'Legacy issues' continue to haunt Balfour Beatty

 

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The Independent Online

The ailing construction group Balfour Beatty warned that it would post a loss again this year as it served up its seventh profit warning in two years. Balfour said 2015 pre-tax profits would be up to £150m lower than expected, wiping out City hopes that it would return to the black with a £77m profit in the current year. Its shares dropped 3.6 per cent to 220.2p.

The construction group blamed “legacy issues” – mainly down to the  low margins it accepted to win contracts during the recession. It said that about two thirds of the shortfall came from the UK, but there were also hits from its US and the Middle Eastern businesses. Leo Quinn, who joined Balfour as chief executive in January, said: “The issues we are working through and legacy challenges remain.

“However, we are making encouraging progress on the group’s transformation.”  

Balfour Beatty called in the accoutancy firm KPMG to carry out an in-depth review of its business last autumn after it saw off a takeover attempt by its smaller rival Carillion.

It also rejected a £1bn offer from John Laing for its public-private partnership contracts. Just 18 months ago it won a £154m contract to convert London’s Olympic Stadium into the home of West Ham football club.

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