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Balfour Beatty upbeat as annual profit rises
11th Mar 2020 08:03
(Sharecast News) - Balfour Beatty reported an 8% increase in annual operating profit as the infrastructure group increased sales and orders.
Underlying operating profit for the year to the end of December rose to £221m from £205m as underlying revenue increased to £8.4bn from £7.8bn. Pretax profit increased to £200m from £181m.
The FTSE 250 company increased its annual dividend to 6.4p a share from 4.8p and said it would review its capital structure when the impact of the COVID-19 coronavirus is clearer.
Balfour Beatty shares rose 11.2% to 245.60p at 08:34 GMT as stocks responded to the Bank of England's 0.5 percentage point interest rate cut and news of higher investment spending in Wednesday's UK budget.
Balfour Beatty said it was monitoring the coronavirus's effects closely to mitigate risks for employees, customers and supply chains. All sites in the UK, US and Hong Kong are open but it is too early to judge the impact on business performance, it said.
Revenue increased because of higher construction income in the UK and the US. Support services revenue fell 7% due to lower volumes in power transmission and distribution and the end of a highways maintenance contract. The group's order book increased 13% to £14.3bn at the end of December with growth concentrated in US construction.
Balfour Beatty has recovered from a string of profit warnings and a failed takeover bid by Carillion in 2014 by cutting costs and rejecting unprofitable or unsuitable projects. It has also quit a number of countries to focus on a handful of markets including the UK and the US.
Leo Quinn, chief executive, said: "Having focused Balfour Beatty's geographic and operational footprint, we have invested significantly in capability, innovation and standard systems and processes.
"In this way we have created a scalable business which - together with the increasing order book - gives us confidence that the group will continue to deliver profitable managed growth and cash generation on a sustainable basis.
"The group is continuing to pay down around £150 million of borrowings in 2020 and in addition, the board will review Balfour Beatty's capital structure once there is clearer understanding of the COVID-19 situation."
Underlying operating profit for the year to the end of December rose to £221m from £205m as underlying revenue increased to £8.4bn from £7.8bn. Pretax profit increased to £200m from £181m.
The FTSE 250 company increased its annual dividend to 6.4p a share from 4.8p and said it would review its capital structure when the impact of the COVID-19 coronavirus is clearer.
Balfour Beatty shares rose 11.2% to 245.60p at 08:34 GMT as stocks responded to the Bank of England's 0.5 percentage point interest rate cut and news of higher investment spending in Wednesday's UK budget.
Balfour Beatty said it was monitoring the coronavirus's effects closely to mitigate risks for employees, customers and supply chains. All sites in the UK, US and Hong Kong are open but it is too early to judge the impact on business performance, it said.
Revenue increased because of higher construction income in the UK and the US. Support services revenue fell 7% due to lower volumes in power transmission and distribution and the end of a highways maintenance contract. The group's order book increased 13% to £14.3bn at the end of December with growth concentrated in US construction.
Balfour Beatty has recovered from a string of profit warnings and a failed takeover bid by Carillion in 2014 by cutting costs and rejecting unprofitable or unsuitable projects. It has also quit a number of countries to focus on a handful of markets including the UK and the US.
Leo Quinn, chief executive, said: "Having focused Balfour Beatty's geographic and operational footprint, we have invested significantly in capability, innovation and standard systems and processes.
"In this way we have created a scalable business which - together with the increasing order book - gives us confidence that the group will continue to deliver profitable managed growth and cash generation on a sustainable basis.
"The group is continuing to pay down around £150 million of borrowings in 2020 and in addition, the board will review Balfour Beatty's capital structure once there is clearer understanding of the COVID-19 situation."