REG - Balfour Beatty PLC - BALFOUR BEATTY 2024 TRADING UPDATE

Balfour BeattyAnnouncement

05/12/2024 07:00

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RNS Number : 8581O  Balfour Beatty PLC  05 December 2024

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 expectations(1), 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 (https://www.balfourbeatty.com/) 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.

 

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