By Aby Jose Koilparambil
(Reuters) - UK's Balfour Beatty (LON:BALF) forecast a higher profit from its core infrastructure businesses this year, with the company's CEO saying the results would be driven by faster-than-expected activity in the UK power sector and a pick up in U.S. orders.
The company's shares were trading about 9% higher at 1152 GMT on Wednesday, topping the FTSE 250, helped in part by plans to return more money to shareholders via stock buybacks and dividends.
Balfour's underlying profit from operations (PFO) rose 2% in 2023 to 236 million pounds ($302 million) from its earnings-based businesses, which excludes its investment portfolio.
The London-headquartered company did not specify how much this profit would grow in 2024 but CEO Leo Quinn told Reuters that a pick up in activity in the U.S. and UK would drive results.
"We are seeing growth in transmission, growth in the de-risking of the grid, and the ASTI programme, which we were thinking would be pushed out the next three to five years, is being accelerated," Quinn said.
The UK's Accelerated Strategic Transmission Investment (ASTI) framework funds large onshore electricity transmission projects, with incentives for timely delivery of projects.
Balfour's UK nuclear projects, Sizewell C and Hinkley Point, are progressing well and activity associated with energy security and net zero carbon are being accelerated, Quinn added.
Balfour's forecast implies that no matter who wins the next UK general election, the company would benefit as the government would focus on clean and domestically-generated energy, Russ Mould, investment director at AJ Bell, wrote in a note.
While Balfour's UK business comprises national projects such as highways, onshore transmission and nuclear power stations, its U.S. operations are mostly commercial constructions.
Quinn said Balfour was getting firm orders for U.S. projects as last year's tech downturn eases and on the prospect of lower interest rates.
The UK and U.S. construction divisions accounted for about 29% and 22%, respectively, of Balfour's 2023 underlying PFO. ($1 = 0.7819 pounds)