Balfour Beatty shares fall after profit warning

Suzie Neuwirth
BALFOUR Beatty’s shares plunged 10.35 per cent yesterday, after the infrastructure group announced its second profit warning in six months.

The FTSE 250-listed company said that challenging market conditions had impacted its UK construction business and reduced its profit expectations for 2013 by £50m.

“The news was a surprise, as I still had the company on a buy recommendation,” Andy Brown, analyst at Panmure Gordon, told City A.M.

“Unfortunately a continuing tough market has meant that the reorganisation of its operations announced at last November’s profit warning has not been successful.

“There has not been any good macro data or much positive government action for the UK construction sector recently.”

The company said that new chief executive Andrew McNaughton has implemented an immediate action plan and would be taking charge of the UK construction unit personally, to address the operational issues.

“The key thing now is Balfour Beatty’s half-year results in August,” said Brown.

“I think new investors will be cautious until there is more visibility on the outcome of this year.”

The infrastructure group also announced that trading in its other businesses is broadly in line with expectations, with a £10m decline in profits in German rail operations and some deterioration in professional services in Australia.

However, this was offset by stronger performance in investments and professional services, namely US transportation, Asia and the Middle East.