Balfour Beatty, the engineering and construction company, said on Thursday that trading in the first half of 2006 had been good, with an order book now worth more than £8.5bn, and gave an upbeat outlook for the rest of the year.
“Markets have remained positive,” the company said. “We anticipate our businesses will continue to perform well in the second half of the year and that the group will make good progress in 2006 as a whole.”
During the first half, Balfour secured part of a £559m Birmingham hospital public private partnership concession, a 35-year joint venture. It said that the project had the potential to generate more than £300m of long-term service revenues.
The company said its building management and services division and its civil engineering business were performing strongly, helped by new contract wins. However, the rail engineering division had been affected by the absence of last year’s one-off contract settlements and lower activity by Network Rail.
Balfour is involved in the building of the new Terminal Five at Heathrow airport, and said progress on the major rail contracts at the terminal was good.
Balfour said that Metronet, the London tube maintenance consortium in which it holds a 20 per cent stake, was making “satisfactory progress”, although there had been delays to the station upgrade programme and some “challenging operating issues”.
Metronet holds two 30-year contracts to maintain the London Underground, and is owned by a consortium that also includes WS Atkins, Bombardier Transportation, EDF Energy and RWE Thames Water. Atkins said recently reported a sharp fall in profits from its activites related to Metronet.
Balfour recently completed the acquisitions of Charter, a US construction management company, and Edgar Allen, a UK rail products manufacturer, for net consideration of £20m. It also launched a £32m cash offer for Birse, the UK engineering company.
The shares edged up 3¾p to 333¾p in morning trading.
• Separately, Amec, the engineering services company, said on Thursday that it had won a £319m private finance initiative (PFI) schools contract as part of a consortium that also includes Innisfree and Equion, a division of John Laing, the PFI specialist.
The joint venture - lasting 30 years - will involve delivering 17 new and two refurbished secondary schools in South Lanarkshire. Amec shares were hit earlier this month after the company lost a large NHS contract to build a hospital in Colchester, Essex, when the PFI project was cancelled. On Thursday morning they rose 3½p to 316p.
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