A weak construction sector and costs associated with an exit from European mainland rail operations left headline profits sharply lower at construction and services group Balfour Beatty (BBY). But adding back goodwill and restructuring costs left underlying profits down a more palatable 7 per cent at £310m. Even so, this was flattered by a big increase in PPP disposal gains from £20m to £52m, and by the company's own admission, trading conditions are unlikely to show any improvement this year.
On the construction side, the order book slipped from £8.5bn to £8bn, with operating profits down 28 per cent to £122m. And margins fell from 2.4 per cent to 1.8 per cent as a scarcity of major projects left the company chasing smaller contracts.
In support services, the order book rose from £5.1bn to £5.7bn, but profits fell from £67m to £52m due to start-up costs on new contracts and one-off expenses. Professional services - that's mainly design and consultancy work - boosted profits by 12 per cent to £98m, thanks to a strong performance in the US, where the division generates half its revenue. Margins grew from 5.3 per cent to 5.9 per cent, although a scarcity of new projects suggests that these will be hard to maintain.
Broker Investec Securities is reviewing its current forecast of normalised pre-tax profits of £261.4m and EPS of 28.3p (from 35p in 2012).
| BALFOUR BEATTY (BBY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 275p | MARKET VALUE: | £1.89bn | |
| TOUCH: | 274-275p | 12-MONTH HIGH: | 321p | LOW: 235p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 42 | |
| NET ASSET VALUE: | 190p* | NET CASH: | £35m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 8.26 | 267 | 36.9 | 11.2 |
| 2009 | 8.95 | 265 | 37.1 | 12.0 |
| 2010 | 9.24 | 201 | 23.0 | 12.7 |
| 2011 | 9.49 | 246 | 26.7 | 13.8 |
| 2012 | 9.48 | 75.0 | 6.50 | 14.1 |
| % change | - | -70 | -76 | +2 |
Ex-div: 24 Apr Payment: 5 Jul *Includes intangible assets of £1.37bn, or 199p a share | ||||
