Balfour Beatty shares jump on buyback despite lower earnings / Image source: Adobe
  • Shares jump to three-month high
  • Earnings per share fall over 20%
  • Dividend raised and new buyback

Investors gave the latest results from infrastructure firm Balfour Beatty (BBY) a fairly rapturous reception considering it reported a 20% drop in earnings for the year to December.

The shares surged as much as 9% to a three-month high of 370p on a dull day for the rest of the FTSE 250 which traded just 0.2% higher.


The company turned in a ‘solid’ performance last year, according to chief executive Leo Quinn, with revenue up 7% to £9.6 billion driven by its construction services business.

UK Construction registered a 9.5% increase in turnover to £3 billion while the Gammon Asia-Pacific division delivered an impressive 27% increase in turnover to £1.36 billion, although US Construction was flat at £3.7 billion.

Underlying operating profit edged 2% higher to £236 million, while underlying pre-tax profit was 10% lower at £261 million due to lower investment gains on disposals compared with 2022.

That translated into a 21.5% drop in earnings per share, from 47.5p to 37.3p, although the firm did raise its final dividend so the total payout for 2023 came to 11.5p against 10.5p the previous year.

Quinn was upbeat about the medium-term outlook, saying the board was ‘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’.

Quinn added: ‘Looking to 2025 and beyond, we expect our unique capabilities and complex infrastructure project experience to drive further earnings growth, with attractive opportunities being pursued in the UK energy, transport and defence markets and in the US.’


The excitement around the stock seemed to stem from the fact the group announced a further £100 million share buyback, which together with the final 2023 dividend and the 2024 interim dividend means cash returned to shareholders in one form or another will come to around £160 million this year.

That takes the cumulative return to shareholders since the introduction in 2021 of the current multi-year capital allocation strategy to £750 million, although it is worth noting this year’s buyback and total return are lower than those in 2023 and 2022.

‘Resilience is the name of the game and investors like what Balfour Beatty is saying’, observed AJ Bell investment director Russ Mould.

‘The company is confident the broader push to invest in infrastructure projects is playing to its strengths. It also implies no matter who wins at the next general election – Conservatives or Labour – both parties want to ensure the UK has clean and domestically-generated energy, which means plenty of work for Balfour Beatty to chase. Overseas opportunities also seem plentiful.’

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Ian Conway) and the editor of the article (James Crux) own shares in AJ Bell.


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Issue Date: 13 Mar 2024