Balfour Beatty shares were down 1.8% to 236.6p in early afternoon trading on Thursday, following a slight decline in the company’s order book in its trading update for the last four months to £15.6 billion compared to £16.1 billion year-on-year.
The order book included the firm’s recently awarded £530 million Fort Meade design and construct contract in Maryland by the US Army Corps of Engineers.
The company reported that it was trading in line with management expectations, with an estimated growth in FY 2022 profits, building on its £181 million delivered by its earnings-based businesses including construction services and support services.
Balfour Beatty confirmed that its infrastructure investments sector had a selection of scheduled asset sales planned for 2022 which are expected to match the firm’s return requirements.
The construction group confirmed an average monthly closing net cash balance rise to approximately £800 million against a FY 2021 average of £671 million.
The group noted that average monthly cash was expected to come in moderately lower than the first four months of 2022 after its share buyback and a level of anticipated working capital normalisation.
Balfour Beatty further said that construction services’ operational performance remained in line with management expectations, despite disruption in Hong Kong as a result of Covid-19 restrictions.
The company’s UK construction sector is set to deliver industry standard margins of 2%-3% over FY 2022, with US construction estimated to deliver a 1%-2% margin for the complete period.
The group highlighted a margin target of 6%-8% in power, road and rail maintenance, however the company added that the sectors were performing on a slightly lower revenue base due to Balfour Beatty’s withdrawal from the gas and water sector.
The firm mentioned that its outlook included several promising asset investment opportunities for infrastructure, alongside a slate of disposals projected to kick off towards the end of HY1 2022 and continue into HY2 2022.
Balfour Beatty confirmed that it had repurchased £19 million of shares as part of its share buyback programme, with the total £150 million in shares projected to close by the end of 2022.
“We remain confident that the Group is well positioned for 2022 and beyond,” said Balfour Beatty CEO Leo Quinn.
“Our business portfolio has been transformed to focus on the growing infrastructure markets of the UK, US, and Hong Kong – each underpinned by strong government investment programmes.”
“The strength of our balance sheet and the higher quality of our order book will enable us to maximise these opportunities for profitable growth while remaining resilient to the current macro-economic challenges .”