The construction services company said underlying profit from operations more than doubled to £196mln from £69mln in 2016 while revenue was flat at £6.9bn.
The company received £103mln from the sale of a 12.5% stake in Connect Plus, which operates the M25 London orbital motorway. It sold a further 7.5% stake in the M5 for £62mln in late December but the cash was not received until this year.
Results also included a £32mln tax credit after Donald Trump cut the US corporation tax rate to 21% from 35%.
Impact of Carillion collapse
Balfour recognised a one-off provision of £44mln last year stemming from the liquidation of Carillion PLC (LON:CLLN), one of the group’s joint operations partners in the Aberdeen Western Peripheral Route project.
Other items included £12mln of restructuring costs and a £18mln gain on the disposal of its professional services business, Heery International Inc.
Order book lower on more selective bidding
The order book at the end of the year stood at £11.4bn, down from £12.4bn a year earlier, reflecting Balfour’s decision to bid more selectively on projects.
Its decision to be more selective on bidding comes as several British builders, including Carillion, have been hit by writedowns and issued profit warnings in the past decade due to losses on fixed-price contracts.
“Order book down, profits missed a touch, yet bidding discipline and higher margins are paying off for Balfour Beatty,” said Neil Wilson, senior market analyst at ETX Capital.
“Indeed margins are what matter and today’s results continue the positive trajectory evident in the December trading update and the first half results as Leo Quinn’s Build to Last strategy yields results.”
Restructuring on track
Under the so-called 'Built to Last' transformation strategy, the company has been focused on improving the quality of its order book, reducing costs and raising productivity across operations.
“The group has been repositioned to drive sustainable growth in profits, underpinned by a strong balance sheet. It has the right culture and capabilities to capitalise on the rising tide of infrastructure spend in our chosen markets,” said chief executive Leo Quinn.
“As a result of Build to Last, and the governance and controls now in place, we remain on track to achieve industry-standard margins in the second half of 2018. In the medium term, we are building a group capable of delivering market-leading performance.”
Shares rose 2.4% to 283.6p in morning trade.