Balfour Beatty’s CEO Leo Quinn addresses the firm’s profitability and market position, expressing ambition to enhance margins and highlighting key growth areas.
- In a recent podcast, Leo Quinn expressed his dissatisfaction with the company’s current 2% margin and aims to double it.
- The company anticipates significant growth in infrastructure, positioning itself as a major player in energy, transportation, and defence.
- A shift in contracting approaches is expected to bolster Balfour Beatty’s financial performance.
- Quinn’s recent share transactions reflect confidence in the company’s undervalued position.
Balfour Beatty’s chief executive Leo Quinn, during a discussion on The Investor Download Podcast, openly admitted he would feel “embarrassed” if the current profit margin does not double. Currently standing at around 2%, this margin is deemed unsatisfactory by Quinn given the company’s prominent role in the UK construction sector and the burgeoning opportunities in public infrastructure investment.
Quinn believes that Balfour Beatty is undervalued in the market, which does not fully recognise its potential and vast experience. He highlighted that the company is strategically positioned to capitalise on significant growth in infrastructure, which is anticipated over the coming decade. This includes areas such as energy security, transportation, and defence, sectors where Balfour Beatty holds substantial expertise, especially with its involvement in the nuclear component.
The chief executive outlined a transition in Balfour Beatty’s contracting style from a traditional hard bid, fixed-price market to a more collaborative two-phase approach. This involves working closely with clients during the initial specification and costing phase, thereby allowing for a firmly agreed price only after comprehensive engineering research and planning, ensuring better financial outcomes.
Balfour Beatty has been actively engaging in share buyback programmes, signifying a robust strategy for returning value to shareholders. Quinn candidly mentioned that these actions are in response to the underappreciated state of Balfour Beatty’s shares, committing to buy back half of the market capitalisation by the end of 2025, which underscores his faith in the company’s financial pathway.
In support of his public optimism, Quinn recently invested in 37,148 Balfour Beatty shares. The purchase, via the London Stock Exchange, comes shortly after he sold a larger quantity of shares at a higher price, following a brief downturn in share value. This act is interpreted as a tangible demonstration of his confidence in Balfour Beatty’s trajectory and long-term prospects.
Balfour Beatty seeks to enhance profitability through strategic positioning and innovative contract approaches, underscoring its confidence in future growth.
