Construction company Balfour Beatty charged to the top of the FTSE 250 leaderboard on Wednesday, as it raised the full-year dividend and declared a fresh £100m share buyback programme.
At 367.2p per share, Balfour Beatty’s shares were last dealing 8% higher in midweek trade.
The business — which provides infrastructure services in the UK, US and Asia — announced that revenues rose 7% over the course of 2023, to £9.6 billion.
Underlying pre-tax profit declined 10% year on year, to £261 million. This was due to lower gains on asset disposals and the absence of tax credits it had received in 2022.
Revenues at its UK construction division rose 10%, to £3 billion, while sales at its US construction operations edged fractionally higher to £3.7 billion.
At Gammon, turnover leapt 27% to £1.4 billion.
Order Book Down But Improving
The company’s order book stood at £16.5 billion as of December, down 5% year on year.
However, Balfour Beatty said that “both the UK Construction and US Construction order books have remained flat on a local currency basis, which is encouraging given the high interest rate environment faced by customers throughout 2023.”
It added that it had seen “a clear improvement in orders” during the second half of the year “as interest rates in both markets stabilised.”
Dividends, Buyback Hiked
Last year’s solid results prompted the FTSE 250 firm to hike the full-year dividend 10%, to 11.5p per share.
It also announced plans to launch a £100 million buyback programme for this year, plans which will take cumulative shareholder returns since 2021 to £750 million.
This comes despite Balfour Beatty’s average net cash dropping to £700 million last year from £804 million in 2022.
“Solid Performance”
Chief executive Leo Quinn said that “the group’s reliability and resilience has again delivered a solid performance, with increased revenue and profit from our earnings-based businesses and strong operating cash flow.”
He noted that “this success against a challenging economic backdrop is driven by our disciplined contract risk management across a geographically and operationally diversified portfolio.”
For 2024, Quinn said that he expects “growth from our earnings-based businesses” that is underpinned by the strength of the Group’s order book.”
He added that “looking to 2025 and beyond, we expect our unique capabilities and complex infrastructure project experience to drive further earnings growth, with attractive opportunities being pursued in the UK energy, transport and defence markets and in the US.”
“Very Good Signs”
Analyst Mark Crouch of eToro said that Balfour Beatty’s strong results will “further cement” the “sturdy reputation” it has built with investors.
He described the decision to hike dividends and share buybacks as “very good signs,” and added that “while the stuttering UK economy may present bumps in the road ahead, Balfour Beatty’s impressive balance sheet, strong cash position and diversification overseas should offer more than sufficient insulation for their shareholders should an economic slowdown intensify.”
Read the full article here
