Balfour Beatty Investor Day
03 December 2012
Balfour Beatty, the international infrastructure group, is hosting an investor event in London today, Monday 3 December. During the afternoon, Balfour Beatty management will make presentations to investors and analysts, giving an update on the Group’s medium-term strategy.
No new trading information will be provided.
Strategy to seize opportunities in industry verticals and growth markets
The global infrastructure market in which we operate is characterised by long-term growth driven by the need to renew and develop infrastructure in both mature and emerging economies. We meet our customers’ complex challenges by drawing on the knowledge and capability we have progressively amassed across the infrastructure lifecycle, and we are positioning the business in sectors and geographies where we can apply our strengths to best effect.
We are targeting sectors of economic infrastructure which are relatively more resilient than building markets, and where our differentiated offer can attract higher margins. While this transition is a substantial undertaking, we have made good progress in aligning our business behind transport, rail, power, water and mining industry verticals which, together, account for 60% of our order book.
With infrastructure investment in emerging markets set to surpass that in developed markets in the next decade, accessing growth markets and resource economies is a vital part of the strategy. Accordingly, we are deploying our resources to develop our current positions in South Africa, Australia and Canada, and are implementing plans to access Brazil and India. In 2011, total spending on economic infrastructure in these five markets was in excess of £110 billion which is six times the corresponding figure for the UK.
Acceleration of infrastructure investment disposals
In November 2010, we announced our plans to recycle the capital we have invested in our PPP portfolio over the last 15 years by selling £200-300 million of mature assets over the next five years and reinvesting the proceeds in new projects. In the 2011-2012 period we have successfully sold assets with cash proceeds totalling £112 million and re-invested £91 million in new projects.
Based on our success to date, the development of the Directors’ valuation of the portfolio and the current demand in the market for this asset type, we intend to accelerate our disposal programme. In the three years beginning 1 January 2013, we expect to sell assets with Directors’ valuations totalling £200 million and, as a result, generate approximately £40 million of disposal gains per annum.
Balfour Beatty Chief Executive, Ian Tyler, said:
“We have been driving a focused strategy to take advantage of the growth in global infrastructure. We will continue to shift our business to less cyclical, more resilient economic infrastructure markets, which today account for 60% of our order book – up from 43% in 2009. The share of Group revenue from faster growing markets outside Europe and North America has already increased from 9% to 13%. We expect these markets to make up at least 25% of the Group’s revenue in the medium term. While pursuing this strategy, we will continue to shift our capital into professional services, and we remain confident of achieving our 6-7% margin target for this business by 2015.
“Successful implementation of our strategy will transition Balfour Beatty into a stronger player in our chosen verticals in both our current and target geographical markets which are expected to deliver better margins and sustainable growth. I am pleased with the progress we have made so far.”
The presentations will be webcast live from 14:00 (UK time) onwards on the company's website, www.balfourbeatty.com. The webcast should last about three hours and will also be available for replay after the event.
Balfour Beatty plc
Tel 020 7216 6924
Balfour Beatty plc
Tel 020 7216 6865
This document contains forward-looking statements which have been made in good faith based on the information available at the time of its approval. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a number of risks and uncertainties that are inherent in any forward-looking statement which could cause actual results to differ materially from those currently anticipated.
Notes to Editors:
1.Balfour Beatty (www.balfourbeatty.com) is a world-class infrastructure group with capabilities in professional services, construction services, support services and infrastructure investments.
We work in partnership with our customers principally in the UK, continental Europe, the US, South-East Asia, Australia and the Middle East, who value the highest levels of quality, safety and technical expertise.
Key infrastructure markets include transportation (roads, rail and airports); social infrastructure (education, specialist healthcare, and various types of accommodation); utilities (water, gas and power transmission and generation) and commercial (offices, leisure and retail).
The Group delivers services essential to the development, creation and care of these infrastructure assets including project design, financing and management, engineering and construction, and facilities management services.
Balfour Beatty employs 50,000 people around the world.