Balfour Beatty issues profit warning
Lack of infrastructure spending hits company’s order books
By CFOWorld.co.uk staff | CFO UK | Published 13:55, 08 November 12
Construction and big ticket infrastructure developer Balfour Beatty issued a profit warning on Thursday.
In an interim management statement, the company said that it expected full-year profits to be at least £10 million below previous forecasts in wake of weaker construction activity and reduced appetite for rail projects across Europe.
It added that rail construction spending in Italy and Spain was at a “critically low” level.
As a consequence of reduced infrastructure spending, the company’s order book has shrunk to £14.4 billion, down from £15 billion at the end of June.
Balfour Beatty said that the conditions were likely to remain difficult into 2013. While construction activity in the US was sluggish, the UK had seen "further market deterioration", it said.
In order to mitigate lack of infrastructure spending in various jurisdictions, Balfour Beatty said that it had undertaken a £50 million cost-saving drive. The move, announced in March, will see 650 back office jobs at Balfour Beatty go by the end of the fourth quarter.
The company operates in 80 countries worldwide with several government contracts on its order books.
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