Balfour Beatty plc (LON:BBY) saw its shares gain today after the contractor reported a return to profit in the first half led by a recovery in its UK construction business.
The FTSE 250-listed firm posted a total pre-tax profit of £12mln for the six months to June 30, a turnaround from a loss of £15mln a year earlier, as revenue rose to £4.201bn, up from £3.976bn a year earlier.
READ: Balfour Beatty constructs a return to annual profit in 2016, says transformation "well underway"
Balfour Beatty’s total profit from operations jumped to £29mln, against a £17mln loss a year earlier, with its construction business reporting a profit from operations of £2mln, a rebound from a loss of £69mln last year.
The firm highlighted a strong pipeline for its US and UK business, though Its order book was down 8% at £11.4bn reflecting selective bidding to deliver higher margins and reduced risk
Leo Quinn, group chief executive, commented: "These results demonstrate the transformation being driven by focusing Balfour Beatty relentlessly on its chosen markets and capabilities.
“Profitability is rising, backed by positive cash flow from operations, and the Group had average net cash during the period; all achieved without any material investment disposals. The balance sheet remains strong, underpinned by the £1.2bn Investments portfolio.”
He added: “All of this gives us confidence that the Group remains on track to achieve industry-standard margins in the second half of 2018, and in line with this, we are declaring an interim dividend of 1.2p per share."
Encouraging interims, says Liberum Capital
In early morning trading, Balfour Beatty shares topped the FTSE 250 leader board, up 5.3%, or 13.8p to 276.3p.
In a note to clients, analysts at Liberum Capital said Balfour Beatty’s interim results were “encouraging” and “ahead of low expectations with all operations profitable”.
Repeating a ‘buy’ rating and 335p price target on the stock, they added: “We expect Leo to keep driving cost out of the business and there is increased scope for shareholder return.”
-- Adds share price, broker comment --