• Home
• /
• Business

Balfour H1 profit rises 77pc on Dubai orders

DUBAI - Balfour Beatty Plc, Britain’s biggest builder, said first-half profit rose 77 per cent as a US acquisition boosted military housing orders and it won civil engineering and maintenance contracts in Dubai.

Net income advanced to £106 million ($201 million), or 23.9 pence a share, from £60 million, or 13.9 pence, a year earlier, the London-based company said in a statement. Revenue gained 32 per cent to £3.79 billion.

Balfour plans to tap rising demand for public infrastructure and maintenance work to offset a possible commercial construction slowdown in the US and Europe. The builder receives 80 per cent of its sales from state or government-regulated industries such as water and power, limiting the effect of an economic slowdown, Chief Executive Officer Ian Tyler said in an interview on Wednesday.

“Balfour is well positioned to benefit from regulatory driven growth, particularly in electricity,” Joe Brent, an analyst at Citigroup Inc. in London, said today in a note. “We expect consensus estimates to nudge up for 2008 and 2009.” Balfour gained as much as 4.8 per cent to 429.75 pence in London trading and was changing hands at 422.75 pence as of 8:11 am local time. The company, which started building work on London’s 2012 Olympics Aquatics Center last month, has fallen 16 per cent this year for a market value of £2 billion.

Pretax profit before one-time items increased 25 per cent to £95 million. Analysts had estimated £92.2 million on sales of £3.25 billion, according to estimates compiled by Bloomberg.

Strong Orders

“We anticipate that order intake and trading performance will remain strong throughout the year,” Tyler said. “In the commercial property space, quite a lot of our customers in that area are continuing to invest through the cycle. Not everyone is giving up and going home.” Balfour has spent $640 million on five acquisitions this year, including US-based GMH Military Housing, a UK airport and a German rail-engineering company. The company raised £186 million in a share sale in May to fund future acquisitions and said it planned to expand in the UK building and civil engineering markets, as well as in the US.

Balfour said that its joint venture companies in Dubai were awarded civil engineering and building services contracts valued at Dh1.7 billion($462.8 million).

Dubai Partnership

The UK builder, along with venture partner Dubai-based Dutco Group, won orders to build two road interchanges and two hotels in the United Arab Emirates, including the Trump International Hotel.

Balfour is seeking to increase work in the US, Germany and Asia for so-called public-private partnership, or PPP, contracts, where companies help fund, build and operate hospitals, schools and infrastructure. Balfour on Wednesday said it signed a £100 million PPP contract to build and maintain a technical college in Singapore. It is the company’s 27th such contract and the first in the island country. Balfour is the largest PPP investor in its home UK market.