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Mon June 21 2021

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Balfour Beatty takes £50m hit on UK building jobs

29 Apr 13 Reorganisation within Balfour Beatty’s UK construction business has led to problems on specific contracts that are set to knock £50m off operating profit, the company has disclosed.

CEO Andrew McNaughton
CEO Andrew McNaughton

Chief executive Andrew McNaughton has now taken personal command of the UK construction business in an attempt to sort it out.

Balfour Beatty told the stock exchange this morning that UK construction market conditions had deteriorated significantly in the second half of 2012 and continued to be difficult. Trying to restructure the business in these conditions had caused certain specific projects to go awry, the company admitted.

About 100 of the 1,000 live regional contracts have been identified as being at risk of profit revisions. The are mainly sub-£1m  jobs.

“In these extremely tough conditions, our UK construction business has been concurrently implementing a substantial organisational restructuring in order to streamline the business for future success while reducing costs to remain competitive,” the company said.

It continued: “The group's 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. This internal review has concluded that the combination of a difficult external environment and internal reorganisation has resulted in specific instances of poor operational delivery.”

Other parts of the business remain on course to meet expectations, the company said.

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