Balfour Beatty Plc, the U.K. construction company whose chief quit in May after predicting a profit drop, fell to a six-year low after saying earnings from engineering services will decline more than forecast.
Profit at the division will fall by 65 million pounds ($111 million) this year, 35 million pounds more than announced earlier, after new management identified project delays and contractual disputes, London-based Balfour Beatty said. The additional shortfall will be offset by gains from public-private partnership project disposals, the company said in a statement.
Balfour has struggled since the global recession, with a lack of building work in the U.K. and the cancellation of projects across Australia’s resources industry. The company cut hundreds jobs in Australia last year. Balfour reiterated today that 2014 pretax profit will be in a range of 145 million pounds to 160 million pounds.
“Whilst the pace of ongoing decline at mechanical and electrical engineering is a concern, the market should take some comfort from the fact that the remaining 90 percent of the business is on track,” analysts at Liberum in London, including Joe Brent, wrote in a report to customers, reiterating a buy recommendation on the stock.
Balfour Beatty plunged as much as 17 percent to 193.8 pence, the lowest intraday price since October 2008, and was trading down 7 percent at 216.8 pence as of 12:07 p.m. in London. That extended the decline this year to 25 percent, valuing Balfour Beatty at 1.49 billion pounds.
Andrew McNaughton stepped down as chief executive officer on May 6, following 13 months in his post, after saying that earnings will be “significantly” lower than forecast. Chairman Steve Marshall has taken over on an interim basis.