Balfour Beatty plc

First-half revenue increased 10% to GBP 5.2 billion, or 12% excluding FX. Profit from operations was flat at GBP 77 million; profit for the period fell 10% to GBP 73 million; EPS declined 6% to 14.4p. Order book increased 6% to a record GBP 19.5 billion; period-end cash rose to GBP 1.2 billion and average net cash to GBP 1.1 billion, helped by a GBP 290 million working capital inflow. U.K. construction profit grew 35% excluding insurance recoveries and the business hit a 3% PFO margin, with a GBP 10 million insurance recovery also booked. Support Services revenue rose 19% and profit increased 35% to GBP 46 million. Full-year guidance calls for increased PFO from earnings-based businesses, U.K. construction at a 3% PFO margin, Support Services margins toward the top of the 6% to 8% range, U.S. construction PFO of around GBP 20 million, investment disposals of GBP 30 million to GBP 40 million, net finance income of around GBP 30 million, average net cash of GBP 1.1 billion to GBP 1.2 billion, and capex of GBP 40 million to GBP 50 million. The interim dividend was raised 11% to 4.2p per share.

Leo Quinn framed the first half as evidence that Balfour Beatty’s strategy is working, highlighting a record backlog, a large secured pipeline, and increasingly derisked contracts. He repeatedly stressed selectivity, saying demand in infrastructure exceeds supply and that the group is choosing projects with better margins and lower risk, especially in power transmission, power generation, defense, and selective transport work. His tone was highly optimistic and emphatic, saying he has “never known the business being in such a good position for the future.”

Philip Harrison focused on the numbers and guidance, noting the 10% revenue growth to GBP 5.2 billion, flat group operating profit at GBP 77 million, EPS down 6% to 14.4p, and the 6% increase in the order book to GBP 19.5 billion. He pointed to strong cash generation, including a GBP 290 million working capital inflow, period-end cash of GBP 1.2 billion, average net cash of GBP 1.1 billion, and around half of the planned buyback already completed. He also explained margin and valuation moves: U.K. discount rates were raised by about 0.6 and U.S. by 0.5 for the investments portfolio, which reduced valuation, while the company still expects investment disposals of GBP 30 million to GBP 40 million and average net cash of GBP 1.1 billion to GBP 1.2 billion for the year.

Analysts pressed on the U.S. construction margin outlook, the Texas civils write-down, the U.S. military housing monitorship, the sustainability of working-capital inflow, and whether power and support-services margins could rise further. Management said the Texas issue was tied to subcontractor and design problems in a joint venture, that recoveries are being pursued, and that U.S. construction should return to around GBP 20 million of PFO this year before improving further over time. On the monitorship, they said most work should be done by year-end and the monitor process should conclude by June 2026, with no cash impact beyond current budgets. On working capital, they said 15% of sales is a sustainable level, though the current 18% is being defended, and on power they reiterated double-digit margin ambition while emphasizing that growth must remain selective and derisked.