Construction firm Balfour Beatty PLC on Wednesday launched a new share buyback and predicted a brighter financial future after profit fell in 2023.

Shares in Balfour Beatty jumped 8.3% to 368.00 pence in early exchanges in London on Wednesday.

The London-based infrastructure construction contractor reported a 15% drop in pretax profit to £244 million in 2022 from £287 million in 2022.

This was despite a 7.4% increase in revenue, including joint-ventures and associates, to £9.60 billion from £8.93 billion in 2022. Statutory revenue, which excludes those items, was 4.8% higher at £7.99 billion from £7.63 billion.

Diluted earnings per share declined to 34.8 pence from 46.3p.

Balfour lifted its final dividend by 14% to 8.0 pence from 7.0p. It meant its annual dividend was 10% higher at 11.5p from 10.5p. In addition, it said it plans to repurchase £100 million of its stock during the 2024 phase of its share buyback programme.

However, this still means total planned returns of £160 million in 2024 will be down from £208 million in 2023.

Balfour said the lower profit in 2023 was predominantly due to lower gains on investment disposals as previously guided, while a £56 million tax credit relating to the recognition of additional UK tax losses in 2022 did not repeat.

Underlying operating profit from the earnings-based businesses - construction and support services - of £236 million, was slightly higher than £232 million in 2022.

Balfour expects an upturn in underlying operating profit in 2024, with growth accelerating in 2025.

This is underpinned by a £16.5 billion order book, Balfour said, although this was lower than £17.4 billion seen at the end of 2022. Balfour said the second half of 2023 showed a clear improvement in orders compared to the first half, as interest rates stabilised.

In 2025, Balfour expects growth to accelerate, driven by energy, transport and defence in UK and buildings in US.

Chief Executive Leo Quinn said: ‘The group’s reliability and resilience has again delivered a solid performance, with increased revenue and profit from our earnings-based businesses and strong operating cash flow. This success against a challenging economic backdrop is driven by our disciplined contract risk management across a geographically and operationally diversified portfolio.

‘The board remains confident in Balfour Beatty’s ongoing ability to deliver sustainable cash generation for significant shareholder returns, with growth from our earnings-based businesses in 2024 underpinned by the strength of the group’s order book.’

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