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| Balfour Beatty shares fall after profit warning | Balfour Beatty shares fall after profit warning |
| (about 7 hours later) | |
| Shares in Balfour Beatty have fallen sharply after it issued its second profit warning in six months, blaming weak conditions in the UK construction market. | Shares in Balfour Beatty have fallen sharply after it issued its second profit warning in six months, blaming weak conditions in the UK construction market. |
| The UK's largest building firm said it expected full-year profits at its UK arm to be £50m below expectations. | The UK's largest building firm said it expected full-year profits at its UK arm to be £50m below expectations. |
| Balfour, whose projects include the M25 motorway widening, said the UK was a "challenging" place to do business. | Balfour, whose projects include the M25 motorway widening, said the UK was a "challenging" place to do business. |
| Official data last week highlighted a big slowdown in the UK building sector. | Official data last week highlighted a big slowdown in the UK building sector. |
| The Office of National Statistics' GDP figures for the first three months of 2013 said UK construction activity fell 2.5%. | The Office of National Statistics' GDP figures for the first three months of 2013 said UK construction activity fell 2.5%. |
| 'Strong' balance sheet | 'Strong' balance sheet |
| Balfour said in a trading update: "The UK construction market has been a challenging environment in which to win and execute work. Market conditions which deteriorated significantly in the second half of 2012 continue to be difficult. | Balfour said in a trading update: "The UK construction market has been a challenging environment in which to win and execute work. Market conditions which deteriorated significantly in the second half of 2012 continue to be difficult. |
| "Our subcontractors continue to operate under considerable financial strain. 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." | "Our subcontractors continue to operate under considerable financial strain. 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." |
| Balfour said chief executive Andrew McNaughton, who took over last month, would personally take charge of the UK construction unit to address the operational issues. | Balfour said chief executive Andrew McNaughton, who took over last month, would personally take charge of the UK construction unit to address the operational issues. |
| Shares in the FTSE 250-listed company, which reported a 7% fall in 2012 profit last month, closed down 9.5%. | |
| Balfour Beatty said trading in its other businesses was broadly in line with expectations, with a £10m profit fall in its German rail operations and weakness in professional services in Australia offset by outperformance in the US, Asia and the Middle East. | Balfour Beatty said trading in its other businesses was broadly in line with expectations, with a £10m profit fall in its German rail operations and weakness in professional services in Australia offset by outperformance in the US, Asia and the Middle East. |
| "Our balance sheet remains strong taking full account of the cash impact of the £50m profit shortfall," the company's statement said. | "Our balance sheet remains strong taking full account of the cash impact of the £50m profit shortfall," the company's statement said. |
| On 8 November, Balfour warned of a £10m hit to profits because of weak construction and rail markets across Europe. Since then, Balfour's shares have fallen by about 30%. | On 8 November, Balfour warned of a £10m hit to profits because of weak construction and rail markets across Europe. Since then, Balfour's shares have fallen by about 30%. |
| Following last week's GDP data, construction activity in the UK remains more than 18% lower than it was before the start of the financial crisis in 2008. | Following last week's GDP data, construction activity in the UK remains more than 18% lower than it was before the start of the financial crisis in 2008. |