Shares in UK contractor Balfour Beatty fell today after it warned investors that its 2015 results would be hit by a "shortfall" of between $180m and $230m.
The profit warning is the seventh in two years, and has led to a complete change in its senior management and a number of investigations into the cause of its malaise.
(There was) insufficient visibility, control and understanding of actual programme forecasting versus reported contract performance– Balfour Beatty report
The company’s statement announcing the warning said an ongoing review of the business had "continued to identify legacy issues in the UK, US and Middle East". It added that the UK would account for about two-thirds of the shortfall.
The City had been expecting Balfour to make a pre-tax profit of $120m, so the lower than expected earnings could push it into a loss that will be greater than the $85m loss it reported in 2014.
Leo Quinn (pictured), the group chief executive, said: "We are making encouraging progress on the group’s transformation. The positive response of our people to change, the continuing confidence of our customers in Balfour Beatty’s expertise and the first signs of improving cash performance reinforce my conviction in the group’s long-term success."
Quinn, who has a reputation for turning struggling businesses around, took over his role in January.
The same month an external report into the group’s failings was produced by accountant KPMG. This found that teams in its UK business won work by "tendering at very low margins with optimistic assumptions and inadequate provisions for risk".
KPMG also said there were problems with the way Balfour managed legal contracts, including "poor contract administration and optimistic assumptions on contract penalties". According to the report, there was "insufficient visibility, control and understanding of actual programme forecasting versus reported contract performance".
Shares in the company fell 9.6p to 221.6p in early trading.