Balfour Beatty shares popped higher on Wednesday after the group raised its full-year guidance on the back of a strong first half, with a turnaround in its US business and booming demand for power transmission work driving a sharp rise in profit.
The infrastructure group said underlying profit from its earnings-based construction and support services businesses jumped 42% to £153m in the six months to 26 June, on revenue of £5.56bn.
Group underlying profit from operations rose to £119m from £77m, and underlying earnings per share climbed to 21.7p from 14.4p.
The US did a lot of the heavy lifting for Balfour Beatty with the construction arm swinging to a £22m profit from an £11m loss a year earlier, as its buildings business grew and losses in civils shrank.
Support Services, home to Balfour Beatty’s fast-growing power transmission operations, lifted profit to £66m from £46m as it delivers work on the National Grid’s “Great Grid Upgrade” and Scottish network schemes. Its work on power connections was good in the first half and is likely to remain so as the UK slowly but surely upgrades its infrastructure.
UK construction held broadly steady.
The group ended the half with a £22.9bn order book and average net cash of £1.6bn, up from £1.2bn. It raised its interim dividend 12% to 4.7p and had completed £102m of its £200m annual share buyback by the half-year.
Adam Vettese, market analyst for etoro, said: “Balfour Beatty shares surged this morning after the infrastructure group delivered a strong first half and raised full-year guidance. Investors clearly liked what they saw, profits from the core earnings businesses jumped sharply, cash generation remained robust, and the order book held firm at almost £23 billion.
“The real story is momentum. US buildings and UK power transmission are firing, the long-running US civils headache is fading, and Support Services margins are expanding nicely. Management’s decision to nudge guidance higher, from high single-digit to low double-digit profit growth, signals genuine confidence rather than cautious conservatism.”
Chief executive Philip Hoare said the group had entered the second half with real momentum, supported by its order book and its growth markets.
Balfour Beatty shares were 10% higher at the time of writing.