Balfour Beatty posts loss of $88m in 2014

Balfour Beatty, Britain’s largest contractor, has scrapped its dividend to shareholders after suffering a total loss of $88m (£59m) in 2014. 

Its performance in the UK was particularly bad. There it posted a loss of $472.5m (£317m), which was partially offset by a 24% increase in the firms overseas business. 

Leo Quinn (pictured), the chief executive appointed to turn around the group’s fortunes, said today that the losses were the legacy of problem contracts in the UK domestic market, and said the firm planned to resolve them over the next two years. Shares rose as the market welcomed signs that the company’s new management was taking the situation in hand. 

As well as the cancelled dividend, Balfour cancelled a $300m share buyback, which has been intended to reward shareholders for sustaining it during its extended takeover battle with Carillion, the UK’s second largest contractor, at the end of last year. 

A management review by KPMG said Balfour’s problems stemmed from inadequate management control over the contracts that the firm’s regional divisions were taking on, often based on unduly optimistic assumptions about the costs and risks involved. Quinn said he was planning a separate review of the group, and expected to make a report by September. 

"In actually looking at the rest of the organisation, we’ll be inspecting and checking all contracts but I don’t believe there is the need or any signs that we would do a deep dive audit at this time," he told the Reuters news agency.  

The company reported an additional $175m write-down in its UK construction contracts, bringing the total losses in the division to nearly $450m. 

Shares in Balfour, which employs around 36,000 people in about 80 countries, lost 26% of their value last year. 

Photograph: Leo Quinn: the man brought in to remodel Balfour Beatty (Source: Balfour Beatty)