Profit slump threatens Balfour jobs

Balfour Beatty's operating profit in the first half of 1996 slumped to just œ1 million.

Without the œ9 million that three newly acquired British Rail Infrastructure Units generated, Balfour would have been in the red with an œ8 million loss.

Alan Jones, chief executive of Balfour's parent group BICC, said that Balfour could improve margins by its own efforts, a signal that there will be job losses within Balfour.

Balfour's turnover was œ995 million (œ802 million). In the first half last year its operating profit was œ13 million.

The dismal performance announced last week was the result of several American construction contracts that "came in badly". Balfour also suffered bad debts in the USA.

Dick Curle, who headed Balfour's operation in America, has left the company "by mutual consent". The construction business in the States is now led by Haro Bedelian who crossed over from the UK three months ago.

Overseas projects account for over 50% of Balfour's current workload. Three of the largest schemes are the rail electrification of the Boston to New York line, Hong Kong airport work and a power station in Indonesia. A spokesman said: "The benefits from all these will come through in 18 months' time."

In the UK, the spokesman described Balfour's current margins in general construction, building and M&E as "OK". He explained: "Margins are low, but it's the same with everyone.

"Normally, you expect to make better margins on the big schemes but we've not been doing that this year. However, we're confident that better margins have been built into the future order book."

Balfour has scooped over 50% of all the DBFO schemes let to date. "We don't expect much profit for a while," said the spokesman, "but we will see a benefit to the bottom line some 18 months out."