Balfour Beatty, the international infrastructure group, has announced further overhead reductions and additional supply chain savings with the publication of its latest trading update covering the period to 17 November 2014.
On overall trading, the group said there has been no material change in trading since the last trading update on 29 September 2014.
The UK construction business is continuing to prioritise actions to address the issues highlighted in the September trading update. These include further overhead reductions and additional supply chain savings. The regional business is continuing to reduce both its exposure to smaller contracts and its number of delivery units.
The update said an independent review by KPMG of the contract portfolio within Construction Services UK is "well under way", with the report expected by the end of 2014.
Balfour Beatty said the remainder of the Construction Services division and the Group’s other operating divisions, Support Services and Infrastructure Investments, are continuing to trade as expected.
Order book stands at £11.7 billion
At the end of the third quarter, the order book stood at £11.7 billion, flat on the half-year. The order book at the half year has been restated from the reported £13.0 billion to £11.7 billion from continuing operations, to take account of the Parsons Brinckerhoff disposal.
The Construction Services order book increased to £7.9 billion, driven largely by an increase in the US, predominantly due to foreign exchange movements, and by contracts in the UK announced in the period. The growth was offset by an expected reduction in the Support Services order book to £3.7 billion, as we continued to complete on long term contracts in both the Power and Water sectors.
Parsons Brinkerhoff sale raised £753 million
The disposal of Parsons Brinckerhoff l was completed on 31 October and raised £753 million - which represented a multiple of 11 times underlying EBITDA for the year ended 31 December 2013 and was received on 31 October.
Average net debt for the nine months to the end of September was £477 million. The firm expects average net debt for the full year to be approximately £400 million after taking into account the benefit of the proceeds from the sale of Parsons Brinckerhoff.
In October the Group announced the appointment of Leo Quinn as its new Chief Executive Officer. He will take up his new position and join the Board on 1 January 2015. The processes to appoint a new non-executive Chairman and Chief Financial Officer are being actively progressed.
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