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Infrastructure giant Balfour Beatty reported a heavy drop in profit as it promised to pay back the furlough money claimed from the Government.
The business said that it will return £19 million to the Government that had been claimed under the scheme, as it embarked on a programme to give payouts to shareholders.
Pre-tax profit hit £48 million last year, down nearly two thirds, on revenue of £8.6 billion.
Although most of its sites remained open for business during the pandemic, Balfour Beatty tapped into the furlough scheme between April and October last year, topping up salaries of furloughed staff.
The company has also repaid the taxes it deferred in the UK in 2020.
Shareholders will be given a 1.5p dividend, down from 2.1p a year earlier, the business said. It will also buy back an additional £100 million in shares from its investors, adding to a £50 million buyback launched in January.
Balfour said it had benefited from having a business in Hong Kong – Gammon Construction – which had in the past been forced to deal with the Sars virus.
“Given the timing of the spread of Covid-19, the group was able to take learnings from Gammon, such as working safely and efficiently in enclosed spaces whilst maintaining social distancing, then apply them across the rest of the group,” the company said.
Revenue and profit rose at Gammon, which was less severely impacted than Balfour’s US and UK businesses.
A nearly £2 billion contract win for Gammon from the Hong Kong Airport Authority also helped boost Balfour Beatty’s order book by 15% last year to £16.4 billion. The order book, which now represents years of revenue, was also boosted by £3 billion worth of HS2 contracts.
The business now expects 2021 to be broadly in line with 2019, before the pandemic hit. Operations recovered in the second half of 2020, and all sites are currently open, it said.
“In some ways Balfour Beatty has been surprisingly resilient this year,” said William Ryder, an analyst at Hargreaves Lansdown, who pointed out that the company stood to gain from the pandemic recovery.
“Both the UK and US governments are using the same imaginative ‘Build Back Better’ slogan, a prospect which clearly has Balfour salivating.”
He added: “It’s been a tough year for Balfour, and a backdrop of infrastructure spending and Government stimulus provides almost ideal conditions to stage a recovery. Now management just has to deliver.”
Balfour Beatty is one of 30 companies on the UK Government’s Build Back Better Business Council.