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The Infrastructure company, Balfour Beatty Plc (LON:BBY) disclosed that it has shelved plans to buy back £200 million plus worth of shares as it prepares to nullify the impact of the outbreak of novel coronavirus on its international businesses. The company stated that paying back of its £500 million stockpile of cash to investors is not possible right now because of the lack of clarity of the impact of the epidemic on its range of businesses.
As per media report, the chief executive of the company, Leo Quinn, stated that returning capital to shareholders would not be the right decision when cash may be required to meet costs arising out of Covid-19 outbreak. At the end of December 2019, the companyâs cash was reported to be at £512 million.
As per the annual financial report, which was published on 11th March 2020, Leo Quinn had stated that the companyâs foremost aim is to generate value for its shareholders. In the year 2020, the Group is endeavouring to pay back approximately £150 million of its borrowings. In addition to this, the companyâs board would evaluate its capital structure after gauging the full impact of the novel coronavirus.
Stock price on the London Stock Exchange as on 11th March 2020 (Source: Thomson Reuters)
Regardless of the declaration of the shelved buyback plan, the stock of the company closed at GBX 264.60 yesterday, increased by 19.84 per cent or GBX 43.80.
However, the companyâs total pre-tax profit also increased by 12 per cent to £138 million and total revenue increased by 7.64 per cent to £8.41 billion in the year 2019. Nevertheless, the overall performance of the company was reported to be impressive, which might be the reason for the increased share price.
One of the primary contractors of the HS2 high-speed rail link stated that the epidemic impacted its construction operations and supply chain in Hong Kong. Â The company further stated that issues with the supply chain have started affecting the stock of products like windows and curtain walls. Due to this, Hong Kong revenues are expected to fall by 10 per cent in the first quarter of the year 2020. As per the chief executive of the company, nearly 10 per cent to 15 per cent of its seven thousand employees were not able to come back to work since lunar new year holiday. The company is not clear about whether it is happening because of the novel coronavirus or the lockdown in the Hongkong, but both are interlinked with each other.
Balfour Beatty Plc
Balfour Beatty Plc is one of the prominent international construction companies. The company develops, constructs, maintains and finances the essential infrastructure for sustaining daily life. The company is managing strong infrastructure business in Hong Kong, the United States and the United Kingdom, with approximately 26,000 employees spread out globally. The companyâs primary customers are agencies, regulated utilities, government departments and private sector companies. The company has nearly 110 years of experience in providing shape to multifaceted infrastructure projects.
BBY â Financial Highlights
On 11th March 2020, the company announced the full-year results for the period ended 31st December 2019.
The companyâs underlying profit from operations increased by 7.80 per cent during the year as compared to the prior year. The profit from operations related to earnings-based businesses increased by 21.9 per cent during the year 2019.
As US military housing valuation declined by £79 million, the investment portfolio of the company also reduced to £1.1 billion in the year 2019 as compared to £1.2 billion in the year 2018. In contrast, the order book increased by 13 per cent to £14.3 billion because the company has witnessed a 40 per cent increase in order intake with recent HS2 approval in the year 2019.
The goodwill of the company decreased to £828 million as at 31st December 2019 as compared to £903 million at the end of the prior year. In contrast, the other intangible assets increased to £300 million as at 31st December 2019 compared to £258 million at the end of the previous year.
The property, plant and equipment declined significantly to £91 million as on 31st December 2019 as compared to £168 million as on 31st December 2018. In contrast, Inventories of the company also increased to £101 million as at 31st December 2019 as compared to £84 million at the end of the prior year. The Non-current borrowing increased marginally to £333 million as compared to £331 million as on 31st December 2018.
The company earned group revenue of £7,312 million, which includes £3,276 million from the United Kingdom, £3,990 million from the United States, £46 million from the Rest of the World. The companyâs revenue by type of assets includes revenue of £4,149 million from buildings, £2,091 from infrastructure, £1,058 from utilities and £14 million from other assets.
At Gammon (50:50 joint venture based in Hong Kong) the companyâs Group share of underlying revenue reduced by 1 per cent (5 per cent at constant exchange rates) to £893 million in the year 2019 versus £898 million in the year 2018. In contrast, underlying profit attributable to the company rose to £26 million in the year 2019 (2018: £23 million) while the order book remained steady at £1.6 billion during the year.
Lastly, the company stated that at this stage, it is too early to comment on the overall impact of COVID-19 on the Groupâs operations in Hong Kong.
BBY â Share price performance
Stock price on the London Stock Exchange as on 12th March 2020, before market close (Source: Thomson Reuters)
On 12th March 2020, at around 09:07 AM (GMT), by the time of writing this report, the stock of Balfour Beatty Plc was trading at a price of GBX 249.00 per share on the London Stock Exchange, a decrease in the value of around 5.90 per cent or GBX 15.60 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 264.60 per share.
The share price of Balfour Beatty Plc recorded at GBX 296.94 as on 17th February 2020 was its 1-year peak price, whereas the share price recorded at GBX 192.30 as on 07th August 2019 was the 1-year low share price. The current share price was lower by 16.14 per cent from the 1-year high price, whereas the current share price was higher by 29.5 per cent from the 1-year low price.
The beta of the companyâs stock has been reported at a value of 0.36, which shows that movement of the share price is less volatile against the movement in the comparative benchmark index.
The annual dividend of the company was reported at GBX 6.40 per share, and the annual dividend yield was reported to be 2.42 per cent at the time of writing.
At the time of writing, the companyâs market capitalization was reported at GBP 1.82 billion with respects to the stockâs current market price. The free float and outstanding shares of Balfour Beatty Plc stood at 686.40 million and 689.74 million, respectively.
