Balfour Beatty confirms water market exit
August 17, 2020 – Balfour Beatty has confirmed it is exiting both the gas and water markets warning the risks and returns fail to meet its selective bid criteria.
The contractor first revealed five months ago that it would wind down gas infrastructure activities, highlighting historic underperforming contracts for the decision.
At the time it kept the door open to selectively bidding water work where Balfour could deliver value for clients at appropriate risk and returns.
But with wafer-thin margins, high risks and heavy working capital demands in the sector, Balfour this week confirmed it was unlikely to take on any new work in the next AMP7 spending period.
Chief executive Leo Quinn said: “The group continues to manage two long-term gas contracts in the RIIO-GD1 period – until early 2021 – which have historically underperformed and have also been negatively impacted by Covid-19.
“The gas market is no longer considered viable to the group because of the unfavourable working capital and onerous terms and conditions.”
He added: “The water business is now at the end of the current AMP6 water regulatory cycle. Balfour Beatty has historical contracts with Thames Water, Anglian Water and United Utilities.
“Under the new AMP7 regulatory period (2020-2025) contracts are generally being awarded on terms that are not acceptable to Balfour Beatty and therefore the group is only expected to retain the Anglian Water contract.”