Balfour Beatty shares jump as profits surge

Balfour Beatty shares jump as construction group hikes its dividend and ups its annual profit forecast

  • Balfour Beatty shares rose sharply today amid a strong rise in half-year profit
  • Group has bolstered its dividend for shareholders and upped its profit forecast

Balfour Beatty shares rose sharply today after the group posted a bumper rise in profit in the first half.

The construction group posted a pre-tax profit of £83million, up from £35million a year earlier. 

Profit from operations rose to £82million from £40million, and the firm now expects its annual profit to come in higher than previously forecast. 

On the back of an upbeat forecast, the group has hiked its interim dividend to 3.5p a share, marking an increase of 17 per cent.  

On the up: Balfour Beatty shares rose sharply today after the group posted a bumper rise in profit

Balfour Beatty shares were up 9.74 per cent or 28.17p to 317.37p in late morning trading. 

Full year profit from investment disposals is now now expected to come in at between £55million to £65million, while annual average net cash is forecast to be £740million to £780million, which includes Balfour’s share buyback and further working capital outflows in the second half.

The group said it continued to see inflationary pressures across its construction and infrastructure markets in labour and materials, but it was managing rising costs well. 

Balfour Beatty said: ‘Whilst the group is not immune to these pressures, Balfour Beatty is currently mitigating these risks through contractual protection and early buyout using the Group’s scale and supply chain management and does not expect a material impact on the full year results.’ 

Leo Quinn, Balfour Beatty’s boss, said: ‘With the Group well-positioned to capitalise on the growing infrastructure market, underpinned by its unique capability and balance sheet strength, the upgrade to the full year performance gives the Board further confidence in future capital returns.’

Danni Hewson, an analyst at AJ Bell, said: ‘Turnaround specialist Leo Quinn continues to make progress at Balfour Beatty, despite rising costs. 

‘A corporate “Mr Fix-it”, Quinn has positioned the construction services business to take advantage of a resilient infrastructure sector and turned what was a bit of a basket case into an increasingly well-oiled machine.

‘Since Quinn took the helm at the start of 2015 Balfour Beatty’s shares have advanced 45%. A respectable showing given the impact of disruptive events like Brexit and the Covid pandemic.’