Balfour Beatty plc delivers a solid performance, with increased revenue and profit

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Balfour Beatty PLC (LON:BBY) has announced its results for the full year ended 31 December 2023.

Solid performance with expectations delivered

Operational momentum with immediate and mid-term opportunities

Leo Quinn, Balfour Beatty Group Chief Executive, said: “The Group’s reliability and resilience has again delivered a solid performance, with increased revenue and profit from our earnings-based businesses and strong operating cash flow. This success against a challenging economic backdrop is driven by our disciplined contract risk management across a geographically and operationally diversified portfolio.

“The Board remains confident in Balfour Beatty’s ongoing ability to deliver sustainable cash generation for significant shareholder returns, with growth from our earnings-based businesses in 2024 underpinned by the strength of the Group’s order book. Looking to 2025 and beyond, we expect our unique capabilities and complex infrastructure project experience to drive further earnings growth, with attractive opportunities being pursued in the UK energy, transport and defence markets and in the US.”

Solid performance with continuing momentum from earnings-based businesses

· Revenue up 7% to £9.6 billion (2022: £8.9 billion)

· Underlying profit from operations (PFO) from earnings-based businesses up 2% to £236 million (2022: £232 million)

· Underlying profit before tax down 10%, due predominantly to lower gains on investment disposals as guided

· Underlying EPS of 37.3p down 21%: £55 million increase in tax charge, following £56 million credit recognised in 2022

Resilience against economic challenges, with diversified portfolio providing stability

· Construction Services: PFO up 5% to £156 million (2022: £149 million)

· Support Services: PFO margin of 8.0% (2022: 8.4%) at top of 6-8% targeted range

· Infrastructure Investments: £1.2 billion Directors’ valuation (2022: £1.3billion) impacted by exchange and discount rates

· Sixth consecutive year of improved employee engagement

Continued shareholder returns supported by consistent cash generation and balance sheet strength

· 10% increase in recommended full year dividend at 11.5 pence per share (2022: 10.5 pence per share)

· £100 million share buyback commenced for 2024, with total expected cash returns of c.£160 million (2023: £208 million)

· Average net cash of £700 million (2022: £804 million) as forecast

Strategic focus on strong delivery of order book and significant medium-term growth opportunity

· Earnings growth in current year underpinned by £16.5 billion order book (2022: £17.4 billion)

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· Unique Group capabilities aligned to significant future opportunities

· Earnings growth accelerating in 2025, driven by energy, transport and defence in UK and buildings in US

(£ million unless otherwise specified)	2023		2022
(£ million unless otherwise specified)	Underlying²	Total	Underlying²	Total
Revenue¹	9,595	9,595	8,931	8,931
Profit from earnings-based businesses	236^#	223	232^#	233
Profit from operations	228^#	211	279^#	275
Pre-tax profit	261	244	291	287
Profit for the year	205	194	290	287
Basic earnings per share	37.3p	35.3p	47.5p	46.9p
Dividends per share		11.5p		10.5p

		2023		2022
Order book¹		£16.5bn		£17.4bn
Directors’ valuation of Investments portfolio		£1.2bn		£1.3bn
Net cash – recourse³		842		815
Average net cash – recourse³		700		804

Segment analysis	2023			2022
	Revenue¹	PFO^2,#	PFOmargin²	Revenue¹	PFO^2,#	PFOmargin²
	£m	£m	%	£m	£m	%
UK Construction	3,027	69	2.3%	2,763	59	2.1%
US Construction	3,697	51	1.4%	3,651	58	1.6%
Gammon	1,357	36	2.7%	1,068	32	3.0%
Construction Services	8,081	156	1.9%	7,482	149	2.0%
Support Services	1,006	80	8.0%	989	83	8.4%
Earnings-based businesses	9,087	236	2.6%	8.471	232	2.7%
Infrastructure Investments	508	31		460	81
Corporate activities	–	(39)		–	(34)
Total	9,595	228		8,931	279

Notes:

¹ Including share of joint ventures and associates

² Before non-underlying items (Note 9)

³ Excluding non-recourse net borrowings, which comprise cash and debt ringfenced within certain infrastructure investments project companies, and lease liabilities

^# Underlying profit from operations, or PFO, as defined in the Measuring our financial performance section

A reconciliation of the Group’s performance measures to its statutory results is provided in the Measuring our financial performance section

Investor and analyst presentation:

A presentation to investors and analysts will be made at Numis, 45 Gresham Street, London, EC2V 7BF at 09:00 (GMT) on 13 March 2024. There will be a live webcast of this on: www.balfourbeatty.com/webcast. The webcast will be recorded and subsequently available at Results, reports and presentations – Investors – Balfour Beatty plc.