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Balfour Beatty warns again

Balfour Beatty reveals that the UK construction side is in an even bigger mess
September 30, 2014

Balfour Beatty's (BBY) wretched run continued as the construction and services group issued yet another profit warning, wiping 20 per cent off the share price, with profit now expected to be £75m lower than previously expected. Accordingly, analysts at Numis Securities have cut their pre-tax profit forecasts for the current year from £145m to £72m and EPS of 10.2p (from £186.6m and 19.9p in 2013).

IC TIP: Sell at 182p

Programme slippage, cost inflation pressures, resource and skills shortages and poor operational delivery were just some of the reasons put forward for the underperformance, and the group has now appointed accountant KPMG to undertake a detailed independent review of the contract portfolio within the construction services UK division.

The group also confirmed that the sale of Parsons Brinckerhoff is expected to enable around £200m to be returned to shareholders. However, this will not take the form of a special dividend but will be implemented through a share buy-back programme.

Trading elsewhere remains in line with expectations, with a growing US construction order book, and higher than expected profit from the sale of PPP investments.