their drawn-out timelines, and conditions changing between the design and build-out phases.

Balfour Beatty’s backlog results stood in contrast to construction backlog faltering among many contractors in the U.S.

The company’s U.S. construction profit rose to $25.3 million, up from $24.1 million a year ago. 

The firm’s U.K. construction profits rose to $21.7 million. That compared to a loss of $27.7 million in the first half of 2021, due to write-downs on private sector London property projects, according to the earnings report.

Balfour Beatty expressed confidence in its outlook for the U.S. construction market. During the call, Quinn presented a highlighted map of its projects in locations such as Washington State, Oregon, California, Arizona, Texas, as well as Florida and the mid-Atlantic.

“Although nationwide forecasts show a relatively flat overall construction market, Balfour Beatty is positioned in regions that are expected to outperform the national forecast,” the company said in the earnings report.

In the past few months, the company was awarded projects in California that total $235 million with a focus on government and education projects. In Maryland, it won a $698 million design and construct contract at Fort Meade from the U.S. Army Corps of Engineers.

Other U.S. projects with major milestones in the half year included:

  • The completion of one of two lines of the 4.7-mile light-rail project on Massachusetts Bay Transportation Authority’s Green Line Extension.
  • The completion of the Los Angeles International Airport’s 2.25-mile Automated People Mover train guideway superstructure, which it topped out on Thursday, as part of the LINXS Constructors JV.
  • The setting of the first bridge beams that support widening activities on the Texas Department of Transportation’s Oak Hill Parkway project, as part of the Colorado River Constructors JV.
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