Balfour Beatty Q1 2023 trading update

The UK’s largest contractor has published its trading update for the first quarter of 2023. 

Balfour Beatty has reported a drop in the value of the Group’s order book to £17 billion at the end of March, down from £17.4 billion in December 2022. 

Cash 

For the first three months of this year, Balfour’s average monthly closing net cash balance was £740 million, compared with an average of £804 million in 2022, and then £815 million at the close of the last financial year.  

It said this was driven by an “expected working capital outflow of around £100 million and share buybacks”. Balfour said it expects the £150 million share buyback to be completed by the end of the year, with £75 million completed to date. 

It added it expects a full year working capital outflow of between £75 million and £125 million for 2023. 

“Overall trading has been in line with expectations and the Board continues to expect the Group’s 2023 profit from operations from its earnings-based businesses to be broadly in line with 2022,” said Balfour.  

Order book 

New projects added in Q1 2023 include: 

• £297 million East Sussex highways contract over seven years.  
• USD$242 million design and build highways contract in North Carolina. 
• USD$230 million of data centre work in the US Northwest. 

2022 full year results 

In March this year, Balfour reported a strong operational and financial performance across the Group for FY2022. 

Key takeaways:   

• 42% rise in underlying profit from operations (PFO) to £279 million (2021: £197 million). 
• Underlying PFO from earnings-based businesses: £232 million (2021: £181 million). 
• 8% rise in order book to £17.4 billion (FY2021: £16.1 billion). 
• Investments valuation increased to £1.3 billion (FY2021: £1.1 billion). 
• Closing net cash balance: £804 million (FY2021: £671 million). 
• 60% rise in underlying basic earnings per share (EPS) at 47.5 pps (2021: 29.7 pps). 
• 17% rise in recommended full year dividend at 10.5 pps (2021: 9.0 pps) 
• £150 million share buyback for third consecutive year. 

“The diversified portfolio, both geographically in the UK, US and Hong Kong, and operationally across Construction Services, Support Services and Infrastructure Investments, plus the strength of our balance sheet and cash management, have provided the resilience for the Group to deliver ahead of expectations and grow our order book through the global instability seen in 2022,” said Group chief executive, Leo Quinn, at the time. 

Adding: “The Board’s confidence in both the short and longer term is reflected in its commitment to a multi-year programme of strong shareholder cash returns. We believe that Balfour Beatty’s unique capabilities and the positive outlook in its chosen markets will enable it to deliver ongoing profitable managed growth.” 

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