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)
· 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 | ||||
| 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 | PFO2,# | PFOmargin2 | Revenue1 | PFO2,# | 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.
