ii view: nuclear powers progress at Balfour Beatty
Navigating the ups and downs of construction since 1909 and with modern day interests including building new US data centres. Analyst Keith Bowman assesses prospects.
4th December 2025 15:50
by Keith Bowman from interactive investor
Full-year trading update to 4 December
- Expects order book growth of around 20% during 2025 (FY2024: £18.4 billion)
- Expects revenues to be more than 5% above last year (FY2024: £10.0 billion)
- Expects adjusted profit from earnings-based businesses to be ahead of last year’s £252 million outcome
Chief executive Philip Hoare said:
"In my first three months at Balfour Beatty, I've been delighted to see first-hand the pride, care, and passion on which the company is built.
"Our immediate priority is to finish 2025 strongly, while laying the groundwork for further progress in 2026, where I expect the Group to continue on its journey of delivering PFO growth from its earnings-based businesses. In addition, we are reaffirming our commitment to shareholder returns and confirming a further share buyback for 2026."
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ii round-up:
Construction firm Balfour Beatty (LSE:BBY) today reaffirmed expectations for growth in annual profits, pushed by £3.5 billion of new power generation orders as well as demand for new data centres.
Management expects the group’s order book to grow by around a fifth compared to 2024’s £18.4 billion, fuelled by around £3 billion of work for the new Sizewell C work nuclear power plant as well orders in the US for new prisons and data centres.
Shares in the FTSE 250 company rose 0.5% in UK trading to another record high, having come into this latest news up by more than a half so far in 2025. The FTSE 250 index is up by close to 7% year-to-date. Shares in fellow construction company Kier Group (LSE:KIE) at by just under a half during that time.
Balfour Beatty operates across the three areas of construction, support services and infrastructure investments.
Driven by the company’s core growth markets of UK energy and US buildings, revenues for the full year to late December are expected to rise by more than 5% from £10 billion a year ago.
Profit For Operations (PFO), which excludes infrastructure investments, is forecast by Balfour to exceed 2024’s outcome of £252 million.
Average group net cash held, previously highlighted by management as a key health indicator, is expected to come in at an average monthly total of £1.1-1.2 billion versus £766 million in 2024.
Following on from cash returns of £189 million in 2025 via share buybacks and dividends, and with an unchanged policy, Balfour plans to announce new 2026 share buybacks at its full-year results in March.
ii view:
Balfour today employs over 27,000 people. Construction accounted for most revenues in 2024 at 80%. That was followed by Support Services at 15% and infrastructure investments the balance of 5%. Geographically, the UK generated most sales at 44%, followed by the US at 40% and the rest of the world and largely Hong Kong the balance of 16%.
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. A previously highlighted cost overrun and monitoring of its US infrastructure investments, is not to be forgotten, while any construction projects taken on at fixed prices always carry risk of cost overrun.
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To the upside, an order book potentially up 20% year-over-year supports guidance for operational profit growth in 2025. 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 sees a continuing share buyback programme sat alongside a forecast dividend yield of almost 2%.
On balance, and despite continuing risks and shares at all-time highs, order book momentum should 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
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