- Balfour Beatty helped build the Channel Tunnel and Docklands Light Railway
- Profits were hit by a £44m decline in gains on disposals of investments.
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Balfour Beatty made lower profits last year despite strong growth in its construction businesses in the UK and Hong Kong.
The infrastructure giant, which helped build the Channel Tunnel and Docklands Light Railway, posted an underlying operating profit of £228 million in 2023, a fall of 18 per cent on the previous year.
Profits were mainly affected by a £44 million decrease in gains on disposals of investments, as well as some US civil engineering projects taking longer than initially planned.
Profits drop: Infrastructure giant Balfour Beatty posted an underlying profit of £228 million from operations in 2023, a fall of 18 per cent on the previous year.
This offset rising underlying profitability from its UK division, which benefited from rising levels of transport-related work such as the HS2 high-speed rail line and the Thames Tideway tunnel.
Balfour Beatty’s domestic business saw revenue growth of 10 per cent to £3bn, even as high interest rates increased economic uncertainty.
Its joint venture subsidiary in Hong Kong, Gammon, saw the biggest increase in turnover, rising 27 per cent to £1.36bn, due to work on projects such as the expansion of Hong Kong Airport’s Terminal 2.
As a result, the London-listed company’s total revenue rose 7 percent to £9.6 billion, better than expected.
Leo Quinn, chief executive of Balfour Beatty, said: “The group’s reliability and resilience have again delivered strong performance, with higher revenues and profits from our profit-based businesses and strong operating cash flow.”
“This success in a challenging economic environment is driven by our disciplined contract risk management across a geographically and operationally diversified portfolio.”
Balfour Beatty Stock jumped 7.5 per cent to 365.2p on Wednesday morning, making them the FTSE 250’s top performers and taking their gains over the past two years to around 37 per cent.
The company forecasts higher operating profits from its profit-based segments this year before “accelerating” in 2025, driven by America’s chosen buildings industry and energy, transportation and defense plans in Britain.
By 2024, the group said growth will be supported by its £16.1 billion order book.
Among the contracts won by Balfour Beatty in 2023 was a £330m six-year deal from Lincolnshire County Council for motorway maintenance and a £300m deal to build student accommodation for the University of Sussex.
Outside the UK, the company won $480 million for federal works in Washington DC and a HK$3.7 billion bid to build a new development at Cyberport, a business park home to the largest fintech community in Hong Kong.
Mark Crouch, analyst at eToro, said: “While the faltering UK economy may present bumps in the road ahead, Balfour Beatty’s impressive balance sheet, strong cash position and overseas diversification should offer further insulation. sufficient for its shareholders in the event of an economic slowdown intensifying. .’