BALFOUR Beatty, the UK’s largest construction company, said it expects markets to remain tough for the next two years as government cutbacks in the UK and US continue to weigh down on its operations.
The group, whose projects include the refurbishment of London Blackfriars station and the aquatics centre for London’s 2012 Olympic Games, reported a meagre four per cent rise in underlying profits to £138m in the first half of the year to July 1 from £133m last year.
“Nearly a year on from the UK government’s comprehensive spending review, the impact of the reduction in government spending is evident in UK infrastructure markets and consequently in our UK order book,” Balfour, led by chief executive Ian Tyler, said in a statement.
Overall orders, however, grew by six per cent to £15.5bn from £14.6bn a year earlier, boosted by a “good order intake from the US”.
Whilst domestic markets remain sluggish, Balfour said it was seeking opportunites for expansion abroad, such as the Middle East where there is a growing demand for infrastructure.
“We expect recovery in our markets in the medium term, and we have positioned ourselves to take advantage of the growing demand longer-term for infrastructure across the globe,” Tyler said.
Balfour, which operates in 80 countries and employs 50,000 people, said it continues to focus on cost efficiencies, which are expected to save at least £30m per annum by the end of 2012.
Shares closed down five per cent to 249p as the market remained uncertain over recovery in the US.