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A tale of 2 construction stocks – Balfour Beatty swings to profit only 2 months after Carillion collapse

by | 14 Mar, 2018

 

A tale of two construction stocks

While British construction services company Carillion collapsed in spectacular style earlier this year under the weight of its huge debt burden, another UK construction giant that worked alongside it has seen its shares rise (see below) after revealing record profits. 

Balfour Beatty said today its annual underlying pretax profit had almost tripled to £165 million by the end of 2017, from £62 million a year earlier, as it’s construction unit bid more selectively to win profitable contracts.

The gains for the firm are a testament to the benefits of a prudent strategy in picking projects, as opposed to Carillion, who took on more than they could chew.

The Chief executive of Balfour Leo Quinn explained it narrowly avoided the same fate as Carillion by reforming its business in the past few years.

Quinn said to BBC Radio 4: “We had our own near-death experience three years ago – eight profit warnings, £600m cash outflow in nine months from the company. These results today demonstrate an amazing transformation and turnaround.”

The company, which is behind the Crossrail project, was directly affected by Carillion’s liquidation – suffering a one-off-loss of £44 million on the Aberdeen Western Peripheral Route project as a result of Carillion’s fall.

The stellar reversal of fortunes for Balfour Beatty comes as the UK’s construction sector contracted for the ninth month in a row in March.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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