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Balfour Beatty warns on profits - again

And this time, the chief executive has stepped down with immediate effect
May 6, 2014

Shares in Balfour Beatty (BBY) slumped 20 per cent after the international infrastructure group added to a string of profit warnings by admitting that pre-tax profits for the current year will be significantly lower than previous expectations. A £30m shortfall identified in the UK construction division means that group profits will be in the range of £145m to £160m, Balfour Beatty added. One of the major casualties is chief executive Andrew McNaughton who steps down with immediate effect, having only been appointed just over a year ago. He will be replaced by executive chairman Steve Marshall until a successor is appointed.

IC TIP: Sell at 230p

The group has already disposed of its UK facilities management business for £155m and put its rail operations in Spain and Scandinavia up for sale, and options identified in a strategic review now include the possible sale of professional services group Parsons Brinkerhoff, acquired in 2009 for £380m. The decline in profits is largely confined to the UK construction business where the group has experienced issues with poor operational delivery, as well as cost increases and delays.