Balfour Beatty trading update sends shares close to 10-year high, 8 Dec 2022 11:04

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Balfour Beatty trading update sends shares close to 10-year high

08 December 2022, 11:04

- Infrastructure market is booming

- Full-year profits seen above consensus

- Shares just pence away from a new high

International infrastructure group Balfour Beatty (BBY) received the thumbs-up from investors for its latest trading update and increased full-year earnings guidance.

The shares gained 3% to 342p, above their September closing high of 340p, which - assuming they stay at that level at the close - would mark their highest for a decade.

WHY HAS THE STOCK DONE SO WELL?

Despite economic headwinds, the global infrastructure market continues to grow with the US Inflation Reduction Act signed this summer giving the industry and those involved in it added momentum.

Balfour Beatty finances, develops, builds and maintains essential infrastructure around the world, with the US and the UK accounting for roughly a third each of its order book and the remaining third split between Hong Kong and its support services division.

UK projects include Glasgow Queen Street station, Whitechapel station on the new Elizabeth Line in London, a coastal defence scheme in North Wales, work on the M60 and the Manchester Engineering Campus and the Thames Tideway Tunnel.

US projects include a $700 million federal building in Maryland, a $400 million convention centre in Florida and $300 million of data centres in Oregon.

The firm’s order book for this year is expected to be £16.1 billion, while revenues are seen at £8.7 billion, both around 5% higher than 2021 thanks to a small tailwind from the US dollar.

Thanks to its large cash position, which is above management forecasts, and its considerable interest income thanks to higher rates, together with a lower tax charge, pre-tax profits for this year are now seen beating market forecasts of £210 million to £220 million.