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Tue April 20 2021

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Analysts air mixed views on Balfour Beatty

10 Jul 15 City analysts have been running their pointy pencils over Balfour Beatty since its latest profits warning.

Balfour Beatty yesterday revealed that its profits were set to be £130m to £150m below previous expectations as more legacy costs continue to crawl out of the woodwork. [See previous report here.] The share price fell 8% from 248.4p to 228.4p during the day.

Britain’s biggest construction company has now issued seven profits warnings in two years and warned of £478m of profit shortfalls and risk provisions since the beginning of 2014.

Westhouse analyst Alastair Stewart rated Balfour Beatty as a ‘Sell’, saying: "It all looks very negative and could run and run."

However, investment bank Berenberg said it believed Balfour Beatty was now through the worst of its problems and reiterated its ‘Buy’ rating “based on the cheap valuation and significant self-help potential under the new management team”.

It added: “In the UK, while further warnings cannot be ruled out, we think the company is through the worst.”

However, it did express concern that legacy issues have now also emerged at the US business. Previously they had been focused on the UK. “The shortfall in the US is more worrying as this business has been profitable in recent years,” Berenberg said.

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