Balfour Says U.K. Infrastructure Market Resilient to State's Spending Cuts

U.K. infrastructure spending will grow “significantly” as water, power and airport projects outweigh budget cuts for schools and public buildings, according to Balfour Beatty Plc, Britain’s biggest builder.

Overall prospects for Britain’s infrastructure market remain “very strong,” though Balfour is budgeting for a decline in state projects over the next four or five years, Chief Executive Officer Ian Tyler said in a telephone interview.

Britain’s government is preparing the deepest cuts to public spending since World War II, threatening projects to build schools, prisons and railways. Balfour is partly shielded by contracts including a 460 million-pound ($721 million) order to expand Heathrow airport’s Terminal 2.

“If you take the U.K. infrastructure market, it will grow, it will grow significantly by anyone’s calculations over the next five years,” Tyler said, adding that Balfour will also be boosted by expansion overseas.

Hong Kong, Singapore, South Korea and India, where Balfour is helping develop the Mumbai metro and Delhi’s airport, will provide opportunities in “the long term,” Tyler said.

Balfour bought employee-owned Parsons Brinckerhoff in September for $626 million, taking the company into Australia, India, China and South Africa. The purchase helped boost first- half profit 24 percent to 63 million pounds. Revenue rose 4.9 percent to 4.6 billion pounds.

The U.S. accounts for about 35 percent of revenue and profit, Tyler said, while the U.K. is “less than half,” he said.

Balfour Beatty was little changed in London trading, trading at 264.2 pence as of 10:28 a.m. The company is valued at 1.81 billion pounds.

To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net.

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