Balfour Beatty kicks off renewed share buyback scheme

Balfour Beatty has kicked off the New Year by launching more tranches of its share buyback programme, with an aim to complete £50m of repurchases from shareholders by May. 

The UK’s biggest contractor has this week bought 404,476 ordinary shares at an average price per share of 343.9p through two separate transactions. 

Balfour Beatty has been returning cash to shareholders over the past two years through a series of buybacks after delaying the programme in 2020 when the COVID-19 pandemic first emerged. 

Share buybacks involve a company using cash to buy back its own shares on the open market.

The process can be undertaken for various reasons, including returning surplus cash to shareholders or to boost the share price. It can be seen as a show of confidence from a company’s management.

In 2021 Balfour Beatty completed total buybacks of £150m.

Last year it initially intended to buy back at least £100m of shares, but subsequently increased this amount to £150m.

Adding in dividend payments, the FTSE-250 firm has distributed around £385m to its remaining shareholders over the last two years. 

The latest move comes as the group’s performance has continued to improve, while its share price has ticked up.

Last month it raised its full-year profit outlook as it said turnover is likely to be five per cent up on the previous year’s figure of £8.3bn.

Total cash returns to shareholders in 2023, including dividends, are expected to be “broadly similar” to 2022, it said this week.

Balfour Beatty is expected to confirm full plans for its 2023 share buyback programme at its full-year results in March.

A spokesperson declined to comment directly on why it is carrying out the process.

Analyst Stephen Rawlinson told Construction News that the contractor appears to be in “robust shape”, based on its share price and the work it is winning. 

He suggested the buyback programme was a signal from the company that it believes its shares are worth more than their current price. 

However he acknowledged some shareholders could be happy to sell at the current price. “A lot of shareholders may say ‘I bought Balfour shares after they fell in 2021, they now want to pay me a pound more per share for them, happy days, I’ll take it’,” he added.