Balfour Beatty sees positive impact from US tax cuts

Broker Numis sees cuts add 4% to EPS

Balfour Beatty said US President Donald Trump's tax cuts will result in a one off £20m non-cash credit from the revaluation of US deferred tax liabilities.

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In a statement, the company said the reduction in corporate income tax rates to 21% from 35% will lead to a reduction in the effective tax rate on US earnings from to 26% from 40% in 2018 and beyond.

Balfour added that the valuation of its investments portfolio will increase by about £95m.

Broker Numis said the benefits of the change equate to around 1p per share on earnings per share, or a rise of 4%

"Aside from these direct benefits, the indirect benefits of increased business confidence and likely investment in the US resulting from these tax moves are good news given the scale of Balfour's US operations nationwide," it said in a note.

In 2016 Balfour Beatty's US construction business had revenue of £3.4bn and at 30 June 2017 the order book was £4.7bn. At end December 2016 the company's North American Investments portfolio was worth £513m.

Balfour's current portfolio of projects in the US includes the $697m electrification of the 52-mile Caltrain rail corridor between San Francisco and San Jose; the $625m reconstruction of the 'Southern Gateway' road in Dallas, Texas; the $260m Harrison Medical Centre project in Seattle; and the $100m contract to serve as construction manager for Cleburne Independent School District's.