Balfour Beatty returns to profit

Workers on Crossrail Image copyright PA

UK engineering giant Balfour Beatty has returned to profit after two years of losses.

The company behind Crossrail and the transformation of the former Olympic Stadium into West Ham's ground made an £8m profit, after a £199m loss in 2015.

Balfour said it had allowed its business to become too complex after a series of takeovers.

Chief executive Leo Quinn said the company's leadership, processes and controls had been upgraded.

"The transformation of Balfour Beatty is well under way," he said.

High profile projects

The company said that, by 2014, it had become overly complex following more than a decade of acquisition-led growth.

It added there had been an overall lack of leadership and strategic direction, and that its businesses had a tendency to compete with each other. However, Balfour says its business has now been simplified.

The company is involved in some of the country's highest profile building projects.

As well as Crossrail, which will link west and east London, it is upgrading motorways and working on the Thames Tideway Tunnel.

In the next few years it plans to be part of the country's three biggest infrastructure projects: High Speed 2 (HS2), the new nuclear power stations at Hinkley Point C and Wylfa, and the third runway at Heathrow airport.

'Reasonable foundations'

Analysts have been encouraged by the company's progress.

"The self-help phase of the turnaround plan has restored the group to reasonable foundations, with the all-important construction division back in profit in the second half," said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

"The strategy now calls for the group to rebuild margins towards something close to industry standard - at around 2% it's not an overly ambitious target on the face of it, but something Balfour have failed to achieve for some time," he said.

Balfour said it was upbeat about prospects as the "trading environment in the group's core UK and US markets remains positive".

"In the UK, government policy is helping to drive a strong pipeline of major infrastructure projects in transport and energy.

"In the US, the new administration has made infrastructure one of its key priorities."

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