US unit drives Balfour profits

CONSTRUCTION firm Balfour Beatty saw its underlying pre-tax profits jump to £319m last year.

The infrastructure and maintenance group increased profits in the year to 31 December 2010 by 20 per cent, beating market expectations.

The strong improvement was bolstered by its acquisition of US firm Parsons Brinckerhoff two years ago.

The consolidation of the professional services unit helped to boost its full-year results for the first time, accounting for 13 per cent of growth.

Yet weak construction markets in America and the UK also wiped off 11 per cent of underlying revenue.

Balfour Beatty’s order book increased by eight per cent to £15.2bn over the year, with £7.2bn of work to be carried out in 2011.

Its average cash for the year was a strong £435m, despite an unwinding of negative working capital due to lower construction volumes.

Management at the firm approved a six per cent increase in dividend payments on last year, giving a full-year payout of 12.7p.

Analysts said the results showed strong progress could be made this year, despite potentially tough trading conditions.

Andy Brown, analyst at Panmure Gordon, said: “Its financial position remains strong and the order book provides good revenue visibility. Immediate conditions remain tough, but the group expects to make further progress. We maintain our positive stance.”

Balfour Beatty chief executive Ian Tyler said: “While we do not expect, in the short term, a meaningful recovery in the UK and US infrastructure markets, we expect to make progress this year.”