Balfour Beatty expects 'significantly lower profits' in 2013

Balfour Beatty, the FTSE 250-listed infrastructure group, has reported that its UK construction business is expected to deliver 'significantly lower profits' from operations in 2013 than management's previous expectations at the time of its full-year results announcement in March.

Balfour Beatty, the FTSE 250-listed infrastructure group, has reported that its UK construction business is expected to deliver 'significantly lower profits' from operations in 2013 than management's previous expectations at the time of its full-year results announcement in March.

It said that altogether the remainder of the business remained on track.

The company reported that the UK construction market had been a challenging environment in which to win and execute work and said that that market conditions had "deteriorated significantly" in the second half of 2012 and continued to be difficult.

Balfour Betty reported that changes in procurement trends were allowing customers to impose increasingly stringent conditions onto contractors while subcontractors were operating under considerable financial strain.

Restructuring underwayAs a result of the conditions, the group said its UK construction business had been concurrently implementing a substantial organisational restructuring in order to streamline the business for future success while reducing costs to remain competitive.

The group said that its latest monthly business reviews highlighted some poor performance in the UK regional construction business, and to a lesser extent the building part of the major projects business, which led to an internal review.

It said that the combination of these factors was expected to reduce management's 2013 full-year expectations for profit from operations in the UK construction business as a whole by approximately £50m.

Trading in the group's other businesses is broadly in line with expectations with a £10m profit deterioration in rail operations in Germany and some weakness in professional services in Australia offset by outperformance in investments and in professional services, specifically in US transportation, Asia and the Middle East.

As a result in aggregate, Balfour Beatty's businesses outside UK construction are on track to deliver on management's expectations for 2013 and continue to support the Group's medium-term strategy.

Our balance sheet remains strong taking full account of the cash impact of the £50m profit shortfall.

Balfour Betty's share price was down 8.16% to 226.30p at 08:18 on Monday.

MF

Recommended

Why it pays to face up to your investment mistakes
Investment strategy

Why it pays to face up to your investment mistakes

Buying stocks can be a complicated business. But selling stocks can be tricky, too – even if you sell for the right reasons. Max King explains how to …
17 Sep 2021
Share tips of the week – 17 September
Share tips

Share tips of the week – 17 September

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
17 Sep 2021
Royal Mail will deliver for investors – here's how to play it
Trading

Royal Mail will deliver for investors – here's how to play it

Royal Mail Group has found its feet in the past 18 months and looks cheap. Matthew Partridge looks at how to trade the shares.
14 Sep 2021
The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021

Most Popular

Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021
How you can profit from the power of the grey pound
Share tips

How you can profit from the power of the grey pound

Higher life expectancy and surging asset prices have proved a boon for the baby-boomer generation, which has accumulated vast wealth. Younger generati…
10 Sep 2021