By Ed Ballard
LONDON — Balfour Beatty PLC Thursday warned that earnings will be worse than previous forecasts after an audit of its underperforming U.K. construction business, and said there could be still more losses to come.
Earnings will take a 70 million pound ($105.9 million) hit in Balfour’s /zigman2/quotes/202863772/delayed UK:BBY +0.53% 2014 results, further to the £135 million previously indicated, but the total impact won’t be known until March’s full-year results, the company said. Balfour cancelled a proposed £200 million buyback program and said it will review its dividend policy.
Cost overruns and project delays led to a string of profit warnings in 2014, which was marked by an acrimonious failed merger with Balfour’s rival Carillion PLC /zigman2/quotes/208402800/delayed UK:CLLN -28.95% and a management overhaul.
“Balfour Beatty is a large organization which had become too complex and too devolved for adequate line of sight and financial control,” said chief executive Leo Quinn, who joined the company this month.
“The key is that these issues can be put right and we now have clear action plans in hand,” he added. Balfour said it will tighten up its bidding procedure, make project managers more accountable, and make the division responsible for the biggest projects report directly to the chief executive.