Balfour Beatty (BBY) chief executive Leo Quinn has been in place just over two years and already the turnaround embraced in its 'Build to Last' programme is beginning to deliver results. Shareholders will be rewarded with reinstatement of the final dividend.
So after three years of reporting a loss, the infrastructure company returned to profitability in 2016 with an underlying profit of £67m. Targets in the two-year first phase of the recovery programme have been exceeded, with cash generation in that time of £439m and costs cut by £123m. In the previously troubled UK construction division, 90 per cent of legacy contracts have reached practical completion, and construction delivered an underlying profit in the second half.
Overall, construction services secured an increased order book of £9.6bn, up from £7.9bn, but selection of new work has been tightened up to include increased margin thresholds, improved risk frameworks and better contract governance (the absence of these was why construction fared so badly in previous years).
On the support services side, the phasing of contracts and regulatory cycles cut revenue by 12 per cent to £1.1bn, although margins improved to 3.1 per cent, placing support services within the Phase Two recovery target range of 3-5 per cent.
Analysts at Numis are forecasting adjusted pre-tax profits for the year to December 2017 of £95m and EPS of 12.9p (from £60m/7.1p in 2016)
| BALFOUR BEATTY ( BBY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 262.1p | MARKET VALUE: | £1.81bn | |
| TOUCH: | 262.0-262.2p | 12-MONTH HIGH: | 299p | LOW: 185p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | na | |
| NET ASSET VALUE: | 110p* | NET DEBT: | 21% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 8.66 | 147 | 17.9 | 14.1 |
| 2013 | 7.49 | -35 | -7.5 | 14.1 |
| 2014 | 7.26 | -304 | -43.9 | 5.6 |
| 2015 | 6.96 | -199 | -30.2 | nil |
| 2016 | 6.92 | 8 | nil | 2.7 |
| % change | - | - | - | - |
Ex-div: 20 Apr Payment: 7 Jul *Includes intangible assets of £1.16bn, or 168p a share | ||||
