The FTSE 250 construction firm reported a rise in underlying pre-tax profit to £181mln from £165mln in the year ended 31 December 2018, although underlying revenues fell to £7.8bn from £8.2bn.
Balfour’s order book meanwhile increased to £12.6bn from £11.4bn in 2017 while the final dividend was increased 33% to 3.2p per share, taking the total for the year to 4.8p from 3.6p.
The results were broadly in line with updated forecasts issued in December after Balfour pocketed gains from several disposals as part of its restructuring efforts.
The company’s chief executive, Leo Quinn, said during the second half of 2018 the company had achieved “industry standard margins” and that it would perform in line with market expectations for 2019.
Quinn has been spearheading the turnaround strategy at Balfour, known as Build to Last, which was first launched in 2015 and included the goal of winning higher margin contracts as well as inward investment.
The firm also said it had contingency plans in place for any uncertainty arising out of Brexit, adding that it had been planning for all outcomes.
George Salmon, equity analyst at Hargreaves Lansdown, said the firm’s net cash position of £337mln at the end of the year and the “impressive” infrastructure portfolio meant the company’s balance sheet was strong and there was “plenty of infrastructure business around on both sides of the Atlantic”.
However, he added that “a pragmatic investor would demand more” from the company.
“Margins have improved to at or above industry norms, but they’re still in the low single-digit percentages and the downfall of Carillion is a constant reminder of how little room for error there is in this industry.”
In a note to clients, analysts at broker Liberum said the results had come in ahead of their expectations with the £181mln profit figure beating their forecast of £178mln.
They also maintained their ‘Buy’ rating and 350p price target on the stock and maintained forecasts of 3% sales growth in 2019.
Shares were up 0.9% at 288.5p.