While British construction services company Carillion collapsed in spectacular style earlier this year under the weight of its huge debt burden, another UK construction giant that worked alongside it has seen its shares rise (see below) after revealing record profits.
Balfour Beatty said today its annual underlying pretax profit had almost tripled to £165 million by the end of 2017, from £62 million a year earlier, as it’s construction unit bid more selectively to win profitable contracts.
The gains for the firm are a testament to the benefits of a prudent strategy in picking projects, as opposed to Carillion, who took on more than they could chew.
The Chief executive of Balfour Leo Quinn explained it narrowly avoided the same fate as Carillion by reforming its business in the past few years.
Quinn said to BBC Radio 4: “We had our own near-death experience three years ago – eight profit warnings, £600m cash outflow in nine months from the company. These results today demonstrate an amazing transformation and turnaround.”
The company, which is behind the Crossrail project, was directly affected by Carillion’s liquidation – suffering a one-off-loss of £44 million on the Aberdeen Western Peripheral Route project as a result of Carillion’s fall.
The stellar reversal of fortunes for Balfour Beatty comes as the UK’s construction sector contracted for the ninth month in a row in March.