Water and Effluent Treatment Magazine
Issue link: https://fhpublishing.uberflip.com/i/507429
6 Leaders 2015 The LeADeRS 2015 Balfour Beatty looks to the ture Problem contracts and merger talks contributed to an eventl 2014 for Balfour Beatty. But the focus now is on building to last. D espite a turbulent time as a result of some troublesome construction contracts, along with the distraction of merger talks with Carillion, Balfour Beatty continues to top the turnover chart with revenue of more than £8.7bn. It is the fi•h consecutive year that Balfour has topped the Turnover Top 10, and is streets ahead of second-placed AMEC and third- placed Kier. Balfour Beatty's water business is just one of the areas that has brought some welcome news to the group as it strives to put a troublesome year behind it. The group's order book has benefited from new AMP6 contracts with Anglian Water, United Utilities and, in a three-way joint venture, Thames Water. The water activities are part of Balfour Beatty's support services division, which also includes the power Turnover £M Balfour Beatty 8,745 AMEC 3,974 Kier Group 2,954.3 Morgan Sindall 2,094.9 Amey 1,761.5 Vinci Construction 1,232.3 Mace 1,181.1 Skanska UK 1,120.7 Costain 885.2 Interserve 770.7 "Balfour Beatty's recent trading makes it imperative to gain early momentum in our transformation plans" and transportation operations. The division reported a 1% increase in revenue to £1.3bn last year while profit from operations was down 9% to £50M. At group level, though, Balfour Beatty's 2014 results have been described by chief executive Leo Quinn as being "pretty horrid". Balfour Beatty announced an £80M underlying pre-tax loss last year, compared with a profit of £131M in 2013, while underlying turnover was down to £8.4bn. The cause of the poor results has been laid firmly at the door of the UK construction business, where there have been a number of problem contracts and most of which were due for operational completion in 2014. Action was swi•ly taken to refocus Construction Services UK and improve efficiency, including eliminating a layer of the management structure as part of simplifying the business, and targeting an increase in the average contract size in regional construction, with bidding activity being tightly controlled across the division. Pipeline Of the UK construction business, Quinn says: "The thing that I'm looking at and focused on is the fact that over the next 24 months, I think all bar one or two of those [problem] contracts will be completed, the majority of which will be completed in the next 12 months. So getting those out of the pipeline is really, really important and getting the focus back on new business." Quinn has taken tough action by suspending the group's final dividend for 12 months, cancelling a proposed £200M share buyback plan, and changing pension fund payments to shore up the balance sheet. Balfour Beatty is also undergoing a major transformation designed to drive continual improvement across all its businesses. The Build to Last programme will target bringing each business unit to industry-standard performance levels by focusing on four key areas: • Lean – Deliver rapid performance improvement by strengthening financial controls and transparency and simplifying the organisation with detailed indirect cost reduction plans, plus the launch of the My Contribution productivity initiative (metric: operating profit and operating cash generation) • Expert – Ensure the attraction, retention and development of key employees and sub-contractors by investing in training and talent to enhance engineering, project management and delivery capability Balfour Beatty Utility Services Park Square, Newton Chambers, Chapeltown, Sheffield. www.bbusl.com