Balfour is warning on profit but KPMG offers constructive advice
CONSTRUCTION giant Balfour Beatty warned yesterday that it expected profits for 2014 to be £70m lower due to problems with contracts.
Accountants KPMG have been reviewing the firm’s construction business and found that it had been bidding with “optimistic assumptions”. KPMG added it had not been managing contracts effectively.
Balfour Beatty has also shelved a planned £200m share buyback.
The valuation of its investments portfolio increased to £1.3bn, and beyond the problems in the UK construction business there had been no material change in other business areas, Balfour said.
The announce appeared to please analysts, with Liberum changing its rating to “buy”, noting it was a “first [but not final] step to recovery”.
It continued: “This may not be the cleansing statement investors had hoped for, but there is as much recovery potential as ever and buyers will be watching closely.
Balfour Beatty shares closed up 4.86 per cent at 215.60p.