Balfour Beatty trading update - January 2013
08 January 2013
Balfour Beatty plc, the international infrastructure group, is providing this trading update in advance of its results for the year ended 31 December 2012 which will be announced on 7 March 2013.
Further to our Interim Management Statement of 8 November, overall 2012 performance remains in line with our expectations.
The order book was at £14.2 billion at 30 November 2012; however, given the orders we were awarded in the month of December, notably the £1.2 billion eight-year National Grid contract and the tunnel contract won by Gammon in Hong Kong, the year-end order book is expected to have improved to around £15 billion.
While the magnitude of the order book is broadly in line with the levels at the end of 2010 and 2011, there are certain trends that are worth noting. In keeping with our strategy and given the difficulties in a number of our markets, particularly in UK construction and European rail, the order book mix is shifting from construction to professional services and support services, and overall, from buildings to infrastructure projects. Due to the longer-term nature and back-end loaded margin profile of these contracts, most of the benefit to revenue and profit arises in 2014 and thereafter.
Since the beginning of 2013, we have completed the following transactions, which represent examples of our strategic initiatives as well as some good wins.
- We acquired Subsurface Group, Inc. to expand Parsons Brinckerhoff’s Energy Storage Services business in the USA. Subsurface is a professional consulting and engineering firm, providing services in underground injection, underground storage and specialty wells, and is forecast to have generated approximately US$50 million (£31 million) of revenue in 2012.
- We were awarded the Wiltshire County Council contract for highways maintenance and street lighting as well as dealing with winter weather, drainage and bridges worth £150 million over five years.
- We have won a contract for the engineering, procurement and construction (EPC) of the Garrison Energy Center, a 309MW combined cycle gas-fired power plant in Dover, Delaware in joint venture with Kvaerner.
- We won the £321 million design and construction contract to upgrade sections of the M25 London orbital motorway in a 50/50 joint venture with Skanska.
We have announced today that, after leading the organisation successfully for eight years, Ian Tyler will hand over to Andrew McNaughton as Chief Executive, effective from 31 March, 2013. Andrew McNaughton is currently Deputy Chief Executive and Chief Operating Officer.
Average net debt for 2012 was approximately £50 million, reflecting the significant cyclical unwind of working capital during the year; we expect to have ended the year with a broadly cash-neutral position.
As we stated in the Q3 IMS on 8 November 2012, we have been managing our business on the basis that market conditions would be tough, and this has been an effective strategy. We will take further action, both operationally and strategically where necessary, to mitigate any adverse impacts on our business.
In the medium and long term, we are confident that our position in infrastructure markets, our focus and competitive advantage in the transportation, rail, power, water and mining verticals, and our initiatives to access growing markets such as Australia, Canada, Brazil and India will stand us in good stead as well as making the business more robust.
Balfour Beatty plc
Tel +44 (0)20 7216 6924
Balfour Beatty plc
Tel +44 (0)20 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.