ii view: Balfour Beatty’s record order book and bumper profit

Full-year results to 31 December

• Revenue up 8% to £10.76 billion
• Adjusted profit from operations up 16% to £293 million
• Order book up 23% to £22.7 billion
• Final dividend of 9.8p per share
• Total 2025 dividend up 12% to 14p per share
• Average net cash held up 58% to £1.21 billion

Guidance:

• Planning new £200 million share buyback programme for 2026
• Expects annual adjusted profits to grow by high single-digit percentage in 2026

Chief executive Philip Hoare said:

"Since joining in September, I've been truly impressed by the depth of talent across Balfour Beatty and the inherent strength of the Group. Our capabilities, the quality of our order book and our disciplined approach to risk provide a powerful foundation for the future.

“Supported by a robust balance sheet and a resilient diverse business model, we are incredibly well positioned to respond to market dynamics, accelerate profitable growth, improve margins and drive value creation for our customers, communities, and shareholders."

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ii round-up:

Exposure to growth in UK power networks and buildings to house data centres helped construction company Balfour Beatty (LSE:BBY) today unveil better than expected shareholder returns. 

A near one-quarter expansion in Balfour’s order book to a record £22.7 billion aided a 16% gain in adjusted annual profit for 2025 to £293 million. A final dividend of 9.8p per share, payable to eligible shareholders on 1 July, takes the total payment up 12% to 14p per share. That topped forecasts of 13p, with shareholder returns also including a new £200 million share buyback programme this year.

Shares in the FTSE 250 company rose 7% in UK trading having come into these latest results up by just over a half in 2025. That’s similar to fellow construction company Kier Group (LSE:KIE). The FTSE 250 index rose 9% last year. 

Balfour Beatty operates across the three areas of construction, support services and infrastructure investments, largely in the UK, US and Hong Kong. 

Its UK construction order book soared 44% in 2025 to £8.9 billion, driven by work won at the Sizewell C nuclear power station and the Teesside carbon capture project. 

US exposure includes £2.5 billion of works for new buildings including data centres and new prisons, with projects elsewhere now seeing Balfour construct four nine-storey buildings at the Hong Kong-Shenzhen Innovation and Technology Park.

Average group net cash held, previously highlighted by management as a key health indicator, rose 58% year-over-year to £1.21 billion. 

Accompanying management outlook comments flagged further momentum into this year and 2027, with accelerating demand driving a forecast high single-digit percentage gain in annual 2026 adjusted profit. 

Balfour’s AGM on 7 May will include a trading update.  

ii view:

Started in 1909 by George Balfour and Andrew Beatty, the FTSE 250 company today employs over 27,000 people. Construction accounted for most revenues during 2025 at 81%. That was followed by Support Services at 13% and infrastructure investments the balance of 6%. Geographically, the US generated most revenues last year at 45%, followed by the UK at 44% and the rest of the world and Hong Kong most of the balance of 11%. 

For investors, a forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap. Elevated UK and US government borrowing could see infrastructure related spending reduced at some point, while any construction projects taken on at fixed prices always provide a degree of cost overrun risk.

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On the upside, a growing order book supports expected growth in adjusted profit in 2026. Diversity of both operations and geographical regions exist. Previous management initiatives have looked to lower risks including reducing fixed price contracts where possible, while a focus on shareholder returns has seen over £1.2 billion returned to shareholders since 2021, with the shares now on a forecast dividend yield of around 2%.  

In all, and despite ongoing risks, order book momentum is likely to keep fans of this major construction company optimistic about the long term.  

Positives: 

• A focus on lower risk contracts
• Increasing shareholder returns

Negatives:

• Uncertain economic outlook
• Risk of cost overruns

The average rating of stock market analysts:

Buy