Balfour Beatty strengthens order book

UK construction group Balfour Beatty today said it was on track to meet forecast earnings for 2006, after orders grew by 20%.

The engineering giant reported its order book increased to around £9bn (€13.6bn), up from £7.6bn (€11.5bn) at the end of 2005.

The private finance initiative (PFI) specialist reported the strongest progress in the building sector, fuelled by more than £650m (€983.9m) of potential new work in facilities management. This included “major new long-term contracts” for the Department of Work and Pensions and the Metropolitan Police.

In a trading statement today, the company described its investments performance as “very satisfactory” with preferred bidder status secured on a number of projects.

Engineering improved with the appointment of the company as preferred partner for the £550m (€832.6m) Eastern Electricity Alliance by National Grid, but reorganisation costs for Balfour Beatty Construction in the US affected the division.

Meanwhile, rail saw “strong recovery” in the second half year after a “relatively weak” first half. The Metronet project on the London Underground completed the Waterloo and City line refurbishment and the company was recently awarded the £363m (€549.5m) contract for the new East London Line.

However, Balfour Beatty reported that its building and engineering sectors felt “the impact of some issues” related to the delivery programme for the London Underground public private partnership.

Joe Brent, analyst at Citigroup, judged that the business was performing “soundly”, but noted that there was “no material news” on many contracts.

He said: “The business is strategically challenged … [and] we expect government spending growth to reach an inflection point this year.”

Balfour Beatty will announce its full-year earnings on March 7. Mr Brent said he was looking for profits of £130m (€196.8m), against £141m (€213.4m) last year.