Galliford Try Posts 24% Profit Jump on Strong Order Book

Galliford Try reported a 24% increase in adjusted profit before tax to £55.9 million for the full year, according to data from GN markets/earnings. The UK construction firm posted a 3% rise in revenue to £1.93 billion, resulting in a margin expansion to 3.5%. Adjusted earnings per share grew by 23.1% to 42.4p, reflecting better cost control across its Building and Infrastructure divisions.

The company maintained a strong financial position with £259 million in year-end cash and no bank debt or pension liabilities. Management highlighted a 100% cash conversion rate and announced a new £15 million share buyback alongside a 23.5p dividend per share. These measures underscore the board’s focus on returning capital to shareholders while maintaining a robust balance sheet.

Secured Revenue Provides Future Visibility

The order book remains a key driver of stability, with £2.7 billion in Building contracts and £1.7 billion in Infrastructure projects secured. For the upcoming fiscal year, 93% of Building revenue and 87% of Infrastructure revenue are already contracted. This high level of secured work reduces execution risk and provides clear visibility into future cash flows.

Management expects similar revenue growth in FY2027, supported by public infrastructure spending and the AMP8 water sector cycle. The company is also leveraging higher-margin specialist businesses and opportunities in affordable housing to drive profitability. Disciplined bolt-on acquisitions will continue to support organic growth in core areas such as highways and environment.

Tax Impacts Alter Future Margins

Infrastructure revenue growth is expected to flatten in the next fiscal year as highway projects transition into lower-revenue early stages. Additionally, the company’s historic tax losses are largely exhausted, meaning Galliford Try will resume corporation tax payments from FY2027. This change will impact net profit margins compared to previous years where these losses offset taxable income.

Despite the upcoming tax burden, the firm maintains a conservative debt-to-equity ratio of 43.47 and a current ratio of 0.92. The stock’s low beta of 0.47 suggests lower volatility relative to the broader market, while the price-to-earnings ratio stands at 18.69. These metrics reflect a company balancing growth ambitions with financial prudence.

Market Reaction Reflects Confidence

Shares of Galliford Try rose 7.2% on the news, opening at 656 GBX. The stock is trading near its 52-week high of 658 GBX, significantly above its low of 465 GBX. This price action indicates strong investor confidence in the company’s strategic direction and financial health.

Berenberg Bank raised its price target from 680 GBX to 750 GBX, maintaining a buy rating. The consensus among analysts remains positive, with an average target of 650 GBX. This upward revision aligns with the improved earnings outlook and the company’s strengthened balance sheet position.