Balfour Beatty said its “direction of travel” remains positive despite concerns that cutbacks to major infrastructure projects under the new Labour government may impact growth.
Shares in the London-listed construction group had fallen after Chancellor Rachel Reeves unveiled wide-ranging plans to axe a string of projects in her first Commons speech.
But Balfour Beatty on Wednesday gave a bullish update on its medium-term outlook, citing government plans to leverage private investment, reform the planning system and upskill the UK’s workforce.
“The outlook for the group’s chosen growth markets, where we hold unique capabilities in delivering complex infrastructure projects, remains encouraging, including in the UK with the new Government reinforcing commitments to critical national infrastructure,” chief executive Leo Quinn told shareholders.
It came as the firm’s order book widened to £16.6bn, up from £16.4bn the prior year, and revenue increased by three per cent to £4.7bn.
On an underlying basis, half-year profit rose from £97m to £98m. Shares are up over 20 per cent this year to date.
In a statement to markets, Balfour Beatty forecast barriers to “delivering major infrastructure” in Britain would begin to ease over time amid “improved economic and political stability.”
In its UK segment, which is comprised of transport and construction, the company flagged increasing investment in road maintenance and improved connectivity across cities in the north of England.
A growing number of projects have also overcome hurdles from so-called Development Consent Orders (DCO), including Balfour’s £185m contract to upgrade sections of the A9 road in Scotland, it added.
At the same time, the group said it had benefitted from increasing defence spend, and a number of contract wins. Rolls-Royce selected it to work on expanding the engineering giant’s Derby facility amid increased demand from the Ministry of Defence in the wake of Russia’s war in Ukraine.
Average cash in 2024 is expected to be broadly in line with the £700m recorded in 2023, bringing full-year capital expenditure to levels of around £35m.
“In summary, the board continues to expect growth in underlying group earnings in 2024, with growth accelerating in 2025,” Balfour Beatty said.