Balfour Beatty: Key projects with BP, Equinor and Rolls-Royce help construction giant trade in line

Balfour Beatty said trading had been in line with expectations in the first quarter as it announced progress on three major UK infrastructure projects.

The construction giant said profit from operations at its earnings-based business and total group earnings would increase through the rest of the year, despite sector-wide challenges.

In the first three months, the average monthly net cash balance was £756m, up from last year’s £700m average.

The board expects 2024 average cash to be roughly in line with 2023, “reflecting an expected working capital outflow.” A £100m share buyback programme will be completed by the end of the year, with around £50m already completed to date.

It comes as Balfour continues work on a number of major British infrastructure projects, alongside FTSE 100 giant’s Rolls-Royce and BP.

The firm has been selected as a construction partner for the expansion work at Rolls Royce’s facility in Raynesway, Derby. Rolls is looking to meet growing demand from the Ministry of Defence after the Aukus trilateral pact between the US, Australia and the UK.

Balfour is also working alongside energy giants BP and Equinor on the Net Zero Teeside Power project, which is expected to be the world’s first commercial scale gas-fired power station with carbon capture usage and storage.

The company has received a letter of intent to progress with the next phase, where it will construct a combined-cycle plant alongside the carbon capture facility.

Balfour, which also has contracts work on HS2’s Old Oak Common and the London Picadilly Line has faced persistent struggles with inflation over the last year.

Underlying pre-tax profit dipped from £291m to £26m, while the group’s order book narrowed 5 per cent to £16.5bn.

Shares are down around three per cent in the last 12 months, despite bumper payouts for investors unveiled in March. They stayed level in early trading on Thursday.