Balfour Beatty posts $22.3m loss from Middle East operations
The UK’s biggest contracting firm announced total losses of $88 million in 2014
Balfour Beatty, the UK’s biggest contractor, has announced losses of $22.32 million from its Middle Eastern operations during 2014.
The construction giant, which operates in the UAE through the joint ventures BK Gulf and Dutco Balfour Beatty, reported total worldwide losses of £59m ($88m) last year.
The London Stock Exchange-listed firm said its poor performance in the Middle East was largely due to two specific contract positions within the mechanical and electrical (M&E) engineering joint ventures.
“In the Middle East, the market for the construction joint venture in Dubai has continued to improve and the order book was significantly up on 2013,” the company said in its financial statement. “Wins included the Dubai Mall extension project.”
“However, the mechanical and electrical engineering market remains very difficult, with some of the same issues faced by the UK M&E business existing in the Middle East – such as disputes and delays with main contractors who have taken on complex and difficult jobs.
“In particular, two significant projects have caused write downs, even though we believe a significant proportion of these will ultimately be recoverable. The joint venture is no longer bidding for M&E work outside the UAE,” it added, though it declined to name the projects.
The results in Balfour Beatty’s Middle Eastern operations form part of a wider gloomy outlook for the contractor, which saw it posting an annual pre-tax loss of £59m ($88m) and scrapping its dividend.
That total loss figure would have amounted to £304m ($452.4m) were it not for the sale of its US construction business, Parsons Brinckerhoff.
Leo Quinn, the recently appointed CEO, said that a dose of “self-help” would be needed to lift the company out of this troubled period, which has been marked by a string of profit warnings, a report in The Guardian said.
“Over the next two years we should work through the severe legacy of problem construction projects,” he said. “However, in tackling the cultural change required to ensure these issues are behind us, we face major short-term challenges. The key is that we are determined to address this through self-help,” Quinn told the UK newspaper.
The company will not pay a final dividend to shareholders, but expects to reinstate the payout by March 2016. It had already shelved plans for a $297.6 million-plus share buyback. Its revenue for 2014 was roughly unchanged at $13.0 billion.
Shares rose 6% to 245p despite the losses and challenging outlook.
