UPDATE 1-Balfour Beatty's annual profit almost triples

Wed, 14th Mar 2018 08:05

* Annual underlying profit rises 166 pct to 165 mln pounds

* UK construction business back in black

* Company more selective in contract decisions(Adds CEO comments, share movement)

By Radhika Rukmangadhan

March 14 (Reuters) - Britain's Balfour Beattyreported a tripling of annual profit on Wednesday and said theconstruction was returning to health after the high-profilecollapse of Carillion this year.

The demise of Carillion came after construction companiestook on major contracts at thin margins, leaving them nursinglosses in the event of delays or problems.

"Companies are starting to recover from what effectively wasvery low pricing in 2013 and 2014," Balfour Beatty ChiefExecutive Leo Quinn told Reuters.

"I wouldn't brand the industry like Carillion," he added.

Underlying pretax profit for the infrastructure and buildingcompany rose to 165 million pounds ($230.4 million) in 2017,from 62 million pounds a year earlier.

"The business increased bid margin thresholds ... coupledwith a lower risk profile, so that the group wins work atappropriate terms and conditions," the company said in astatement.

Its UK construction business reported an operating profit of16 million pounds last year, recovering from a 65 million poundloss in 2016.

Shares in Balfour Beatty were up 2.8 percent at 284.7 penceat 1010 GMT.

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Balfour Beatty has overhauled operations, in a turnarounddubbed "Build to Last", after losses at its British constructiondivision led to multiple profit warnings.

As well as selecting contracts more carefully, BalfourBeatty has also narrowed its focus to Britain and Ireland, theUnited States and the Far East.

It has pulled out of the Middle East, another problem regionfor Carillion, Indonesia and Australia.

Its order book fell 8 percent to 11.4 billion pounds in 2017and it said it saw a strong commitment from the Britishgovernment towards the new high speed railway (HS2) project andHighways England road programmes.

The company said it was on track to achieve"industry-standard margins" in the second half of 2018, andadded it will continue to sell assets in its infrastructureinvestments business.

One of Carillion's joint venture partners on the AberdeenWestern Peripheral Route (AWPR) road project in northernScotland, it took a one-off charge of 44 million pounds in 2017due to Carillion's liquidation.($1 = 0.7161 pounds)(Reporting by Radhika Rukmangadhan in Bengaluru; Editing byKeith Weir)