With overall Group pre-tax profit sitting at £22 million, up from a £15m loss in the same period last year, Chief Executive Leo Quinn said his Build to Last plan to turnaround the business is on track to deliver 'industry-standard' margins in the second half of next year.
Other highlights include the construction services division switching from a £54m underlying loss in the first half of 2016 to a £24m profit from operations in 2017. In addition, UK Construction reported a £2m profit during the period (2016; £69m loss).
Elsewhere, despite a 4% decrease in the UK order book to £2.2bn, the Group said its UK construction business "continued to be more selective in the work that it bids, through increased bid margin thresholds, improved risk frameworks and better contract governance".
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By the end of next year Balfour Beatty expects its UK Construction business to be making an operating profit margin of between 2% and 3%; US Construction is targeting 1% to 2% and support services between 3% and 5%.
Concerning historical problems, the Group said: "At the 2015 half-year, 89 historical contracts were identified that had a material negative impact on profitability and cash. As at the end of June 2017, 82 (92%) of these projects were at practical completion (90% at end December 2016), with over 75% at financial completion (over 70% at end December 2016). Two of the remaining seven contracts are expected to reach practical completion in 2017, with the remainder in 2018."
Chief Executive Leo Quinn said: "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 £1.2 billion Investments portfolio.
"Under stronger leadership and much improved bidding disciplines, the businesses are booking new orders at improved margins and reduced risk. Our infrastructure pipeline in the US and UK remains buoyant and the Group continues to win landmark contracts such as the Dallas Southern Gateway and HS2.
"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 1.2 pence per share."
(LM)
