News Release
5 December 2024
BALFOUR BEATTY 2024 TRADING UPDATE
On track to deliver earnings growth in 2024;
further share buybacks in 2025
Balfour Beatty, the international infrastructure
group, today provides a trading update covering the period to 5
December 2024.
Financial
Update
·
Order book expected to grow
by over 5% in 2024 (FY2023: £16.5 billion) driven by momentum in
the Group's chosen growth markets, principally UK energy and US
buildings, with market dynamics allowing the Group to be more
selective in the work it undertakes.
·
2024 revenue expected to be
c.2% ahead of prior year (FY2023: £9.6 billion) due to growth in
Support Services and Gammon.
·
2024 underlying profit from
operations (PFO) from earnings-based businesses expected to
be ahead of the prior year (FY2023: £236 million):
o Construction Services expected to be in
line with prior year (FY2023: £156 million) as the improved PFO
margin in UK Construction is now forecast to be offset by lower US
Construction profitability, with the cost of delays at a small
number of civils projects having increased in the second half.
o Support Services expected to continue
to deliver margins at the top of its 6-8% target range, with
revenue growth of c.15% (FY2023: £1,006 million).
·
Infrastructure Investments
gain on disposals expected to be modestly above previously guided
£20 - £30 million range with a number of ongoing transactions, with
PFO excluding disposals remaining close to the £7 million loss
reported for the first half.
·
2024 profit after tax
expected to be ahead of prior year (FY2023: £205 million) and
slightly ahead of market expectations1, with growth
driven by Support Services.
·
2024 average monthly net
cash expected to be ahead of prior guidance and now around
£750 million (FY2023: £700 million).
1 Company compiled consensus (8 analysts) for 2024 profit after
tax is currently £209 million.
Quote
Leo Quinn, Balfour Beatty Group Chief Executive,
said:
"In 2024, the Group has once again shown the benefit
of the geographical and operational diversity of our portfolio,
delivering an encouraging overall performance. As a result, we are
on track to deliver earnings growth in 2024.
"We are pleased to confirm our fifth successive year
of share buybacks in 2025, as our large orderbook, unique
capabilities and balance sheet, provide a strong platform for
continuing future shareholder returns."
Operational Update
Construction
Services:
In the UK, strong performance has continued, which
underpins the Board's expectation of growth in PFO margin for 2024.
Operational delivery at the Group's current largest UK projects,
being the HS2 contracts for Area North and Old Oak Common and the
new nuclear power station at Hinkley Point C, continues to progress
well. In November, Balfour Beatty signed a two year extension to
its existing four year term as sole contractor to both of the SCAPE
Civil Engineering frameworks, which cover England, Wales and
Northern Ireland, and the entirety of Scotland. The frameworks will
now run until November 2028.
The UK Government's commitment to invest in
infrastructure to support economic growth is encouraging for
Balfour Beatty in the medium term, with the Group's UK growth areas
of energy, transport and defence included in the broad investment
plans.
In the US, the buildings business has delivered a
further period of robust performance; however the cost of delays at
a small number of civils projects has increased in the second half
of the year, reducing the profitability of the segment.
The US order book is expected to grow by over 10% in
2024 (FY2023: £5.7 billion) due to a strong second half of order
intake for both the buildings and civils businesses. In the growth
area of US Buildings, the higher order book reflects second half
awards worth $600 million in the hospitality sector, $500 million
of federal/state work, $400 million for commercial office and $350
million for education. The US Civils business signed a $746 million
contract to rebuild part of the Interstate 35 through Austin for
the Texas Department of Transport. The project, which is expected
to complete in 2033, closely aligns to the Group's selective
approach to US civils; working for a long-term customer and in a
geography where Balfour Beatty has proven expertise, strong teams
and trusted supply chain partners.
In Asia, Gammon has maintained its consistent
operational performance in the second half of the year and the
major airport projects have driven annual volumes ahead of 2023
levels. New orders in the period include data centres in Hong Kong
and Singapore, and a civils contract in Hong Kong's Northern
Metropolis to prepare the land and deliver engineering
infrastructure works for a new development area.
Support
Services: Performance across Support Services has remained
strong. In particular, growth in the year has been driven by higher
volumes in both the power and road maintenance businesses.
As expected, the Group's power business continues to
expand and has secured new orders of around £600 million in the
second half of the year, including the Bramford to Twinstead
Reinforcement project for National Grid. Balfour Beatty has also
recently been named as one of eight preferred partners for Scottish
Power Energy Networks' Strategic Agreement for Transmission
Overhead Line Works, with up to £3 billion of work being
tendered.
Infrastructure
Investments: The Group's 2024 disposal programme is expected
to complete in the coming weeks, with a number of transactions
ongoing. 2024 investment in new and existing projects is expected
to be around £30 million.
Capital
allocation framework
Balfour Beatty is delivering £160 million to
shareholders in 2024 through share buybacks and dividends, while
maintaining an appropriate balance between investment in the
business and a strong capital position. This will take the Group's
shareholder distributions to over £750 million since the launch of
its capital allocation framework in 2021. Balfour Beatty's capital
allocation framework remains unchanged, and from January 2025 the
Group intends to buy back further shares ahead of confirming the
amount for its 2025 share buyback at the Group's full year results
in March.
ENDS
Analyst/investor enquiries:
Jim Ryan
Tel. +44 (0)785 836 8527
jim.ryan@balfourbeatty.com
Media
enquiries:
Antonia Walton
+44 (0)203 810 2345
antonia.walton@balfourbeatty.com
Notes to
editors:
· Balfour Beatty
is a leading international infrastructure group
with over 26,000 employees driving the delivery of powerful new
solutions, shaping thinking, creating skylines and inspiring a new
generation of talent to be the change-makers of
tomorrow.
· We finance, develop,
build, maintain and operate the increasingly complex and critical
infrastructure that supports national economies and deliver
projects at the heart of local communities.
· Over the last 115
years we have created iconic buildings and infrastructure all over
the world. Currently, we are working to deliver Hinkley Point C,
the first UK nuclear power station in a generation; constructing
the world-class arts and cultural facility, the Lyric Theatre, in
Hong Kong; and designing, building, financing, operating and
maintaining the Automated People Mover superstructure at the fifth
busiest airport in the world, Los Angeles International
Airport.
