Increased order book at £18bn secures growth over next two years
A reassessment of building safety work dented Balfour Beatty pre-tax profits last year which slipped 14% to £214m.
But underlying profit from operations edged up 7% to £252m helped by improved profitability in UK Construction and higher volumes at Gammon.
This was partially offset by reduced profits in US Construction.
Overall revenue remained stable, up 4% to just over £10bn.
Balfour Beatty said it has increased building remediation provisions by £83m following a full assessment of potential liabilities relating to the Building Safety Act.
The firm also took a £52m hit at its UK business regarding a claim on a legacy highways project completed back in 2012 in Texas.
| Balfour Beatty divisions trading | |||||||
|---|---|---|---|---|---|---|---|
| 2024 | 2023 | ||||||
| Revenue | Op profit | Margin | Revenue | Op profit | Margin | ||
| £m | £m | % | £m | £m | % | ||
| UK Construction | 3,011 | 81 | 2.7% | 3,027 | 69 | 2.3% | |
| US Construction | 3,638 | 40 | 1.1% | 3,697 | 51 | 1.4% | |
| Gammon | 1,550 | 38 | 2.5% | 1,357 | 36 | 2.7% | |
| Construction Services | 8,199 | 159 | 1.9% | 8,081 | 156 | 1.9% | |
| Support Services | 1,210 | 93 | 7.7% | 1,006 | 80 | 8.0% | |
Overall the construction services arm delivered underlying operating profit increased to £159m, as UK Construction operating margin continued to improve with a further year of strong project delivery and Gammon recorded 14% revenue growth.
US Construction profitability reduced due to the cost of delays at a small number of civils projects.
Support Services delivered strong growth, with revenue increasing by 20%.
Balfour Beatty continued to forecast growth in the near term despite challenging economic conditions driven by UK energy, transport and defence work and US buildings.
Power transmission work in the UK and an uptick in building orders in the US helped the year-end order book to improve 12% to £18.4bn (2023: £16.5bn).
Future growth in the Support Services division is expected to be largely driven by the expansion of work in the power transmission and distribution sector, which is not reliant on Government funding or the ongoing comprehensive spending review.
Leo Quinn, Balfour Beatty group chief executive, said: “The group made further strong progress in 2024.
“We once again delivered managed profitable growth from our earnings-based businesses and healthy cash generation, while also increasing our high-quality order book.
“The group’s long-term outlook remains positive, with the growth forecast in 2025 and 2026 being driven by strong visibility from its high-quality order book, alongside the further opportunities in the energy, transport and defence sectors in the UK and the Group’s chosen buildings sectors in the US.”
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