Shares in Balfour Beatty plc reached a record high after the construction group raised its annual profit forecasts.
The FTSE 250 infrastructure company reported strong demand for construction projects across both sides of the Atlantic during the first half of the year.
Balfour Beatty shares jumped 10 per cent to hit an all-time high during trading, before settling up 8.4 per cent at 938.5p. The gains extend a strong run for the stock, which has climbed 31.4 per cent so far this year.
Following a strong showing across its core divisions, the group now expects low double-digit percentage growth from its operating businesses this year. It had previously guided investors to expect high single-digit percentage growth.
Underlying profit from operations rose to £153 million for the six months to the end of June, up from £108 million in the same period a year earlier. Pre-tax profits surged 46 per cent to £139 million, while net revenues grew 10 per cent to £5 billion.
Major UK energy and defence projects
The company was bolstered by increased UK government spending on power grid upgrades. It is currently involved in major nuclear energy projects, including the construction of Hinkley Point C in Somerset and Sizewell C in Suffolk.
Balfour Beatty is also working on the construction of Net Zero Teesside, a flagship project aiming to become the world's first gas-fired power station equipped with carbon capture and storage technology.
Higher British defence spending following the publication of the UK Defence Investment Plan, along with a government emphasis on domestic UK suppliers, has provided additional momentum. Balfour Beatty stated that these policy shifts are all supportive for its long-term ambitions in the space.
Philip Hoare, chief executive of Balfour Beatty, said: "We have continued to secure high-quality work, drive profitability and generate strong cash flow." He added that the business is entering the second half of the year with strong momentum.
Order book growth and US expansion
Growth was also supported by an uptick in demand at the firm's US buildings division, which manages residential, institutional, and commercial building developments. This helped push the group's total order book to £23 billion in the six months to the end of June.
Balfour Beatty operates across the transport, energy, and defence sectors for both public and private sector clients. As a constituent of the FTSE 250 index, the London-listed multinational is one of the primary infrastructure contractors operating in Great Britain and North America.
Adam Vettese, market analyst at retail investment platform eToro, noted that investors have welcomed the company's clear earnings visibility. "This is exactly the kind of de-risked, high visibility business the market wants right now," Vettese said.
Vettese added: "With major UK energy and defence programmes still to flow into the order book, and a healthy pipeline of US work, Balfour is well placed to keep compounding. The progressive dividend and ongoing buybacks only sweeten the deal."
Shareholder returns and market outlook
Reflecting its increased earnings and strong cash flow, Balfour Beatty raised its interim dividend by 7 per cent to 4.7p per share. The company is continuing with ongoing share buybacks to return capital to shareholders.
Vettese acknowledged that sector-specific risks remain, but emphasized that market confidence is strong. "Risks around project execution and political funding never fully disappear in this sector, but today’s reaction shows investors are willing to look past them," he said.
