New Balfour Beatty boss Leo Quinn delivered more bad news for long-suffering investors in the ailing builder with another £70 million blow to profits and a looming dividend cut.
Quinn also scrapped a £200 million share buyback from the sale of Balfour’s US consulting arm Parsons Brinckerhoff to shore up the balance sheet while he gets to grips with a lengthy repair job. Shares fell 3% or 6.8p to 198.8p,
The former QinetiQ chief executive said the sprawling construction business had been guilty of a “conspiracy of optimism”.
Accountants KPMG, brought in to review the construction arm last year, identified the fresh provisions on problem contracts and recommended the firm sharpen its poor bidding and contract management.
Quinn flagged up “significant opportunities” to cut costs but said it was “far, far too early” to be specific about job losses.
He added: “Clearly the company has become too big, too quickly… This is about getting back to basics and getting it right.”
He admitted he hadn’t consulted shareholders over cancelling the buyback and “reviewing” the dividend, but the latest blow could reawaken interest from smaller rival Carillion, who made a failed merger bid last summer.
The company — which promised at least £225 million in cost savings through a deal — is free to bid again at the end of next month.
Liberum analyst Joe Brent said: “We still believe that a bid is possible… This may not be the cleansing statement investors had hoped for but there is as much recovery potential as ever and buyers will be watching closely.”
