Back in the game.
Builder Balfour Beatty has returned to profits after two years of losses, with its statutory pre-tax loss of nearly £200m for 2015 flipping to a profit of £8m for last year. CEO Leo Quinn hailed it as a “transformation”.
“Having simplified the Group, we are focused on our core markets in the UK and US, where governments are committed to large scale expenditure on infrastructure. All this positions us for future profitable growth,” he said.
The company started to see a break in the clouds last summer, when it reinstated its dividend to investors after being dragged down by overly cheap contracts and forced to issue a series of profit warnings. It also fended off a takeover attempt.
Now, it has dropped some non-core assets, simplified its management structure and boosted risk management, all in an effort to get back on track. A newly “disciplined” approach to bidding for contracts also helps.
The UK construction business reported an underlying profit from operations in the second half of the year.
By 2014 Balfour Beatty had become overly complex following more than a decade of acquisition-led forced growth. There was an overall lack of leadership and strategic direction. Operationally, project bidding and delivery lacked standard processes and internal systems and controls were weak with little focus on cash management. A federated culture had resulted in layers of unnecessary cost and a tendency for elements of the business to compete with one another. Inevitably, performance had deteriorated not only financially but in terms of customer and employee satisfaction.
The decisions and actions taken under Build to Last were often, in themselves, simple and straightforward. However, taken early and in combination, they are now transforming Balfour Beatty.