Profit warning is contractor’s seventh in three years
Balfour Beatty has issued its seventh profit warning in three years, this time for between £120-150m.
The contractor made the profit warning this morning ahead of announcing its half-year results for the six months to June 2015 next month.
Balfour said the latest profit warning had been prompted by discovering new “legacy issues” in the firm’s UK, US and Middle East divisions, as part of the firm’s “on-going, in-depth” review of the divisions.
The UK accounts for around two thirds of the £120-150m amount, Balfour said.
Balfour chief executive Leo Quinn (pictured) said: “The issues we are working through are as I set out in March and legacy challenges remain.
“However, we are making encouraging progress on the Group’s transformation. The positive response of our people to change, the continuing confidence of our customers in Balfour Beatty’s expertise and the first signs of improving cash performance reinforce my conviction in the Group’s long-term success.”
Balfour said its ‘Build to Last’ cost-cutting programme was “gaining traction” and new financial controls and a new senior leadership team were being embedded. The firm is aiming to make £100m of permanent cost reductions.
Stephen Rawlinson, analyst at Whitman Howard, commented: “We are not surprised in the least by this announcement from [Balfour Beatty], only by its timing.
“The concern is that the statement refers to the “ongoing, in-depth” review of group businesses providing investors with no comfort that this is the end of the write-offs.
“In truth management may not know whether it is or not but it needs to soon because the honeymoon period will be short. It may be over already with this news.”