Underlying turnover at the UK’s biggest contractor exceeded £10bn for the first time last year, alongside a double-digit percentage increase in pre-tax profit.
Balfour Beatty’s departing chief executive, Leo Quinn, hailed the latest full-year results as evidence of “further strong progress”.
However, the group noted an £83m building safety charge in its announcement this morning (12 March) to the London Stock Exchange.
The growth in underlying revenue for the 12 months ended 31 December 2024 marked a 4.4 per cent year-on-year increase from last year’s £9.6bn, Balfour Beatty said.
Statutory revenue – the metric Construction News applies in its CN100 index – rose by 3 per cent from £7.99bn to £8.23bn.
Group pre-tax profit increased by 11 per cent from £261m in 2023 to £289m last year, powered by growth in construction and support services.
The company’s order book expanded by 12 per cent to £18.4bn. Balfour Beatty said this reflected demand in the UK energy, transport, and defence markets, as well as in the US construction market.
Quinn, who is stepping down as chief executive after a decade in charge, said: “Balfour Beatty has made further strong progress in 2024. We have delivered managed profitable growth while maintaining healthy cash generation and increasing our high-quality order book.
Balfour Beatty’s core construction services division delivered underlying revenue (including joint ventures) of £8.2bn, up from £8.08bn the year before. UK construction saw its underlying operational profit rise from £69m to £81m.
However, US construction profitability fell due to cost overruns as “a small number of civils projects have taken longer than initially scheduled”, Balfour Beatty said.
The support services business delivered revenue growth from £1.01bn to £1.21bn, supported by increased demand in power transmission and distribution, as well as road maintenance.
Balfour Beatty confirmed a 9 per cent increase in its full-year dividend to 12.5p per share, up from 11.5p in 2023.
Additionally, the company will continue its share buyback programme, repurchasing £125m worth of shares in 2025. The total expected shareholder return for the year is approximately £188m, compared to £161m in 2024.
“Balfour Beatty is confident of continuing to deliver significant future shareholder returns,” the group said in its Stock Exchange announcement.
Average net cash rose to £766m compared to £700m and Balfour Beatty reported a year-end net cash balance of £943m.
However, short-term repayable bank overdraft debt rose from £104m to £185m, while the group’s subsidiaries also held £600m in project finance-specific loans compared to £570m the previous year.
Longer-term repayable borrowings totalled £754m versus £723m in 2023.
In 2024, the group extended its core revolving credit facility by 12 months to June 2028.
The firm’s bottom line was affected by an £83m building safety charge, after “developments in the legal landscape of the BSA [Building Safety Act] prompted it to reassess its provision in this area.
“The provision does not include potential recoveries from third parties and the resulting cash outflow is expected over a number of years,” Balfour Beatty said.
“The group continues to recognise defects on projects not covered by the BSA as part of its underlying performance.”
Balfour Beatty’s order book growth was driven partly by demand in the UK power transmission market. The company secured key contracts in 2024, including a £363m contract with National Grid for the Bramford to Twinstead reinforcement scheme, and a role in the Eastern Green Link 2 project.
In the US, Balfour Beatty’s buildings division saw a 26 per cent increase in its order book, with new contracts across aviation, education, and government sectors.
The company also remains well-positioned in UK defence, having been selected as a key construction partner for Rolls-Royce’s Ministry of Defence expansion in Derby.
Events after the period covered by the latest accounts included the sale of Balfour Beatty’s specialist rail software business, Omnicom Balfour Beatty, to Hitachi Rail for £24m in January this year.
“The disposal is subject to various conditions and completion is anticipated to be in the first half of 2025,” Balfour Beatty stated in its latest results announcement.
“Further profitable growth from earnings-based businesses [is] expected for 2025 and 2026,” it added, with an emphasis on improving margins rather than volume expansion.
Balfour Beatty added that growth in the support services segment will be led by increasing investment in power transmission and distribution, which is not dependent on government funding.
Beyond the new orders in 2024, Balfour Beatty said it has positions on “several long-term frameworks” such as Scottish and Southern Electricity Networks’ £10bn Accelerated Strategic Transmission Investment (ASTI) framework and two Scape Civil Engineering frameworks in the UK, which were extended for two further years in 2024.
Leo Quinn concluded: “Balfour Beatty’s continued strong performance demonstrates our ability to deliver long-term value. We are well positioned for further profitable growth, supported by our high-quality order book and the attractive opportunities in our core markets.”
Read More
Ben Vogel