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Investing.com - Balfour Beatty (OTC:BAFYY) shares dropped 2.9% on Wednesday after the infrastructure group reported first-half results showing strong UK performance offset by unexpected losses in its US civil construction business.
The company posted underlying profit from operations of £77 million for the half-year ended June 27, unchanged from the same period last year.
Profit from earnings-based businesses rose 7% to £108 million, driven by strong performances in UK Construction and Support Services.
UK Construction achieved its 3% profit margin target a year ahead of schedule, delivering a 3.6% margin and underlying profit growth to £56 million.
Support Services saw profit jump 35% to £46 million, powered by expansion in the power transmission business.
However, these gains were wiped out by an £11 million loss in US Construction, where cost overruns at a Texas highways project offset strong performance in the US Buildings division.
The company is pursuing cost recoveries for the troubled project.
"Our continuing strong cash generation is underpinned by a growing order book with improved margins and lower risk contract forms," said Leo Quinn, Balfour Beatty’s Group Chief Executive.
"This provides the Board with increasing confidence in significant future cash generation that supports our ongoing dividends and share buybacks."
Average net cash increased to £1.1 billion (FY2024:£766 million), with the company upgrading its full-year cash guidance to £1.1-1.2 billion. The order book grew 6% to £19.5 billion, providing visibility for future growth.
The Board declared an interim dividend of 4.2 pence per share, up 11% from 3.8 pence last year.
For the full year, Balfour Beatty expects increased profit from its earnings-based businesses, with US Construction now forecast to deliver profit of around £20 million.
The company maintained its overall earnings expectations for 2025, with further growth anticipated in 2026.
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