Shares in Balfour Beatty (BBY) rise on upbeat trading statement
By Rob Griffin
11:03, 9 December 2021
Shares in Balfour Beatty rose today after the UK construction company said its performance was in line with pre-pandemic levels.
In a trading update, it said the year-end order book was expected to be around £15.5bn ($20bn) as it continues to gain business across its portfolio.
This means that full-year group revenue is expected to be around the £8.4bn ($11.1bn) mark, which would be slightly below the £8.6bn ($11.3bn) achieved last year.
High-quality order book
The news went down relatively well in markets, with the company’s stock price having risen by almost 3% to 253.8p by mid-morning in London.
Chief executive Leo Quinn said the group was on track to deliver a 2021 performance in line with pre-pandemic levels and had 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,” he said. “We remain confident of capitalising on these factors to drive superior returns.”
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Andrew Nussey, an analyst at Peel Hunt, reiterated his ‘buy’ target on the stock and a 350p target price.
He pointed out that the company continues to manage inflation and the availabity of materials and skills, helped by its operating scale.
“The continuation of the multi-year capital returns programme should also refocus minds on Balfour Beatty’s potential,” he said.
According to the company’s update, the earnings-based businesses are expected to deliver underlying profits from operations for 2021 in line with the £172m ($226.8m) figure for 2019.
It also said the underlying tax charge for 2021 should be reduced by £16m ($21.1m) due to the revaluation of deferred tax assets following the UK Government’s announced increase in tax rates.
Meanwhile, cash performance continues to be strong, with full-year average monthly net cash expected to be more than £650m ($857.2m) – ahead of the £527m ($695m) last year.
Balfour Beatty said tendering had returned to pre-pandemic levels at US construction, with the focus continuing to be on selectively bidding for new contracts.
In UK construction, meanwhile, 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.
Elsewhere, support services have maintained its strong performance into the second half of the year, with power, road and rail maintenance business units meeting expectations.
Within infrastructure investments, the company has disposed of six assets in the year for around £80m and invested around £20m (26.4m) in four new projects.
The group is currently shortlisted on two US public-private partnerships.