European arm's 50% profit drop is blamed on subcontractors going bust and poor weather on landmark jobs

Bovis Lend Lease has blamed a steep drop in profit on problems with two landmark schemes in London and Leeds.

Half-yearly results out this week show that Bovis' after tax profit on global operations dropped 50% to £16m. Its return on European projects was £300,000, compared with £14.3m in 2004.

The Australian firm blamed the fall on a £14m provision made against problems with the BBC's £400m Broadcasting House in London and the £80m Bridgewater Place tower in Leeds.

No breakdown of the losses has been revealed, but the contractor said the projects were affected by subcontractor insolvency and poor weather conditions.

A source close to the Broadcasting House project also blamed its tight budget. He said: "It's not really a surprise that Bovis lost money because there was so much pressure to save money on the job.

The £400m Broadcasting House refurbishment hit problems in 2004

The £400m Broadcasting House refurbishment hit problems in 2004

"Bovis put pressure on MacCormac Jamieson Prichard and that's what resulted in it being kicked off the job. I don't know whether Bovis was optimistic about what it could save, but they were trying to get £20m."

MacCormac Jamieson Prichard, the architect for the scheme, left last November, to be replaced by Sheppard Robson.

The refurbishment was also affected by a series of problems, among them the liquidation of Easton Masonry, the contractor installing the Portland stone facade on the east wing.

It is not a firm in distress – there have just been some difficulties

Jason Millett, Bovis Lend Lease UK

Jason Millett, Bovis Lend Lease UK chief executive, said: "Obviously we are disappointed by these problem jobs - but we have 70 projects, not three or four like Multiplex.

"Bovis Lend Lease is still going to make a profit both in the UK and globally for the full year. It's not a company in distress - there have just been a couple of difficulties."

A source close to the Bridgewater Place scheme, a 32-storey mixed-use tower in the centre of Leeds, said Bovis had failed to recover after concrete contractor RCG went into administration last July.

The source said: "That was where they started to struggle. When a subcontractor gets into trouble, word gets around and their suppliers start to deny them credit."

Millett said Bovis had responded to the problems by drafting in a new team on the project, including project director Peter Miller and two staff from Australia with experience of building towers.

The project, designed by Aedas and financed as a joint venture by St James Securities and Landmark Development Projects, is running about six months late and is due to be handed over in October.

Bovis put in a request for an extension on the project last December, citing extreme weather conditions, in particular high winds.

Greg Clarke, Lend Lease's group chief executive, said: "Although we are pleased with progress on our strategy and to report the increase in bottom line profit after tax, we are disappointed that the provisions against the UK construction projects held back what would have been an otherwise very strong operating result."