Balfour Beatty has issued a trading update covering the period to 5 December 2024 - the international infrastructure group is expecting its order book to grow by over 5% in 2024 (FY2023: £16.5 billion).
The growth is being driven by momentum in the Group's chosen growth markets, principally UK energy and US buildings, with market dynamics allowing Balfour Beatty to be more selective in the work it undertakes.
Key financials include:
- 2024 revenue expected to be c.2% ahead of prior year (FY2023: £9.6 billion) due to growth in Support Services and the Group’s 50:50 joint venture, Gammon.
- Underlying profit from operations (PFO) in 2024 from earnings-based businesses is expected to be ahead of the prior year (FY2023: £236 million):
- Construction Services is 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.
- Support Services is 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).
- 2024 profit after tax expected to be ahead of prior year (FY2023: £205 million) and slightly ahead of market expectations, 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).
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
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 - 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 Group said 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.
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.
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