Shares in Balfour Beatty (BBY) rose by as much as 5 per cent in a falling market after the construction group revealed that group performance for 2018 will be above earlier expectations. The improvement comes as a result of profits from infrastructure investments reaching around £65m.
Crucially, the group remains on track to complete the Aberdeen Western Peripheral Route (AWPR) before the end of December without any increased costs. This augurs well for the construction specialist’s performance in 2019, with investors and customers alike taking a longer look at group balance sheets in the wake of Carillion’s collapse.
Balfour has been working to assuage any potential worries, paying down all its remaining convertible bonds and delivering a 45 per cent reduction in gross debt over the last 12 months. Average monthly net cash flow is now expected to around £185m, ahead of the previous guidance range of between £140m and £170m. Margins on UK construction are expected to reach up to 3 per cent, which is impressive given the first half disruption caused by the AWPR project.
The group continues to remain selective in winning work that meets its margin requirements and has still managed to increase the forecast year-end order book to £12bn, up from £11.4bn a year earlier. On the support services side, the utilities side is being restructured with a view to reducing costs, while the road maintenance side continues to outperform.
