Balfour Beatty will no longer bid for fixed price central London residential property projects, after it hit problems on existing schemes that were exacerbated by covid-19 disruptions.
The news came as Balfour Beatty unveiled its results for the half year ended 2 July 2021. Revenue was flat at almost £4.2bn (up from £4.1bn for the same period last year), while the group moved back into the black with an underlying pretax profit of £55m, reversing a £24m pretax loss in the same period last year.
Balfour’s order book stands at £16.1bn, weighted to infrastructure with 80% of orders with public sector and regulated clients.
While the business’s construction arm has started building the HS2 Old Oak Common station, cast its last nuclear grade reinforced concrete segment at Hinkley Point C nuclear power station, and handed over Woolwich Crossrail station, it has also suffered performance issues on what it described as a small number of private sector property projects in central London.
Balfour said the problems had been worsened by disruptions caused by covid-19, leading to lengthening project schedules and write-downs. As a result it plans to no longer bid for fixed-price residential property projects in central London.
Meanwhile, it warned that it could face a liability of up to £50m in respect of a high-rise London development completed in 2016 where facades will need to be modified, reinforced or replaced. Balfour said it would pursue all potential recoveries from third parties.
Leo Quinn, Balfour Beatty Group chief executive, said: “We continue to reshape Balfour Beatty to play to its strengths. These include leading capability in markets where governments are committed to long-term infrastructure programmes. It means choosing to exclude regions and sectors which cannot provide profitable, low risk growth, in favour of those that can. Our priority is on executing our already strong order book which will drive attractive cash generation and returns.”