Balfour Beatty UK construction returns to profit

Balfour Beatty’s 2022 revenue was up 8% at £8,931m (2021: £8,263), with a pre-tax profit of £287m (2021: £87m).

Underlying profit from operations was up 42% at £279m (2021: £197m).

The UK construction operation, which ran at a loss in 2021, appears to have been turned around.

Balfour Beatty’s UK construction business made an operating loss of £2m in 2021 on revenue of £2,593m. In 2022 it made a profit of £59m on revenue of £2,763m, at an operating margin of 2.1%.

Balfour Beatty still does most of its business overseas, generating £3,651m revenue and £58m operating profit from the USA last year, plus £1,068m revenue and £32m operating profit in Hong Kong, through its Gammon joint venture with Jardine Matheson

The order book grew by 8% in the year to £17.4bn (2021: £16.1bn) and is now 90% target-cost or cost-plus contracts, rather than riskier fixed-price contracts.

This order book does not include the £1.2bn Lower Thames Crossing project (Essex roads package) awarded in January 2023 or the seven-year £297m contract for highways maintenance in East Sussex because contracts have yet to be formally signed.

The UK construction order book grew by 9% to £6.1bn (2021: £5.6bn) and is 95% for public sector and regulated industry clients (2021: 91%).

Group chief executive Leo 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.”

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