Global construction giant Balfour Beatty is expected to post good figures in its interim results tomorrow, despite a more general slowdown in the UK construction sector.
Buoyed by the success of its part in building the Olympics Aquatics Centre and its ongoing work with Crossrail in London, Balfour Beatty has performed "particularly well in a weak market", according to analysts.
"With Balfour Beatty’s share price up by almost 6% this year, its outlook will likely be spurred by recent government announcements on infrastructure investment plans," said Brenda Kelly, senior market strategist at CMC Markets.
Joe Brent, head of UK Small & Mid Cap research at Liberum Capital warned there were pricing pressures due to hit contracts in the UK market and Balfour Beatty's UK book for future orders could be down as much as £200m as non-residential construction markets are difficult.
"The UK construction market is undoubtedly tough, with a dearth of large contracts, but there are a still a large number of civils opportunities," he added. "Balfour’s should be more resilient (than its peers) given that it operates in difficult verticals in a range of geographies."
Despite the tough market, the outlook for the wider construction industry could be positive.
CMC Markets' Kelly told the Huffington Post that the UK construction sector had made a surprise return to expansion territory in July. While the operating environment in the construction sector was likely to remain challenging in some of the major markets, the UK market is expected to remain competitive.
She said: "There are significant plans by the UK government to underwrite up to £40bn of construction projects, while electricity and gas regulator, Ofgem is planning to spend £22bn by 2021. It is therefore mainly in the longer, rather than near term, that we can expect much of a bounce in this area."
Robert Care, chair of the UKMEA region of Arup, an independent firm of designers, planners and engineers, called for the government to go further in its assistance.
"It would be helpful to have a clearer and more consistent pipeline for future work to help businesses plan ahead and build capacity," he said. "I hope the government will build on the work done by Infrastructure UK and the development of the National Infrastructure Plan.”