Balfour Beatty has reported a £150m pre tax loss
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Balfour Beatty has reported a £150m pre tax loss for the half year to June 2015 because of problem contracts.
Construction services made a £209m loss with the UK operation racking-up £145m of that.
Balfour said: “The business is focused on managing the historic problem contracts, impacting profit and cash, through to completion.
“As at June 2015, 31% of the historic projects are already at practical or financial completion.
“By the end of 2016 the number of these projects at practical or financial completion is expected to be greater than 90%.
“In the UK there are a handful of very complex projects where the range of potential outcomes could result in a materially positive or negative swing, the most significant of which are in Major Projects.”
Balfour has revamped its leadership team and radically altered the way it bids for and delivers work.
All “significant” bids are now reviewed by a panel of senior management while the company rolls-out its Build to Lasttransformation programme.
Initiatives include the Cash is our Compass training programme and My Contribution where staff are asked for money saving ideas.
Balfour is looking to take-out £100m in costs from the business by the end of next year.
The company confirmed that it made £6m in redundancy payments during the first half of the year.
Leo Quinn, Group Chief Executive said: “Six months in, our Build to Last transformation programme is gaining traction throughout the business.
“We have a new senior leadership team and an organisation re-aligned with key customer sectors. We are on course to meet our 24-month targets for £200 million cash in and £100 million cost out.
“In rising core markets, the Group is continuing to win business on better terms across our operations.
“In the last few months the awards of contracts or preferred bidder status for three landmark projects – Bergstrom Expressway in Austin Texas, nuclear new build Hinkley Point C power station electrical package and a UK smart motorway package – is a further endorsement of Balfour Beatty’s leading capabilities.
“Inevitably the headline numbers set out the consequences of the historic issues that are now being tackled.
“However the continuing confidence of our customers in Balfour Beatty’s expertise, the positive response of our people to change, demonstrated by our excellent net cash performance, and the underlying strength of our balance sheet, supported by the Investments portfolio, all reinforce my conviction that over the medium term we can provide our customers, employees and shareholders with superior returns.”