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Balfour Beatty shares rise as the builder flags steady second half recovery

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Balfour Beatty plc (LON:BBY) shares traded in positive territory in Wednesday’s early deals after the builder told investors that its ‘earnings-based businesses’ have recovered steadily throughout the second half of 2020.


The company said it expects full-year profit will be in line with the board’s expectations.


“As the impact of COVID-19 reduces, we are seeing positive momentum across the business,” said Leo Quinn, Balfour chief executive in a statement.


Given the resilience of the performance Quinn and the board said they intend to declare a final dividend at the time of March’s full year results and “as a first step in a programme of returning capital to shareholders”, also plan to begin an initial GBP50mln share buyback programme from January. More details of a new capital allocation framework will be set out at the results.


At year-end, Balfour Beatty’s order book is expected to be around GBP17bn, which the company highlighted is significantly higher than 2019. This is driven by awards related to the UK government’s major HS2 travel infrastructure project.


More generally, the company said that it continued to win material infrastructure projects across all its geographies during the second half of 2020 – including the Three Runway project at Hong Kong Airport, Oak Hill Parkway in Austin, Texas, along with Smart Motorway projects in the UK (M25 and M3).


It said full-year revenue is expected to be in line with last year, which was reported at GBP8.4bn. The company noted that monthly cash generation is forecast at around GBP500mln, beating prior guidance of GBP430mln.


Additionally, the company noted that October’s debt extension, rolling a GBP375mln credit facility to 2023, and highlighted that the facility remains undrawn.


Chairman Philip Aiken has declared his intention to step down at the company’s AGM in May 2021, and, a selection process is underway to appoint his replacement.


Chief executive Leo Quinn added: “We look towards 2021 with a strong order book, a robust balance sheet and having maintained our expert capability. These attributes provide confidence that Balfour Beatty is well-positioned to deliver value through profitable managed growth in both the medium and long term.”


In London, Balfour Beatty shares rose by 5.2p or 1.94% in Wednesday morning’s deals to change hands at 272.34p.

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