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Balfour Beatty wins £524m contract to electrify California rail corridor

Published 16/08/2016

San Francisco is one city served by the railway
San Francisco is one city served by the railway

British building giant Balfour Beatty is celebrating its biggest US contract to date after securing a £524 million deal to electrify 52 miles of California's railway.

The company will lay the infrastructure for new high speed trains along the Caltrain rail corridor which runs across 17 cities between San Francisco and San Jose.

Balfour Beatty will build the overhead power systems and substations to support the new high speed carriages for the network, which currently has 92 trains and shuttles 65,000 commuters daily.

The deal is being hailed for opening the door to the US market just as the UK industry starts to falter.

"It is a reminder that Balfour has a large and profitable US construction business, which is larger than the UK construction business and is growing faster, even in constant currency," analysis by Liberum's UK Small and Mid Cap team explained.

A report by the Office for National Statistics last week showed UK construction output fell by 0.7% in the second quarter, marking a fresh industry recession measured by two consecutive quarters of negative growth.

Balfour's announcement comes one day ahead of the building major's half-year results, with Liberum analysts expecting "awful" profits and a pre-tax loss of £25.1 million thanks to construction losses in both the UK and Middle East.

It follows the company's dismal 2015 results which delivered a £199 million pre-tax loss.

Balfour Beatty shares were up nearly 2% in afternoon trade.

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