Galliford Try's FY25 PBT Performance and Its Implications for UK Construction Sector Exposure

Galliford Try's FY25 results represent a compelling case study in strategic capital allocation and sector resilience. The company reported a profit before tax (PBT) of £45 million, the highest since its 2020 spin-off, with a 6.3% year-over-year revenue increase to £1.875 billionGalliford Try reports PBT of £45m in FY25^[1]. This outperformance, achieved amid a sector grappling with inflation, labor shortages, and insolvencies, underscores the firm's disciplined approach to risk management and capital deployment.

Strategic Capital Allocation: Balancing Growth and Shareholder Returns

Galliford Try's FY25 performance was underpinned by a £4.1 billion order book, with 92% of FY26 revenue already securedGalliford Try reports PBT of £45m in FY25^[1]. The company leveraged this visibility to announce a £10 million share buyback program, following the completion of its 2024 initiativeGalliford Try reports PBT of £45m in FY25^[1]. This move, coupled with a 37.5% increase in its interim dividend per share to 5.5pInfrastructure surge drives half-year profit at Galliford Try^[2], reflects a balanced strategy of rewarding shareholders while retaining flexibility for growth.

The firm also secured a £25 million unsecured revolving credit facility with Barclays, Lloyds, and the National Bank of KuwaitInfrastructure surge drives half-year profit at Galliford Try^[2]. CEO Bill Hocking described this as a “precautionary measure” to ensure financial flexibility, a prudent step given the sector's volatility. For context, UK construction insolvencies rose by 12.6% in Q1 2025UK construction faces rising costs and insolvencies^[3], highlighting the need for liquidity buffers. Galliford Try's net cash position of £237.6 million further reinforces its ability to navigate macroeconomic headwindsGalliford Try’s record £4.1bn order book^[4].

Sector Resilience: Infrastructure and Repair-Driven Growth

The UK construction sector's post-recession recovery is uneven but gaining momentum. While 2024 saw a -2.1% real spend contractionUK construction faces rising costs and insolvencies^[3], 2025 forecasts 2.9% growth, driven by infrastructure projects and repair/maintenance workUK construction faces rising costs and insolvencies^[3]. Galliford Try's strategic focus on infrastructure—now 48% of its workload—positions it to capitalize on this trend. Key projects include the £66.5 million Banwell Bypass and a civil engineering lot on the £59 billion National Grid FrameworkGalliford Try’s record £4.1bn order book^[4].

The company's expansion into the energy sector and affordable housing also aligns with government priorities. For instance, the UK's £775 billion infrastructure investment planThe State of the UK Construction Industry in 2025^[5] and revised housing targetsUK construction faces rising costs and insolvencies^[3] create long-term tailwinds. Galliford Try's 3.0% adjusted operating margin in FY25, achieved a year ahead of its 2026 targetGalliford Try reports PBT of £45m in FY25^[1], demonstrates its ability to execute in a sector where margin compression has been a persistent challenge.

Risks and Opportunities in a Shifting Landscape

Despite its strengths, Galliford Try faces sector-wide risks. Labor shortages persist, with an aging workforce and reduced EU migration exacerbating supply chain strainsThe State of the UK Construction Industry in 2025^[5]. However, the company's investments in apprenticeships and digital tools like BIM and AIThe State of the UK Construction Industry in 2025^[5] mitigate these risks. Additionally, its focus on modular construction and sustainable practices aligns with government net-zero targetsThe State of the UK Construction Industry in 2025^[5], ensuring relevance in an evolving regulatory environment.

Looking ahead, Galliford Try's 2030 strategy—aiming for a 4.0% operating margin and £2.2 billion in turnoverGalliford Try’s record £4.1bn order book^[4]—appears ambitious but achievable. The firm's order book, with 75% of FY27 revenue already securedGalliford Try’s record £4.1bn order book^[4], provides a strong runway for growth. Yet, uncertainties around funding models for large-scale projectsThe State of the UK Construction Industry in 2025^[5] and inflationary pressures could test its resilience.

Conclusion: A Model of Prudence in a Cyclical Sector

Galliford Try's FY25 results exemplify how strategic capital allocation and sector-specific positioning can drive outperformance in a cyclical industry. By prioritizing infrastructure, maintaining liquidity, and aligning with government priorities, the company has insulated itself from some of the UK construction sector's broader challenges. For investors, this represents a compelling case of disciplined execution in a landscape where resilience is increasingly rare.