Balfour Beatty unveils £144m interim pre-tax profit

Balfour Beatty has reported a mouth-watering interim pre-tax profit of £144m which represents a major upturn from the figure of £35m in the first half of 2007.

The figures unveiled this morning cover the six months to 28 June 2008.

The latest interim profit would have run to £95m but it was enhanced by the bonus of an exceptional item worth a further £49m.

This bonus is the result of several items though the single largest contributor was the introduction of measures to curb the future benefits to members of its defined benefit pension scheme – Balfour has brought in measures which limit the increase in members’ future pension benefits to RPI.

The result has been a reduction in past service liabilities of £60m.

Balfour also put £42m of cash into the defined benefit scheme. The result of both changes is that the overall deficit in the scheme has been cut to £309m, a reduction of £102m.

Turnover in the first half of 2008 was £4.3bn, a rise of 28% on the previous figures of £3.4bn.

Excluding the effect of the exceptional items in both periods, Balfour made a profit margin of 2.2% which is identical to the performance in the previous year.

Segmental analysis of the latest figures shows the breakdown of turnover between Balfour’s divisions:

• £2.2bn – building and building management
• £1.6bn – civil and specialist engineering
• £400m – rail
• £220m – investments

Their contribution of the four divisions to operating profit, before allocation of £16m of central costs were:

• £38m – building and building management
• £33m – civil and specialist engineering
• £10m – rail
• (£10m) – investments

Despite the lack of progress at improving profit margin, chief executive Ian Tyler commented: “Financial performance improved significantly.”

During the first half of the year, Balfour made five acquisitions at a cash cost of £270m.

The orderbook grew by £700m and has now reached £12bn.