London-based contractor Balfour Beatty plc. reported on Sept. 29 another $122-million profit shortfall this year for its U.K. operations, following two previous warnings this year. The company has ceased bidding for major contracts in London, southwest England and Wales where its problem contracts are located.
Balfour Beatty has called in financial consultant KPMG to review its U.K contracting strategy, aiming for a report by year’s end. The company issued profit warning on these contracts totalling $106 million in May and July, in addition to three others since 2012.
The new shortfalls relate to 25 contracts, of which 40% are in mechanical and electrical services. The rest are spread between large buildings in and around London, some regional work and some major infrastructure projects.
Marshall will continue running the group on a day-to-day basis until a new CEO is appointed, when he will leave the company. The contractor's previous chief Andrew MacNaughton resigned in May.
To help balance the books, Balfour Beatty plans next month to seek approval from shareholders for its sale of Parsons Brinckerhoff Inc. to Canada-based WSP Global Inc. for $1.3 billion.
The company aims to return $325 million to investors through a share buy-back.
On a positive note, Balfour Beatty has secured a share of a four-year contract, worth up to $546 million, to design and build a nuclear waste facility at the Sellafield site in England.
The contract for a Box Encapsulation Plant, awarded by Sellafield Ltd., awarded to a joint venture of which the firm is partnered with contractor AMEC plc. and design firm Jacobs Engineering Group.
The facility will encapsulate in concrete, Magnox reactor waste now stored at Sellafield ahead of long term storage. "The… project is another significant nuclear waste management initiative in the program to reduce the historic waste issues on Europe's most complex nuclear site," said AMEC CEO Samir Brikho.
Separately, UK-based design giant WS Atkins reported on Sept. 25 a charge of about $7.3 million related to its "unsuccessful pursuiot of a signficant acquisition opportunity."
The firm did not specifiy the acquisition target, but observers speculated it was Parsons Brinckerhoff, according to UK media reports. Atkins had been a contender to buy the firm.
Atkins also said it would had made an unspecified number of staff cuts in its aerospace, water and environmental businesses in the UK and Europe in the first half of the year, although the firm noted high work volume in its rail business and said its first-half results are in line with expectations and that its full-year outlook is unchanged.
The company noted "good ongoing demand for our services," pointing to better government infrastructure prospects in an improving U.K. economy.