British construction and services group Balfour Beatty posted a 36% rise in first-half profit on Wednesday and said it saw further progress after winning four U.S. contracts worth over $730 million.
"This has been another very, very good period for Balfour Beatty. We are looking forward to further growth in the second half and beyond," Chief Executive Ian Tyler told Reuters.
The group reported pretax profit before exceptional items for the six months to end-June of 76 million pounds ($152 million), as revenue rose to 3.5 billion pounds from 2.7 billion the year before.
"First half results are strong and ahead of expectations. We are upgrading 2007 estimated pretax profit from 175 million pounds to 182 million," Landsbanki analyst Chris Millington said, maintaining a "buy" rating on the stock.
A Reuters Estimates poll of 12 analysts had forecast median pretax profit for the year of 175.7 million pounds.
Balfour Beatty, which employs over 30,000 people, said its order book grew by 1.5 billion pounds in the first half and now stood at a record 10.6 billion pounds, boosted by its acquisitions.
Shares in Balfour Beatty, which have underperformed the U.K. construction and materials sector by 14% over the last 12 months, were down 0.2%, valuing the group at around 1.9 billion pounds.
"In our view Balfour Beatty remains the most attractive stock in the contracting universe and based on sum of the parts analysis (using conservative assumptions), we estimate the shares should be trading over 500 pence," Millington said.
Balfour Beatty said earlier this year it had bought Centex Construction, a unit of the fourth-largest U.S. home builder Centex , for $362 million.
The group said it had won four contracts as part of the U.S. Department of Defense's $30 billion Base Realignment and Closure (BRAC) program, which will involve more than 800 projects in over 200 bases.
"We would expect to get a proportion of that. I would hope that we would be in a good position to win a good chunk of that work," Tyler said.
Balfour Beatty is a partner in Metronet, the company contracted to upgrade two-thirds of London's underground rail network, which filed for administration in July after running out of cash due to a projected 2 billion pounds of overspending.
The other partners are EDF Energy, WS Atkins, Bombardier and Macquarie Bank's Thames Water.
Balfour Beatty said it had made a 103 million pound write-off for its investment in Metronet, but this had been offset by the sale of its stake in Devonport to Babcock International and tax benefits in the United States.
The group said it would pay an interim dividend of 4.6 pence per share, up from 3.9p the year before.