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Summary
- Balfour Beatty expects the operating profit to normalize to FY2019 level in FY2021.
- Balfour Beatty cancelled the final dividend for FY2019.
- John Laing Group appointed Ben Loomes as the new CEO from May 2020.
- John Laing Group divested 30 percent stake in theAuckland South Corrections Facility to AMP Capital.
Balfour Beatty PLC (LON:BBY) & John Laing Group PLC (LON:JLG) are FTSE-250 listed stocks. BBY is a construction & material company, whereas JLG is a financial services company. Based on 1-year performance, BBY was up by around 9.32 percent, and JLG was down by over 21.50 percent (as on 14 August 2020, before the market close at 8:00 AM GMT+1).
Balfour Beatty PLC (LON:BBY) – Order book of £17.5 billion in H1 FY2020
Balfour Beatty PLC is a UK based construction group that designs, develops and constructs infrastructure. The Group categorizes the business under Construction Services, Support Services and Infrastructure Investments. Balfour Beatty is included in the FTSE 250.
H1 FY2020 results (ended 26 June 2020) as reported on 12 August 2020
In H1 FY20, the Group generated revenue of £4,115 million, which increased by 5 percent year on year on the constant exchange rate from £3,881 million in H1 FY19. The order book for the Group stood at £17.5 billion in H1 FY20 that was up by 20 percent year on year. The order book was underpinned by HS2 contract worth over £3 billion. During the first half of FY20, Balfour Beatty reported an operating loss of £14 million against an operating profit of £72 million in H1 FY19. The reported loss was £18 million in H1 FY20, whereas the Group reported a profit of £54 million a year ago. In March 2020, the Group repaid USD 46 million related to the private placement and redeemed the preference shares of £112 million in July 2020. Balfour Beatty cancelled the final dividend of 4.3 pence per share that was proposed for FY19. As at the end of the reported period, the director’s valuation of the investment portfolio was £1.1 billion.
Performance by Service Activity & Region
By service activity, the Construction Services division generated revenue of £3,365 million, the Support Services and Infrastructure Investments reported revenue of £476 million and £274 million, respectively. Based on geographical performance, the UK region reported revenue of £1,534 million, the US generated revenue of £2,084 million, and the Rest of the world revenue was £497 million.
Share Price Performance
Balfour Beatty PLC’s shares were down by close to 2.45 percent and trading at GBX 239.00 per share (as on 14 August 2020, before the market close at 8:00 AM GMT+1). BBY’s 52-week High and Low were GBX 296.94 and GBX 165.30, respectively. BBY had a market capitalization of £1.69 billion.
Business Outlook
The Group expects the average net cash to be in the range of £430 million to £460 million for FY20. As on the end of June 2020, 95 percent of the Group’s sites remained operational. Balfour Beatty is closely working with the employees and supply chain partners to stabilize the business activity. It expects a slight improvement in the business performance in H2 FY20 and the business to achieve normalized operating profit in FY21 the same as that in FY19. As soon as the market conditions are back to normal, the Group would resume the divestment of Infrastructure Investments. The Group expects to re-instate the dividend as soon as the business is back to normal.
John Laing Group PLC (LON:JLG) – Divested five assets during the six months ended June 2020
John Laing Group PLC is a UK based financial services company that makes active investment and manages infrastructure projects. The Company is focused on public-private partnership (PP) projects and renewable energy projects across the UK, Europe, North America and the Asia Pacific. John Laing is included in the FTSE 250 index.
Recent events
- On 3 August 2020, the Chief Financial Officer (CFO) Luciana Germinario stepped down from her role from immediate effect.
- On 5 May 2020, John Laing sold the 30 percent stake in the Auckland South Corrections Facility. The stake was sold to AMP capital at a price that met the Company’s expectation.
- On 30 April 2020, the Company appointed Ben Loomes as the CEO. Mr Loomes commenced his new role from 8 May 2020.
Six months trading update as reported on 1 July 2020
The Company stated that it had a steady operational performance during the first six months ended June 2020 that was supported by the availability based projects. The availability based project constitute close to 58 percent of the total portfolio. The improved underlying portfolio performance and foreign exchange gains were offset by the negative effect of covid-19 on the business and reduced power price forecasts. The Company experienced a delay in project delivery of two projects, one in Columbia and one in the UK. The Company has seen a slight uptick in the performance of volume-based project after easing in the lockdown. The net asset value (NAV) before dividend payout is expected to decline by mid-single-digit during the reported period. The pandemic and changes in some macro events are expected to have a negative effect of £100 million on the NAV. The increase in discount rates following turmoil in the market conditions is expected to have a negative impact of approximately £60 million. However, the foreign exchange rates had a positive effect of nearly £60 million on the NAV as the sterling weakened against the US and the Australian dollar. John Laing generated total proceeds of approximately £90 million through the sale of five assets. As on 18 June 2020, the Company had available liquidity headroom of close to £320 million.
Share Price Performance
John Laing Group PLC’s shares were down by around 1.76 percent and trading at GBX 290.80 per share (as on 14 August 2020, before the market close at 8:00 AM GMT+1). JLG’s 52-week High and Low were GBX 397.42 and GBX 274.76, respectively. JLG had a market capitalization of about £1.46 billion.
Business Outlook
The bids for a large number of projects have moved from 2020 to 2021 due to the pandemic. The Company is focused on the divestment programme, and the sale of an interest in Auckland South Corrections Facility was the most recent activity. John Laing has a strong pipeline for assets on sale over the next year, including IEP East and wind & solar portfolio of the Company in Australia. The Company is hopeful over the infrastructure investment.
