- London-based contractor Balfour Beatty announced that it was updating its guidance for the 2022 fiscal year and projected that the company’s performance would be better than previously anticipated.
- As of Dec. 8, Balfour Beatty expects key metrics of its business performance, such as backlog and revenue, to be ahead of the prior year. Revenue is expected to be about 5% ahead of 2021’s end-of-year number from $10.1 billion (£8.3 billion) with backlog also anticipated to be 5% higher than 2021's $19.7 billion, mostly due to favorable foreign exchange rates.
- The firm said its profits for the year would come in higher than expected due to higher interest income and lower taxes, but it did not say by how much.
These increases, particularly on revenue and backlog, show the two-sided coin of foreign currency exchange rates.
For U.S. companies doing business abroad, the strong U.S. dollar has meant the local currency they collect from foreign customers is worth less when they bring it back home. Earlier this year, U.S.-based construction firms, including AECOM, said headwinds from the strong U.S. dollar impacted their profits due to this dynamic.
But for foreign construction firms doing business in the States, the opposite is true: When they collect dollars from customers here and then take them overseas, they're worth more when they hit their home country bank accounts.
Indeed, Balfour Beatty has had a string of U.S. awards over the past eight months, which it highlighted in its Dec. 8 release. Awards include a $700 million federal building in Maryland, a $400 million convention center in Florida, a $300 million multi-use development project in Texas and $300 million of data centers in Oregon, according to the release.
As part of its infrastructure push, the company also landed seven projects on the West Coast worth $235 million combined, and the $666 million Southern Gateway Project in Texas, which Balfour Beatty completed as part of a joint venture with Irving, Texas-based Fluor under the name Pegasus Link Constructors.
The Dec. 8 update follows steady results from the company in a turbulent economy. Balfour Beatty’s backlog and profit from operations saw large increases on flat revenue in its half-year 2022 results.
The company also emphasized in its update that it was continuing to de-risk its backlog by only looking at projects with “appropriate terms and conditions.” In its half-year investor call, Balfour Beatty CEO Leo Quinn announced that the company’s backlog was “significantly de-risked” back in August. Other large contractors, such as Granite, are also looking to take on smaller, lower risk projects to thrive in a turbulent economy.
“Looking to 2023 and beyond, our improved, de-risked and diversified order book gives us confidence that we will continue to make progress in delivering profitable managed growth,” Quinn said in the release.