{"id":29520,"date":"2025-03-14T14:29:59","date_gmt":"2025-03-14T21:29:59","guid":{"rendered":"https:\/\/essential.construction\/news\/balfour-beatty-wary-of-tariffs-amid-profit-dip\/"},"modified":"2025-03-14T14:29:59","modified_gmt":"2025-03-14T21:29:59","slug":"balfour-beatty-wary-of-tariffs-amid-profit-dip","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/balfour-beatty-wary-of-tariffs-amid-profit-dip\/","title":{"rendered":"Balfour Beatty wary of tariffs amid profit dip"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"text-to-speech\">\n    <button class=\"text-to-speech__button button\"><\/p>\n<p>            <img decoding=\"async\" class=\"text-to-speech__button__icon\" src=\"https:\/\/www.constructiondive.com\/static\/images\/audio_icon.svg?482016190122\" alt=\"-\"><\/p>\n<p>        Listen to the article<br \/>\n        <span class=\"text-to-speech__button__audio-length\">4 min<\/span><br \/>\n    <\/button><\/p>\n<div class=\"text-to-speech__controls\">\n        <audio controls=\"\" class=\"js-text-to-speech\" preload=\"none\"><source src=\"https:\/\/res.cloudinary.com\/dmgi9movl\/video\/upload\/q_1\/v1741975144\/news\/text_to_speech\/balfour-beatty-wary-of-tariffs-amid-profit-dip_eumwvk.wav\" type=\"audio\/mp3\"><\/source><\/audio><\/p>\n<div class=\"text-to-speech__controls__text\">\n            This audio is auto-generated. Please let us know if you have <a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/contact\/\" target=\"_blank\">feedback<\/a>.\n        <\/div>\n<\/p><\/div>\n<\/div>\n<p><span><span><span><span><span><span>London-based builder Balfour Beatty hasn\u2019t experienced any disruptions from regime change in Washington, but it is keeping an eye on tariffs coming from the U.S., CEO Leo Quinn told listeners during the company\u2019s <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.balfourbeatty.com\/media\/ejel2xby\/fy2024-results-transcript.pdf\" target=\"_blank\"><span><span><span><span><span><span><span><span>2024 full-year earnings call<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> on March 12.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cThe one area we are focused on is actually the tariffs,\u201d Quinn said on the call. \u201cYou know, when someone puts steel up by 50% from Canada, we need to be careful because we carry a big backlog, and it all goes into the subcontract base.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>The <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/tariffs-shake-up-construction\/741611\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>looming threat of tariffs<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> \u2014 blanket cost hikes on goods from Canada, Mexico, China and the European Union and further increases on certain materials, such as steel and aluminum \u2014 has put contractors in a difficult position. <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/tariff-risk-tips-construction-contracts\/740768\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>Builders are now adjusting contracts<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> for protection from sudden cost jumps and stockpiling materials to get ahead of prices.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Quinn, who is <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/balfour-beatty-ceo-step-down-leo-quinn\/741879\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>stepping down as CEO in September<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>, said in response to a financial analyst\u2019s question that Balfour Beatty would likely act as a \u201cconduit\u201d in the brewing trade war, passing costs down first to subcontractors, and then to clients.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cNow, our risk doesn&#8217;t sit with us, it sits with the subcontract base, and, for reasons of change of <\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span>law or certain terms and conditions, it flows back to the customer,\u201d Quinn said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>However, problems could crop up if a subcontractor goes bankrupt, whereupon the liability could reverberate back up the chain. Quinn said the firm was managing the situation carefully, and ensuring that subcontractors are bonded and secured to decrease its own risk.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Philip Harrison, the company\u2019s CFO, added that bonds or insurance would be the company\u2019s fallback plan, should a subcontractor go bankrupt.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cOur risk is always schedule, not the subcontractor going bust,\u201d Harrison said.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<h3 class=\"standard-heading\"><span><span><span><strong><span><span>The numbers<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n<p><span><span><span><span><span><span>The contractor reported a <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.balfourbeatty.com\/media\/fsrpzelt\/2024-full-year-results-announcementpdf.pdf\" target=\"_blank\"><span><span><span><span><span><span><span><span>2024 pre-tax profit of 214 million pounds<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span> ($277 million), down 12% <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/balfour-beatty-earnings-2023-full-year\/710282\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>from 2023\u2019s 244 million pounds<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>, according to a March 12 news release detailing the company\u2019s financial results.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Harrison pointed to a small number of delayed U.S. civil jobs that continued to drag on that unit\u2019s profitability. Revenue from the firm\u2019s overall U.S. construction business shrank 2% in 2024 to 3.6 billion pounds.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cAs we progress through these delayed civil projects, we expect U.S. Construction PFO to <\/span><\/span><\/span><\/span><\/span><\/span><span><span><span><span><span><span>improve in 2025,\u201d Harrison said, referring to the firm\u2019s profit from operations.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Despite the dip in profits, Balfour Beatty reported 18.4 billion pounds in backlog \u2014 which it refers to as its \u201corder book\u201d \u2014 on the year, up approximately 12% from 2023\u2019s 16.5 billion pounds. Its U.S. Buildings segment led the charge with 26% backlog growth, per the release. Revenue rose to 10 billion pounds, up approximately 4% from 2023\u2019s 9.6 billion pounds.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Yet that growth of pending work in the U.S. could be a double-edged sword, as Quinn noted, due to the impact of future tariffs.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>In the U.K., the company\u2019s performance in the power infrastructure sector echoed the prediction Quinn made during Balfour Beatty\u2019s <\/span><\/span><\/span><\/span><\/span><\/span><a rel=\"nofollow noopener\" href=\"https:\/\/www.constructiondive.com\/news\/momentum-balfour-beatty-earnings-power-infrastructure\/724450\/\" target=\"_blank\"><span><span><span><span><span><span><span><span>half-year earnings call in August<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a><span><span><span><span><span><span>. The company claims it holds market-leading capabilities in the space and that backlog for power transmission and distribution work more than doubled in 2024, per the news release. Its overall Support Services\u2019 backlog, which includes power transmission and distribution projects, grew 14% to 3.2 billion pounds.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>Balfour Beatty said that in the U.S., its organic growth strategy and a more stable economy has resulted in the growth, alongside increased demand across most of its geographies and client sectors, according to the news release.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<p><span><span><span><span><span><span>\u201cWe&#8217;re optimistic about 2024\/25,\u201d Quinn said. \u201cWe know that we&#8217;ve got lots of volume out there which allows us to be selective in what we do.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n<p>[ad_2]<br \/>\n<br \/><a href=\"https:\/\/www.constructiondive.com\/news\/balfour-beatty-tariffs-earnings-full-year-2024\/742594\/\" rel=\"nofollow noopener\" target=\"_blank\">This article was originally posted at Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Listen to the article 4 min This audio is auto-generated. Please let us know if you have feedback. London-based &#8230; <a title=\"Balfour Beatty wary of tariffs amid profit dip\" class=\"read-more\" href=\"https:\/\/essential.construction\/news\/balfour-beatty-wary-of-tariffs-amid-profit-dip\/\" aria-label=\"Read more about Balfour Beatty wary of tariffs amid profit dip\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[457],"tags":[],"class_list":["post-29520","post","type-post","status-publish","format-standard","hentry","category-construction-dive","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/29520","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/comments?post=29520"}],"version-history":[{"count":0,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/posts\/29520\/revisions"}],"wp:attachment":[{"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/media?parent=29520"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/categories?post=29520"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/essential.construction\/news\/wp-json\/wp\/v2\/tags?post=29520"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}