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The company expects marginal gains driven by its work on Phase 1 of Britain’s HS2 rail project and increased airport construction activity in Hong Kong.
Published Dec. 11, 2023
An aerial view of London. Balfour Beatty, headquartered in the city, expects marginal gains in its backlog, it announced during in a year-end trading update.
Tom Shaw via Getty Images
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Dive Brief:
London-based builder Balfour Beatty now anticipates it will slightly exceed its full-year backlog numbers issued in August, with revenue growing about 5% from 2022, the company announced in a year-end trading update on Dec. 7.
The company predicts its order book, or backlog, will be “marginally higher” than the 16.4 billion-pound ($20.7 billion) mark it announced at its August half-year earnings call. It also predicts a 5% gain year-over-year in revenue from FY 2022’s 8.9 billion pounds, driven by higher volume in Phase 1 of the HS2 rail project in the U.K., and increased major airport construction activity in Hong Kong, per the release. At midyear, the company had said it was still on target to hit its full year goals, and that its growing pipeline gave the company confidence through the long term.
Balfour Beatty’s announcement comes on the heels of its downcast half-year earnings, where it reported its pre-tax profit dipped to 82 million pounds from 83 million the year prior. In addition, the builder said its U.S. segment took a hit due to weakness in the office and technology sectors in Texas and the Northwest, respectively.
Dive Insight:
The international contractor said that its U.S. construction segment had a stronger order intake in the second half of the year compared to the first. The gains reflected two commercial real estate projects in Texas totaling $800 million, which the company converted from awarded to contracted, along with $300 million of additional federal work in Washington, D.C.
On the U.K. side, the contractor noted that HS2 activities at Area North and Old Oak Common are still on track, and that its order book wasn’t affected by the British government’s decision to cancel Phase 2 of the megaproject, which hadn’t been contracted out by that point.
The contractor has also been making gains in its British support services vertical. It signed a 330 million-pound, six-year extension to a highways maintenance contract with the Lincolnshire County Council. Additionally, its rail business was awarded a 43 million pound contract to deliver essential upgrade work on the London Underground’s Piccadilly line in October, per the release.
The company plans to continue this program in January, and it will confirm the amount of its 2024 share purchase plan next March.
Balfour Beatty has earned several notable wins over the past six months, including a $62 million highway project in Texas and a potential $500 million Goldman Sachs office complex in Dallas.
However, the company has also been mired in controversy — the contractor, as part of a JV that worked on Boston’s $2.3 billion Green Line megaproject, needs to repair two-thirds of the rails because they were placed too narrowly. The EEOC also sued Balfour Beatty in federal court in September for allegedly allowing men to sexually harass a woman working as a truck driver on a highway project.
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