Balfour Beatty’s UK construction business suffered a loss of £ 23 million in the first half of the year.
The UK’s largest developer said it was facing problems on a number of fixed price housing projects in central London – and will therefore be pulling out of the sector. A cladding problem on a high-rise project could cost £ 50m to fix.
The disruption caused by the pandemic was said to have created delays that forced the company to write off its expected profit, resulting in an underlying operating loss of £ 23 million for the division.
It said: “Balfour Beatty will no longer make offers for residential real estate projects at a fixed price in central London.”
The company also indicated that another high-rise project in London, which was completed in early 2016, may require refurbishment.
It says: “In June 2021, a first static report was received that indicated that the stone slabs attached to the facades must be modified, reinforced or replaced in order to meet the performance requirements.”
Balfour said it was unable to say exactly how much the work would cost, but it could be as high as £ 50 million.
The company also repaid £ 19 million it received from employee leave of absence at the start of the pandemic.
It added that its order book, which increased from $ 3 billion in 2020
At the halfway point, 90% of UK construction backlog was public and regulated industry customers.
Overall, the company’s profits recovered steadily from the Covid 19 pandemic in the first half of the year – with its half-year results from last year, the company was in the red for the first time in four years.
Pre-tax profit for the period jumped from a loss of £ 26 million in the same period last year to £ 35 million in the first half of 2021.
An interim dividend of 3 pence per share was paid to the shareholders. The company bought £ 99 million of shares in a buyback program launched earlier this year.
Revenue rose slightly in the first six months of the year to £ 4.15 billion from £ 4.12 billion in the same period last year.