Balfour boss hails ‘transformation’ after reporting £287m profit

Balfour Beatty chief executive Leo Quinn has hailed the group’s “transformation into a well-balanced and lower-risk group” after reporting £287m profit for 2022.

The UK’s largest contractor has seen its profit increase by 53 per cent, from £187m in 2021, while its turnover increased by 8 per cent, from £8.26bn to £8.93bn.

Balfour Beatty had a 3.2 per cent profit margin in 2022, up from 2.3 per cent in 2021. This was partially because the group had only £3m of exceptional, non-underlying costs in 2022 – relating to “amortisation of acquired intangible assets” – while it had £55m in 2021.

The group also reported an increase in average net cash during the year, up to £807m from £671m in 2021, despite it returning £208m to shareholders throughout the year via dividends and share buybacks.

Balfour Beatty’s order book has also grown by 8 per cent to £17.4bn, with the group adding that it expected to benefit from an “expansion of state-backed infrastructure” in all three territories where it operates: the UK, US and Hong Kong.

Quinn said: “The strong results in 2022 are a testament to Balfour Beatty’s transformation into a well-balanced and lower-risk group.

“The diversified portfolio, both geographically in the UK, US and Hong Kong, and operationally across construction services, support services and infrastructure investments, plus the strength of our balance sheet and cash management, have provided the resilience for the group to deliver ahead of expectations and grow our order book through the global instability seen in 2022.

“The board’s confidence in both the short and longer term is reflected in its commitment to a multi-year programme of strong shareholder cash returns. We believe that Balfour Beatty’s unique capabilities and the positive outlook in its chosen markets will enable it to deliver ongoing profitable managed growth.”

Balfour Beatty’s UK construction business had a profit margin of 2.1 per cent in 2022, with a £59m profit coming from £2.76bn of revenue.

Its US construction business meanwhile had only a 1.6 per cent margin, making £58m from £3.65bn of turnover – while its Hong-Kong construction business, Gammon, had a 3 per cent margin, making £32m from £1.07bn of revenue.

However, the group’s support services business made an 8.4 per cent profit margin, after raking in an £83m profit from a revenue of £989m. Balfour Beatty also made £81m in profit from its infrastructure and investments division after selling housing schemes in Texas, Tennessee, Indiana and Florida.

Looking forward, Balfour Beatty said it was “particularly well-placed to benefit” from anticipated infrastructure investment in the UK, US and Hong-Kong that will seek to “enhance GDP, deliver energy security and mitigate climate change”.

The group said: “These requirements dictate a significant transition in national energy infrastructure, spanning renewable electricity generation and storage, electric vehicle charging, smart grids and carbon capture to hydrogen and nuclear. Balfour Beatty has already started exploring these opportunities.”

The contractor said its own efforts to reduce carbon emissions “continue to deepen” but admitted that its carbon footprint had increased in 2022 “as the group’s mix of work in the year included more tunnelling and earthworks than in 2021, with these activities being particularly carbon-intensive”.

It added that the impact of rising energy prices and inflation meant there had been “reduced opportunities to drive low-carbon solutions as some customers have looked to implement cost efficiencies”.