British contractor Balfour Beatty tapped a new chief financial officer to aid CEO Leo Quinn's effort to restore the firm's sagging balance sheet as it copes with a $105-million profit shortfall—its sixth in two years—and a critical outside review of bidding and risk management in its U.K. construction business.
The hire follows the Jan. 1 start of Quinn, former CEO of British IT firm Quinetiq, who is known for his corporate turnarounds. Balfour Beatty reported more than $13 billion in global 2013 revenue.
Results of a KPMG review begun last August of 127 Balfour Beatty U.K. projects, which the contractor aired on its website, noted the firm's "very low-margin" bids and "inadequate provisions for risk."
KPMG pointed to "optimistic assumptions" on project delay penalties and shortfalls in managing job performance against forecasts.
It also canceled a $300-million share buyback and said other steps would be unveiled in March with the reporting of its year-end results.
But the firm also released a new valuation of its asset portfolio, now worth more than $1.95 billion. A competitor fund, John Laing Infrastructure Fund, had made a $1.5-billion bid for the portfolio last year but Quinn now says it is not for sale.
The firm also said on Jan. 19 said it has been selected as sole contractor for a new type of U.K.-wide public-works construction program worth up to $2.27 billion through early 2019.
"The framework encourages collaborative working and early contractor involvement so that project design and delivery can be influenced, progressing rapidly to the construction stage, stimulating local jobs and spend and increasing value for the customer," Balfour Beatty said.
London-based analyst Stephen Rawlinson told Reuters: “This puts the company back on a good track, if it stops taking bad risks."