- Trading in line with expectations
- Order book stable YOY, hit by FX
- Strong cash generation in December
Battling a challenging market in Australia, construction group Balfour Beatty said it has maintained trading in line with expectations for the full year.
This is partially helped by the arbitration process of an antipodean contract dispute now being expected to slip into the next financial year.
Balfour said the process was well advanced and it remained confident that it will achieve a positive outcome but a settlement was unlikely to be reached in time to be recognised in the 2013 results.
The FTSE 250 company pointed to several major contract wins and said cost reduction measures in Australia were mitigating the impact of the continued challenging market conditions for the Professional Services arm.
However, the order book was maintained in line with its previous year-end position of £13.5bn.
"The order book has been impacted by negative foreign exchange
movements, and a continuing shift in the mix of our Construction order book from the UK to the US," the group reported.
It claimed progress on its series of planned disposals, but had seen the performance of its German rail business worsen since the beginning of November, primarily due to three complex loss-making contracts.
Discussions with a number of potential buyers for the German business remained ongoing.
Underlying cash performance was in line with expectations, with average net debt for the year of £350m, and a strong cash performance in December 2013 that resulted in net debts of under £100m at the year end.
Broker Investec said that while the trading update was light on detail, the cash performance gives confidence that "there is light at the end of the tunnel".
Significant contract wins in the last few months included financial close on the £317m Greater Gabbard offshore UK wind power transmission project and this week it announced reaching preferred bidder status for a £196m children's and women's hospital project in Canada.
But Balfour said it was no longer bidding for Network Rail's track renewal work in the UK, with its existing contract running to the end of the first quarter 2014.
Management did not specifically address the outlook for the company, which, said Investec, implied the company was "not out of the woods yet" and so analysts would continue to "adopt a cautious stance on the recovery trajectory of both margins and cash".
"However, latest construction data is beginning to look more encouraging and importantly, this is not just confined to the residential sector."
Shares in BBY were up 1.2% to 293.5p at 12:25 on Tuesday.