Balfour Beatty Plc, Britain’s largest construction company, reported a 67 percent plunge in operating profit after a decline in U.K. and Australia business.
First-half underlying operating profit from continuing operations fell to 52 million pounds ($81 million) as revenue dropped 3 percent from a year earlier to 4.97 billion pounds, the London-based company said today in a statement. The stock declined as much as 6.2 percent.
In construction services, the U.S. order book increased 15 percent from December, making it 30 percent larger than its U.K. equivalent. The company reduced its full-year forecast for profit in the U.K. construction business by 50 million pounds after the U.K. order book for the unit fell 6 percent.
“The United States in 2014 will be the largest and strongest growing part of our business” removing the U.K. from its top spot as the company’s largest market for the first time, Chief Executive Officer Andrew McNaughton said in a phone interview. “Profit, whilst down on where we were last year, is in line with what we’ve been advising.”
The shares fell 5.9 percent at 235.40 pence at 2:55 p.m. in London, taking the decline to 14 percent this year and giving the company a market value of 1.62 billion pounds.
“Management has reiterated that it expects to deliver a performance from continuing operations in line with the current market expectations for 2013,” Andrew Gibb, an analyst at Investec, wrote in a note to investors. “On our current forecasts this implies 80 percent of profits need to fall in the second half, this looks like too much of a leap of faith.” Gibb recommends selling the shares.
In Australia, trading is “still challenging” and first-half profit in professional services fell by 21 million pounds from a year earlier after project cancellations in the resources sector, Balfour Beatty said.