Balfour Beatty shareholders set for bumper payout as the infrastructure group hikes dividends and boosts its buyback scheme to £150m
- The firm has upped its share buyback programme for this year by another £50m
- Hong Kong joint venture Gammon saw the value of its order book jump by 24%
- Balfour Beatty is currently working on the Hinkley Point C and HS2 projects
Balfour Beatty shareholders are set to cash in on a six-fold hike in dividends after the group’s annual operating profits surpassed expectations.
The infrastructure business has recommended a 9p per share dividend, equivalent to around £57million, compared to just 1.5p in the prior year when the outbreak of Covid-19 caused it to temporarily suspend investor payouts.
Balfour Beatty will also up its share buyback programme for this year by another £50million, having announced back in December that it would purchase at least £100million of its own shares.
Sales fall: Balfour Beatty’s revenues declined by over £300million, primarily due to a drop in trade at its United States construction arm and its Hong Kong-based joint venture Gammon
The group reported a significant recovery in demand for UK-based building projects, which helped underlying earnings nearly quadruple from 2020 to £197million, even though its overall revenue declined by over £300million.
Balfour Beatty said this was primarily due to a drop in trade at its US construction arm and its Hong Kong-based joint venture Gammon, which offset higher revenues at its British construction division.
Among the projects the firm is currently working on include the high-speed railway line HS2 and Hinkley Point C nuclear power plant, where it recently completed an outfall tunnel for the scheme’s cooling water system.
In addition, the FTSE 250 multinational finished an upgrade of the A19 road earlier than planned, and handed over the Woolwich and Whitechapel stations to Crossrail ahead of the Elizabeth Line’s planned opening sometime this year.
While this division returned to profit in the second half of the year, it still made a slight underlying loss of £2million.
But this was down from an underlying loss of £26million in 2020, which it blamed on its withdrawal from three Central London private sector property projects.
By comparison, Balfour Beatty’s support services division disclosed its operating earnings more than doubled to just over £100million, thanks to its decision to exit the water and gas sector.
Big scheme: Among the projects Balfour Beatty is currently working on include the Hinkley Point C nuclear power plant (pictured) and high-speed railway line HS2
A further bonus came from completing its work on the Eleclink project, an electrical interconnector running through the Channel Tunnel designed to help provide more renewable energy to homes in the UK and France.
Its US construction segment also saw underlying earnings almost double to £51million, while Gammon’s profits remained flat at £30million, both of which were in line with pre-pandemic levels.
Meanwhile, the value of Gammon’s order book jumped by 24 per cent after gaining contracts to build seven new residential buildings and an office tower in Hong Kong, as well as tunnels and a station on Singapore’s Mass Rapid Transit system.
Chief executive Leo Quinn said: ‘Balfour Beatty emerges from the last two years with capabilities intact and a higher quality order book. Together these provide the visibility to deliver profitable managed growth and sustainable cash generation.
‘With a transformed portfolio focused on favourable infrastructure markets across our chosen geographies and our sector-leading balance sheet, we are confident of delivering significant future returns to shareholders.’
Balfour Beatty shares rose 3.8 per cent to 240.6p during the late morning on Thursday, though their value has declined by around a fifth over the last 12 months.