Things are looking up at construction giant Balfour Beatty, after it revealed profits had doubled in its first half.
Underlying pre-tax profits rose to £22m in the six months to the end of June, up from £13m during the same period last year.
Underlying revenues rose eight per cent from £3.9bn last year to £4.2bn this year.
However, the company's order book shrank from £11.9bn in the first half of last year to £11.4bn in the first half of this year.
Still, underlying earnings per share jumped to 3.3p, from 2p in the first half of 2016, while dividend per share rose by a third to 1.2p.
Investors were impressed: shares rose 4.2 per cent to 273.4p as the market opened.
Why it's interesting
Just over two years ago Balfour Beatty was in the uncomfortable position of having issued its eighth profit warning, and fending off a takeover approach from rival Carillion.
But it looks like the company's turnaround is going to plan: net cash rose to £161m this year, from £115m last year, which the company put down to its "culture of strong cash discipline and cost control".
That was borne out in the decision to exit the Middle East, where it sold its Dutco Balfour Beatty and BK Gulf businesses to its joint venture partner, and its renewed focus on the the US and UK markets. In the US, underlying profits from operations rose 40 per cent to £17m, while in the UK they rose to £2m, from a £69m loss last year.
Analysts at Liberum pointed out although it failed to turn a profit, there is potential in the company's public-private partnership (PPP) arm.
"We... expect that [chief executive Leo Quinn] will want to take more cost out of the business in 2017 and 2018 however it will get harder due to diminishing returns," they said.
"We believe that there is scope for buybacks and specials, and ultimately even the de-merger of part of the PPP business."
What Balfour Beatty said
These results demonstrate the transformation being driven by focusing Balfour Beatty relentlessly on its chosen markets and capabilities. Profitability is rising, backed by positive cash flow from operations, and the group had average net cash during the period; all achieved without any material investment disposals. The balance sheet remains strong, underpinned by the £1.2 billion Investments portfolio.
Under stronger leadership and much improved bidding disciplines, the businesses are booking new orders at improved margins and reduced risk. Our infrastructure pipeline in the US and UK remains buoyant and the group continues to win landmark contracts such as the Dallas Southern Gateway and HS2.