When Balfour Beatty (BBY) releases full-year figures on Wednesday, weary investors will be hoping the infrastructure group can draw a veil over a turbulent two years punctuated by three profit warnings.
In the light of an independent review by KPMG that highlighted poor control on contract performance, optimistic cost assumptions and tendering at very low margins, management - including new chief executive Leo Quinn - has launched a business transformation programme called Build to Last. Essentially, this is a package of measures to put right what went wrong in the construction arm by strengthening finance controls, cutting costs and rebuilding its reputation.
Despite all the travails, the group is still winning an impressive amount of new business. Earlier this month Balfour secured a £250m contract to improve flood defences along the River Thames, and it will also invest up to £35m over eight years in a joint contract to create new homes at the Queen Elizabeth Olympic Park in East London. This project is expected to generate revenue of around £400m.
