In the year to December 2023 Balfour Beatty grew revenue by 7% to 拢9,595m (2022: 拢8,931) but pre-tax profit was down 15% at 拢244m (2022: 拢287m).
As expected, Balfour Beatty鈥檚 underlying profit for the year reduced to 拢205m (2022: 拢290m) as gains on investment disposals reduced as planned and a one-off 拢56m tax credit boosted 2022 numbers.
Average net cash reduced as expected to 拢700m compared to 拢804m in 2022.
The UK construction business improved its profitability, from a 2.1% operating margin to 2.3%, making a 拢69m operating profit from revenue of 拢3.03bn (2022: 拢59m from 拢2.76bn).
The UK construction market is proving more profitable for Balfour Beatty than the USA, where made 拢51m operating profit last year on revenue of 拢3.70bn at a margin of 1.4%.
Hong Kong was better though. Through its Gammon joint venture with Jardine Mattheson it made 拢36m operating profit from 拢1,357m revenue, a margin of 2.7%.
The medium-term ambition is to achieve a 3% operating margin in UK construction and the board expects to get closer to that this year.
New orders are steady in both the UK and the USA but down a bit in Hong Kong. 聽The group's 2023 year-end order book was 拢16.5bn, which is 5% lower than 2022 (although only 2% lower at constant exchange rates).
The UK construction order book remained flat at 拢6.1bn, with 91% of those orders from public sector and regulated industry clients.
Chief executive Leo Quinn said: 鈥淭he group鈥檚 reliability and resilience has again delivered a solid performance, with increased revenue and profit from our earnings-based businesses and strong operating cash flow. This success against a challenging economic backdrop is driven by our disciplined contract risk management across a geographically and operationally diversified portfolio.
鈥淭he board remains confident in Balfour Beatty鈥檚 ongoing ability to deliver sustainable cash generation for significant shareholder returns, with growth from our earnings-based businesses in 2024 underpinned by the strength of the group鈥檚 order book. Looking to 2025 and beyond, we expect our unique capabilities and complex infrastructure project experience to drive further earnings growth, with attractive opportunities being pursued in the UK energy, transport and defence markets and in the US.鈥澛�
Balfour Beatty UK Construction currently has around 700 live projects in the portfolio, which is slightly higher than recent years. During 2023, work was completed on a wide range of projects including the Mayfield Retirement Village in Watford, the Forder Valley link road and bridge in Plymouth, the National Treatment Centre Highland Hospital in Inverness and the Institute for Regeneration & Repair at the University of Edinburgh. New projects that started in 2023 included a new building at the AWE Aldermaston site near Reading, civils work at Devonport Dockyard in Plymouth, the Central Rhyl Coastal Defence scheme in North Wales and the Dunfermline Learning Campus for Fife College.
In addition to projects started in the year, work added to the order book in 2023 included the 拢300m West Slope student accommodation development a Sussex University, which is a Balfour Beatty Infrastructure Investments project, and a 拢67m contract for a replacement Liberton High School in Edinburgh.
Balfour Beatty is also involved in HS2, Hinkley Point C and the now nearly completed Thames Tideway Tunnel. It is also main contractor for the 拢250m M25 Junction 10 (Wisley interchange) improvement scheme.
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