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Balfour Beatty – Revenue And Profit Expected Higher, Buybacks To Continue Into 2023

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Balfour Beatty plc (LON:BBY)’s full year revenue is expected to be around 5% ahead of last year, which came in at £8.3bn. That was largely driven by positive changes in exchange rates.

The year-end order book is also expected to be around 5% ahead of the prior year’s figure of £16.1bn. Again, that increase is largely driven by changes in exchange rates.

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Balfour now expects profit to be ahead of market expectations, due to positive net interest income and certain accounting measures which will significantly reduce the 2022 tax charge. Average monthly net cash is now forecast to be around £800m, ahead of the previous guidance of £740-£780m.

Over £200m has been returned to investors over 2022, with the current buyback scheme set to complete in December. For 2023, distributions are expected to be broadly similar. From January, the group expects to continue buying back shares ahead of confirming a new buyback scheme with full year results in March.

The shares rose 2.2% following the announcement.

Balfour Beatty's Earnings

“Balfour Beatty looks to be heading into the final stretch of the 2022 financial year in decent shape, both profit and cash flows are expected to be higher giving management the confidence to continue buying back shares into 2023. That’s a clear statement to the market that management still feel the shares offer good value, with them trading hands at 11 times forecast earnings.

Both revenue and the order book are expected to rise around 5% by the year end, though its worth remembering favourable exchange rates are the main driving force which aren’t an underlying, or ongoing, growth factor.

Balfour saw a return to profitability for its UK Construction sector back at the half year mark and is continuing its strategy across the business of de-risking the order book. Around 90% of the UK order book is now in public sector projects, which offer significantly more resilience in a downturn.

We were also pleased to hear the UK government committing to infrastructure investment in the recent Autumn statement, that should act as a long-term demand driver for Balfour.”

Article by Matt Britzman, Equity Analyst at Hargreaves Lansdown