Balfour Beatty Workplace: new name for division with £1bn turnover aspiration

Balfour Beatty aims to double the size of its £410m-a-year turnover Haden Building Management division to £1bn within the next five years.

To help the push, it has been given a new name: Balfour Beatty Workplace.

Kevin Craven, managing director of BBW, says: “Mitie, Carillion, Sodexho and Compass are all over £1bn-a-year turnover players and to be a market leader you need to be about that size.

“Balfour’s model is to be a leader in all its market sectors, taking a position of one, two or three. Sometimes you get there by being opportunistic. It is an area we can move on as there will be companies looking to sell.”

Buying wouldn’t be out of the question as Balfour already had £300m-£350m by way of a healthy cash pile even before its recent Stock Market placement of new shares that added another £200m to this pot.

And still on this score, Craven was more bullish than might have been expected in the current financial situation when he commented: “I wouldn’t rule out another placement [of additional shares].”

Under the Haden Building Management branding, the business had built up to running with 12,000 employees, its preference being to follow a self-delivery approach rather than manage a plethora of subcontractors.

Balfour recently acquired Covion to give Haden more fire-power and “acquisition will be part of the strategy going forward” said Craven.

Asked about aspiration areas in the future, Craven said: “We are not in Europe and we are not global.”

He has kept the emphasis on a smaller number of large clients and BB Workplace currently has:

• seven major clients who account for 90% of turnover
• another 100 clients who account for the other 10% of turnover

Balfour could already have boosted its presence in the sector had it not dropped out of the competition to buy Mowlem, now part of Carillion.

“We were involved but pulled back,” said Craven.

With Craven at the helm, BB Workplace has enjoyed a lift in profit margins.

“The average in the FM sector would be 4.5% - 6% and we are now just below that,” said Craven. “I’d like to see us within the same band as the better players though we’ll not get to the 11% - 12% figure that Compass was making in the past.

“The trick is to do both things – get turnover to £1bn within five years and lift the margins further again.”