Profit warning is contractor鈥檚 seventh in three years
Balfour Beatty has issued its seventh profit warning in three years, this time for between 拢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 鈥渓egacy issues鈥� in the firm鈥檚 UK, US and Middle East divisions, as part of the firm鈥檚 鈥渙n-going, in-depth鈥� review of the divisions.
The UK accounts for around two thirds of the 拢120-150m amount, Balfour said.
Balfour chief executive Leo Quinn (pictured) said: 鈥淭he issues we are working through are as I set out in March and legacy challenges remain.
鈥淗owever, we are making encouraging progress on the Group鈥檚 transformation. The positive response of our people to change, the continuing confidence of our customers in Balfour Beatty鈥檚 expertise and the first signs of improving cash performance reinforce my conviction in the Group鈥檚 long-term success.鈥�
Balfour said its 鈥楤uild to Last鈥� cost-cutting programme was 鈥済aining traction鈥� and new financial controls and a new senior leadership team were being embedded. The firm is aiming to make 拢100m of permanent cost reductions.
Last month .
Stephen Rawlinson, analyst at Whitman Howard, commented: 鈥淲e are not surprised in the least by this announcement from [Balfour Beatty], only by its timing.
鈥淭he concern is that the statement refers to the 鈥渙ngoing, in-depth鈥� review of group businesses providing investors with no comfort that this is the end of the write-offs.
鈥淚n 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.鈥�
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