Balfour Beatty says 2015 results could be hit by $230m shortfall
UK engineering group issues another profit warning following a review of its businesses in the UK, US and Middle East
Balfour Beatty, the UK engineering group, has issued another profit warning saying that its 2015 results will be hit by a shortfall of between $184 million and $230 million.
The announcement came in the wake of a review of Balfour Beatty’s businesses in which the construction giant said it had ‘identified legacy issues’ in the UK, US and Middle East, which would have an impact on profits.
The UK accounted for about two-thirds of the shortfall, the company added.
According to a report by the BBC, shares in the engineering group fell 4.3% to 218.8p in early trade on the UK markets. The announcement also means that it is likely that Balfour will be pushed into a loss in 2015, as analysts had been forecasting profits of $118.4 million.
Balfour has announced several profit warnings over the last two years and last year it resisted a $3.07 billion takeover bid from Carillion. In 2014, the firm posted a loss of $90.85 million and said that it would not be paying an annual dividend to shareholders. That was in stark comparison to its 2013 figures, which included pre-tax profits of $284.76 million.
The company in March blamed problems encountered on two projects for $23 million in losses suffered by its Middle Eastern division. The builder operates in the UAE through the joint ventures Dutco Balfour Beatty and BK Gulf. It reported that its regional arm had made the underlying losses because of write-downs that were caused by disputes with main contractors on the two projects.
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.
However, in April, the company was awarded a $408 million main construction contract by Meraas, the Dubai-based holding company, for a mixed-use development on Dubai Creek. In addition, earlier this year, the contractor was awarded a $23.95 million contract by the RTA to build a 700m long, three-lane bridge as part of the Wafi Interchange Improvement Project being carried out by the government authority.
