LONDON: Balfour Beatty is looking to its professional services business to drive growth in markets such as India and Australia after the British infrastructure firm's profits rose 20 percent last year.
A strong balance sheet means that the group has the firepower to make bolt-on acquisitions, particularly in new or emerging markets that are pivotal for global contractors as Western markets lag.
"We are looking at the growth strategy, that is an organic strategy, but from time to time, there are opportunities to give that growth a kickstart," Chief Executive Ian Tyler told Reuters, citing its purchase of Canadian professional services firm Halsalls as a model for future deals.
The group bolstered its professional services capacity with the acquisition of US firm Parsons Brinckerhoff in 2009.
Tyler said the group was on track to achieve cost savings of 30 million pounds ($49 million) by end-2012. Its order book rose 8 percent to a record 15.2 billion pounds last year.
Balfour Beatty, which operates in 80 countries, offers a range of infrastructure services. It is moving towards higher margin businesses such as design and consulting, known as professional services.
Tyler said that most medium-term growth would be focused around the professional services division, with markets such as India and Australia and sectors such as mining a key priority.
"The development of infrastructure is gaining pace (in India). The real thing for us is to take other capabilities like our financing capability into that market," he added, referring to the big public/private partnership market in India.
British ground engineering company Keller said on Monday that India was also a key focus.
China, the US and India will generate over half of the predicted $4.8 trillion growth in global construction over the next 11 years, according to a new report from PricewaterhouseCoopers, with India set to become the world's third largest construction market by 2018.
Balfour said 2010 pretax profit before exceptional items and amortisation rose to 319 million pounds ($520.9 million) compared with 265 million a year ago, against a consensus of 314 million pounds supplied by the company.
"Professional Services and Construction Services (are) slightly ahead of estimates. Construction margins are holding up well...and contract performance also seems strong," said Joe Brent at Liberum Capital.
Balfour, which recently secured a Crossrail deal in Britain, is in the process of launching its own infrastructure fund management business by raising external equity. It will also sell off its mature PFI portfolio over the next 5 years.
Balfour proposed a final dividend of 7.65 pence per share; with the full year dividend up 6 percent at 12.7 pence per share.
Balfour shares were up 3.3 percent at 0930 GMT, outperforming a 0.4 percent higher FTSE 250 mid-cap index.
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