FTSE 250 constituent Balfour Beatty PLC (GB:BBY) reaffirmed its full-year outlook, earlier outlined in May, and kept its interim dividend stable in its half-yearly earnings for 2023. The company expects its earnings for 2023 to mirror those of 2022, given that its operational advancements are on track.
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The company also declared an interim dividend of 3.5p per share, similar to what was paid in the corresponding period last year.
Balfour Beatty is an infrastructure firm equipped with vast capabilities to design and manage various assets across sectors like transportation, energy, water, and social infrastructure.
Strong First-Half Performance
In its H1 earnings report, the company unveiled a 9% increase in its revenue, reaching £4.5 billion in comparison to the preceding year. Profit from operations also saw a 12% surge to £95 million, marking an improvement from the £85 million recorded in H1 2022. Additionally, the company documented a notable 13% rise in its pre-tax profits.
The order book value was down by 6% to £16.4 billion. However, it still remains strong and supports the short to medium-term outlook of the company. The order book primarily consists of high-value and low-risk orders, instilling confidence in the company’s forthcoming revenues.
On the downside, the company’s U.S. operations are encountering difficulties due to the technology industry’s decline, causing a delay in investments. The company mentioned that technology firms in the U.S. are curbing expenditures for constructing commercial offices and scaling back investments, influenced by the remote work trend and a high-interest rate environment.
The company focuses its U.S. operations primarily on commercial construction, whereas its UK activities center around national infrastructure projects.
Are Balfour Beatty Shares a Good Buy?
Although the company adhered to its guidance figures, the shares experienced an 11% decline in value following the announcement yesterday. This extended the shares’ negative trajectory, persisting in their streak of losses throughout 2023. YTD, the shares have traded down by 7.5%.
The company enjoys operational and geographical diversification along with a strong order book, which lowers the risk of its future top-line growth. Additionally, the company’s commitment to shareholder returns is appealing, with the shares reflecting a historical and anticipated future dividend yield of over 3%.
Moving forward, the company is actively pursuing significant expansion in the power and energy sectors within both the UK and Hong Kong markets. Similarly, it is targeting growth in U.S. business through involvement in the school and airport sectors. This fosters confidence within the company, assuring its capability to achieve sustainable and controlled growth, consequently generating significant future returns for shareholders.
