Balfour Beatty (BBY) chief executive Leo Quinn says the UK government needs to set out its spending plans by the end of the year in order to prevent long-term damage to the construction industry and show Britain is ‘open for infrastructure’.
Quinn says companies need certainty on projects from energy to flood defence schemes in order to make the necessary investments in training and other long-term initiatives required to deliver projects effectively.
‘We have a new government and they should be given time but we do need them to step up and make decisions that remove uncertainty further,’ said Quinn at half-year results which showed Balfour’s revenue declined 6% at constant exchange rates.
‘It’s important we don’t go beyond the end of the year because we train people for a lifetime and if we don’t have that continuity then it’s hard to make those investments.
‘It’s a bit of a no brainer because money is free at the moment so it’s important we move ahead now. A lot of the UK’s prospects hang on the government’s decisions over the next few months.’
Shares in Balfour trade 6.4% higher at 260p this morning as investors cheered Balfour’s return to the dividend list.
It is proposing a 0.9p a share interim payout as Quinn says a turnaround plan looks set to return the business to industry average margins over the next two years.
Balfour ran into trouble in 2014 when it reported unexpected losses in its construction unit because of cost overruns.
Underlying profit in the first six months of 2016 was £14 million on revenues in excess of £4 billion and Balfour reported an underlying loss of £11 million.
Quinn says revenue growth is not an essential requirement for the business to deliver its margin targets.
Order book, a measure of work contracted but not yet started, increased 7% at constant currency to £12.4 billion and Balfour’s book of infrastructure investments was valued at £1.25 billion, flat on a year earlier.
