Balfour Beatty (LON:BBY) reported higher first-half revenue, profit and cash generation for 2026, citing growth in U.S. buildings and U.K. power transmission as well as an improved performance in U.S. construction.
Group Chief Executive Philip Hoare said the company delivered “profitable growth and strong cash performance” during the period. He also noted that the U.S. monitorship concluded on June 6, a development he described as an important milestone that allows the company to focus on service delivery for U.S. military housing customers.
The company declared an interim dividend of 4.7 pence per share, up 12% from the prior year. Balfour Beatty said it remained on track to complete its £200 million share buyback by year-end and expects total shareholder returns of £267 million during 2026.
Margins improve across core operations
Profit from operations margin in Balfour Beatty’s earnings-based businesses rose to 2.9% from 2.2% in the comparable prior-year period. Westcott said U.K. Construction delivered a 3.4% margin, representing a 50-basis-point improvement after excluding a one-off insurance recovery recorded a year earlier.
U.S. Construction returned to profitability, generating £22 million in profit from operations compared with a loss in the first half of 2025. Revenue in U.S. buildings rose 19%, while losses in the civil engineering business were reduced as a Texas highway project approached final closeout.
Management said the long-term target margin for U.S. buildings remains between 1.5% and 2%. Hoare said the business intends to maintain an approximate 90%-to-10% mix between buildings and civil engineering, respectively, while cautiously managing risk in U.S. civils following prior issues on the Texas project.
Support Services recorded a 10% revenue increase and profit from operations of £66 million, producing a 9.1% margin. Westcott attributed the performance to margin gains in both power and transportation, as well as a greater contribution from power transmission work. He said the business could finish close to a 9% margin for the full year, although he did not characterize 9.1% as a new normal.
Order book and selected growth markets
The group’s order book was broadly stable at £22.9 billion, providing what management described as visibility over the coming years. Balfour Beatty also cited a substantial pipeline of selected but not yet contracted projects.
- In U.K. power transmission, revenue increased 24% year over year and the order book rose to £2.1 billion from £1.6 billion at the end of 2025.
- The company has £6 billion to £8 billion of power projects in design phases and expects to convert the majority into its order book during the next 18 months.
- Balfour Beatty secured the £325 million Netherton Hub contract with SSE and additional substation work associated with National Grid’s Bramford to Twinstead project.
- Support Services won a £315 million highways maintenance contract in Warwickshire.
- Gammon’s order book increased 15%, including a rail station contract in Hong Kong’s Northern Metropolis Development area.
Hoare said the publication of the U.K. Defence Investment Plan improved visibility over expected defense infrastructure spending through 2030 and provided a longer-term view toward defense spending of 3.5% of GDP by 2035. He said the company’s U.K. presence, security-cleared personnel, ring-fenced IT system and experience in complex nuclear work position it to pursue defense opportunities.
In the U.S., Balfour Beatty highlighted aviation and data centers as priority building-market verticals. The company secured a $361 million mandate at Raleigh-Durham Airport and reported $350 million of data-center wins, expanding work beyond the Northwest into Virginia. It also has a further $1 billion of data-center work that has been awarded but not yet contracted.
Hoare said data centers account for 6% of the U.S. order book and could become a double-digit percentage over time, though he said the company would avoid becoming overweight in the sector.
Cash, investments and outlook
Net cash at the end of the half stood at £1.7 billion, with average net cash of £1.6 billion. Operating cash flow totaled £151 million. Westcott said working capital increased because of new U.S. project starts and growing power activity, with the business generally receiving payments in advance on contracts.
The company said it expects negative working capital to remain in a 15%-to-18% range over the longer term, although it was about 19% of revenue in the first half. Balfour Beatty made a £30 million pension contribution during the period, with no further contributions expected under its agreement with trustees of its largest pension fund.
The directors’ valuation of the Infrastructure Investments portfolio remained approximately £1.1 billion. Balfour Beatty invested £15 million in new and existing projects, received £15 million in portfolio distributions and disposed of two U.S. assets at or above their directors’ valuation.
For the full year, Balfour Beatty raised its guidance for earnings-based business profit from operations to low double-digit growth, slightly ahead of prior expectations. It also lifted net finance income guidance to £35 million to £40 million and increased expected average net cash to £1.5 billion to £1.7 billion. Guidance for Infrastructure Investments was unchanged.
Hoare said the company’s strategic focus remains on organic growth in U.K. energy, U.K. defense, U.K. transport and U.S. buildings. While management is assessing adjacent opportunities, he said bolt-on acquisitions would be considered only where they enhance capabilities or access to adjacent markets.
About Balfour Beatty (LON:BBY)
Balfour Beatty is a leading international infrastructure group. With 26,000 employees across the UK, US and Hong Kong, we’re leading the transformation of our industry to meet the challenges of the future.
Trusted by our customers to deliver sustainable solutions and strengthen communities, we finance, develop, build, maintain and operate the increasingly complex and critical infrastructure that supports national economies and deliver projects at the heart of local communities.
Collaborating with governments, our customers and partners, we deliver powerful new solutions, shape thinking, create skylines and inspire a new generation of talent to be the change-makers of tomorrow.
