REG - Balfour Beatty PLC - Balfour Beatty Trading Update

Balfour BeattyAnnouncement

09/12/2021 07:00

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RNS Number : 0490V  Balfour Beatty PLC  09 December 2021

 

9 DECEMBER 2021

BALFOUR BEATTY TRADING UPDATE

TRADING IN LINE WITH EXPECTATIONS

 

Balfour Beatty, the international infrastructure group, today provides a
trading update covering the period to 8 December 2021.

Financial update

·    Order book:  The year-end order book is expected to be around £15.5
billion (HY2021 £16.1 billion; FY2020 £16.4 billion) as the Group continues
to win work on projects at the right terms and conditions across its
portfolio.

·    Revenue:  Full year Group revenue is expected to be approximately
double the half year revenue (HY2021: £4.2 billion; FY2020: £8.6 billion).

·    Profit: The Board continues to expect that the earnings-based
businesses (Construction Services and Support Services) will deliver
underlying profit from operations for 2021 in line with 2019 (£172 million).

·    Taxation:  The underlying tax charge for 2021 is expected to be
reduced by £16 million due to the revaluation of deferred tax assets
following the UK Government's announced increase in UK tax rates.

·    Cash: Cash performance continues to be strong in the second half of
the year. Full year average monthly net cash is expected to be over £650
million (HY2021: £611 million; FY2020: £527 million).

·   Balance Sheet: In October, the Group successfully concluded the
extension of its £375 million committed revolving credit facility, which now
extends to October 2024.  As at 8 December 2021, this facility is undrawn.

Operational update

Construction Services: Tendering has returned to pre-pandemic levels at US
Construction as the focus continues to be selectively bidding for new
contracts.  The Group has recently been awarded two circa $200 million
contracts in Texas and another in the Mid-Atlantic.  The underlying market
has been further supported by the bipartisan Infrastructure Investment and
Jobs Act which provides over $1 trillion in federal spending over the next
five years.

At UK Construction, this month the Balfour Beatty VINCI joint venture launched
its first tunnel boring machine at Long Itchington Wood.  Progress is also
being made on the central London property projects.  One reached practical
completion in the fourth quarter of this year and the remaining two contracts
are still performing in line with the Group's expectations.
 

Gammon has recently won a circa £350 million contract for the design and
construction of Ang Mo Kio station and tunnels by Singapore's Land Transport
Authority and a circa £250 million contract for the development of four
residential towers in Hong Kong.

Support Services:  Following the increase in the margin target range from
3-5% to 6-8% in August, Support Services has maintained its strong performance
into the second half of the year as the Group's power, road and rail
maintenance business units continue to meet expectations.

Infrastructure Investments: Balfour Beatty has disposed of six assets in the
year for around £80 million and invested around £20 million in four new
projects.  The Group is currently shortlisted on two US public private
partnerships (P3) projects and is focused on the emerging P3 market for
schools across the country.

Balfour Beatty continues to manage inflationary pressures across its
portfolio.  In Construction Services and Support Services mitigation is
provided through contractual protection and early buyout using the Group's
scale and supply chain management.  At Infrastructure Investments, UK
projects are predominately indexed with inflation.  The US portfolio is also
correlated with inflation, although indirectly through the link to rental
inflation.

Sustainability

Balfour Beatty hosted and participated in a number of events and activities
around COP26.  Kick-started by over 750 ideas submitted by employees to the
Company's My Contribution sustainability campaign, momentum was maintained by
its Sustainable Evolution Showcase at Shotts, Scotland, and its Digital
Innovation Hub in Glasgow.  Employees were able to demonstrate to visiting
customers, Government ministers, supply chain partners and school children the
extent to which sustainability is an integral part of Balfour Beatty's
expertise.

US military housing

The investigation by the US Department of Justice (DoJ) into the handling of
certain work orders by Balfour Beatty Communities at a number of US military
bases remains ongoing. Balfour Beatty's own investigation has completed, and
all findings have been shared with the DoJ. The Group, through its external
counsel, is actively working to resolve this matter in a timely manner.

Capital allocation framework

Balfour Beatty understands the importance of continuing to deliver attractive
total cash returns to shareholders while maintaining an appropriate balance
between investment in the business, and a strong capital position.  The Group
is committed to a multi-year share buyback programme and has returned £150
million in 2021.  It is intended that the 2022 share buyback will be at
least £100 million and is expected to commence following the announcement of
the Group's full year results in March.

Quote

Leo Quinn, Balfour Beatty Group Chief Executive, said: "The Group is on track
to deliver a 2021 performance in line with pre-pandemic levels.

"Looking to 2022, the Group has a high-quality order book. We are strongly
positioned in three geographies where fiscal expansion, green infrastructure
growth and, in the US, public private partnerships all play to our unique
engineering capability.  We remain confident of capitalising on these factors
to drive superior returns."

ENDS

 

Investor and Analyst enquiries:

Angus Barry

Tel. +44 (0)7966 281635

angus.barry@balfourbeatty.com

Media enquiries to:

Antonia Walton

Tel. +44 (0)7966 929633

antonia.walton@balfourbeatty.com

Notes to editors:

·    Balfour Beatty (http://www.balfourbeatty.com/)  is a leading
international infrastructure group with 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 112 years we have created iconic buildings and
infrastructure all over the world including: the £1.5 billion A14 improvement
scheme - Britain's biggest road project; Hong Kong's HK$5.5 billion
world-class harbour theatre project for the West Kowloon Cultural District
Authority; and the 12.5-mile $429 million North Metro Commuter Rail line in
Colorado, US.

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