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Balfour Beatty investors looking for more reassurance in Friday’s update

The penultimate Friday looks unsurprisingly like being a quiet one, but Balfour Beatty is due to publish a trading update and investors will be looking for more reassurance from the contractor

construction worker
Contractors have seen their share prices slump this year, not helped by Carillion’s collapse

It’s been a tough time for contractors recently, not least after Kier Group PLC’s (LON:KIE) surprise cash call earlier this month to help stabilise its balance sheet.

That prompted fears of a debt crunch in the sector and Balfour Beatty plc (LON:BBY) was one of those caught in the crossfire, although it moved quickly to reassure investors that its debts were under control.

Still, its shares are down more than 10% over the past month and more than a fifth so far in 2018, with investors still wary.

Intense competition has forced companies to underbid one another, leaving them with little room for movement when projects overrun and costs rise more than expected, which they inevitably will.

Fears for the sector came to fruition earlier this year when Carillion, another outsourcer with a wealth of government contracts, collapsed.

Balfour Beatty, which reports third-quarter numbers on Friday, has won two big contracts worth £2.5bn over the past month as its turnaround plan continues. The market will be hoping that’s a sign of things to come.

Investors hope for international rescue in SThree fourth quarter

When it issues a trading update on Friday, investors in recruitment firm SThree PLC (LON:STHR) will be hoping for more of the same after international job markets offset weak UK demand in the third quarter.

In September, the group said third-quarter gross profit rose to £82.7mln from £73.7mln the same period a year ago.

Continental Europe was the key driver of growth with gross profit up 24% to £47mln while the US delivered an 8% increase in gross profit to £18.2mln and the Asia Pacific and the Middle East achieved a 16% gain to £4.5mln.

The UK and Ireland division, on the other hand, saw gross profit fall 10% to £13mln as employers continued to exercise caution amid Brexit uncertainty.

With the fourth quarter being the “most significant trading quarter” according to chief executive Gary Elden, any potential slowdown or less positive figures will be eyed closely.

Significant news expected on Friday 14 December:

Trading updates: Balfour Beatty plc (Q3) (LON:BBY), SThree PLC (LON:STHR), Reach PLC (LON:RCH)

Interims: ReNeuron Group Plc (LON:RENE)

Finals: Jersey Electricity PLC (LON:JEL)

Economic data: US retail sales; US industrial production

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