Dive Brief:
- London-based contractor Balfour Beatty has reported a 26 million pound ($34 million) pretax loss in the first half of 2020 compared with a profit of 63 million pounds in the same period last year. The decline was directly related to COVID-19 challenges, said group CEO Leo Quinn in an earnings call earlier this week.
- Nevertheless, the company said it expects its U.K. and U.S. construction businesses to recover through the second half of the year, due to anticipated government stimulus for infrastructure projects.
- The firm's backlog increased 22% to 17.5 billion pounds from 14.3 billion pounds at the end of last year, mainly from new contracts for the High Speed 2 rail line connecting London to northern England. The firm also reported total revenue of 4.1 billion pounds compared with 3.9 billion pounds for the first six months of 2019.
Dive Insight:
As one of the U.K.’s largest infrastructure contractors, Balfour Beatty kept many of its projects running during the coronavirus outbreak, in line with government guidance, but social distancing requirements have slowed work on many sites, Quinn said.
The company has implemented cost-saving measures to help mitigate these effects, including salary reductions for senior executives and suspending its dividend since late March. In the earnings call, Quinn said the firm would reinstate it as soon as possible.
Recent awards in the company's U.S. building division include the $780 million Broward County, Florida convention center expansion and 800-room hotel; $370 million for the mixed-use Block 216 project in Portland, Oregon; a $305 million contract for Phase 2 of The Wharf project in Washington, D.C.; and the $550 million Oak Hill "Y" highway expansion in Austin, Texas.
The coronavirus has had a debilitating effect on the British construction industry overall. Data released yesterday from the U.K.’s Office of National Statistics (ONS) showed that construction output dropped 35% last quarter. The value of new orders in Q2 was at the lowest level since recordkeeping began in 1964, it said.
The ONS also reported that U.K. economic output shrank by 20.4% in the second quarter of 2020, the worst quarterly slump on record, which has pushed the country into the deepest recession of any major global economy, according to the BBC.
In late June, Prime Minister Boris Johnson announced plans to stimulate the British economy by investing in infrastructure and public projects and easing planning regulations. His 5 billion pound “New Deal” involves building or renovating schools, roads, hospitals, town centers and prisons across the country.
Infrastructure stimulus has been discussed in the U.S. Congress and by President Donald Trump as a way to help jump start the American economy, but no specific plan has been approved as of yet. Since the pandemic began, projects totaling more than $9.6 billion have been delayed or canceled, according to a report released by the American Road & Transportation Builders Association (ARTBA).
