As UK construction companies struggle to escape the long shadow of Carillion’s demise, Balfour Beatty’s (BBY) transformation is often hailed as a beacon. Under the ‘build to last’ programme launched in 2015, 89 problematic contracts blunting profitability and cash generation were whittled down to five by the end of 2018. With more selective bidding on higher-margin and lower-risk jobs, the £12.6bn order book is considered a higher quality pipeline of work. Although construction revenue (79 per cent of the group total) fell by 8 per cent last year, underlying construction operating profit (40 per cent of the total) increased by 32 per cent to £95m.
‘Build to last’ programme
Higher quality order book
Low margins
HS2 delays
Military housing allegations
Poor cash generation