New profit warning from Balfour Beatty
29 September 2014
Balfour Beatty has announced its third profit warning in five months. It says it now expects a UK£75 million (€95 million) profit shortfall in its UK Construction Services business. Trading across the rest of the company is said to remain in line with expectations.
The Group has appointed KPMG to undertake a detailed independent review of the Construction Services UK contract portfolio. It said the review will focus on commercial controls, on 'cost to complete' and contract value forecasting and reporting at project level. KPMG are expected to report back to the Board by the end of the year.
Balfour Beatty’s share price slumped on the news. The company was trading around UK£1.80 (€2.20) following the announcement, compared to UK£2.40 (€2.95) prior to it. In May, ahead of the first profit warning which also saw the resignation of CEO Andrew McNaughton, the company was valued at UK£2.80 (€3.45) per share. The string of profit warnings has seen some 36% or UK£710 million (€875 million) wiped off the company’s stock market value.
Executive chairman Steve Marshall said, “This latest trading statement is extremely disappointing. There has been inconsistent operational delivery across some parts of the UK construction business and that is unacceptable. Restoring consistency will take time and it has our full focus.”
The company has also said that Mr Marshall has announced he plans to resign from the Balfour Beatty board as chairman. He has said he will with until there is a new CEO in place – the appointment of which is said to be “at an advanced stage” – and a new non-executive chairman has been identified.