- New £185 million contract win
- 9% rise in half-year dividend to 3.8p per share
- Selected by Rolls Royce as a construction partner
Shares in Balfour Beatty (BBY) fell more than 3% to 394p in morning trading as the infrastructure group reported a widely expected rise in revenue for the first half of the year.
However this news failed to excite investors who took the opportunity to cash in on a recent 52-week high of 437p set on 29 July.
For 2024 as a whole the FTSE 250 company’s shares are up more than 18%.
The dour investor response to Balfour Beatty's results also reflected investor scepticism about the future of infrastructure spending under the new Labour government.
Revenue was up 3% to £4.7 billion driven by increases at support services and its joint venture Gammon.
The company remains positive about earnings growth in the medium term with accelerated earnings growth in 2025.
GOOD NEWS ON DIVIDENDS
The company however revealed some good news for shareholders with a 9% increase in half-year dividend to 3.8p per share compared to 3.5p last year.
Balfour Beatty also said the company’s £100 million share buyback is on track and £60 million of total dividends are due to be paid in 2024.
NEW CONTRACT WIN
The company has been selected by Rolls Royce (RR.) as a construction partner for expansion work in Raynesway, Derby which is needed to meet the growth in demand from the Ministry of Defence.
Balfour Beatty has also been awarded a £185 million contract on A9 road in Scotland which will see the infrastructure group upgrade six miles of single carriageway to dual carriageway.
EXPERT VIEW
Danni Hewson, head of financial analysis at AJ Bell said: ‘One of the first moves by new chancellor Rachel Reeves was to lower the axe on a number of UK infrastructure projects as the Treasury sought to balance its books.
‘Shares in engineering giant Balfour Beatty slumped on the news but despite concerns about the future direction of travel, the company has delivered a solid set of half year results with optimism threaded through the update like a stick of rock.
‘If anyone needed a visual of the scale of the projects the company delivers, they just need to look at images out of Birmingham overnight where a massive bridge spanning the new HS2 line was eased into place. These are the kinds of projects that improve our journeys, make us more productive and, importantly, add to economic growth.
‘Profits were up a touch, and the order book has been padded out. There are still huge budgetary barriers to major infrastructure investment in the UK but longer term the government has been clear that ‘getting Britain building again’ must be at the heart of the country’s future, and that’s something Balfour Beatty believes will be a boon to it and its shareholders.’
LEARN MORE ABOUT BALFOUR BEATTY
Disclaimer: Financial services firm AJ Bell referenced in this article owns Shares. The author (Sabuhi Gard) and editor (Tom Sieber) own shares in AJ Bell.
