Reuters: Hot Stocks: UPDATE 1-Balfour slumps after shock profit warning

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UPDATE 1-Balfour slumps after shock profit warning Apr 29th 2013, 07:36 Mon Apr 29, 2013 3:36am EDT * Profit to miss management expectations by 50 mln stg * Hit by poor UK construction unit, market conditions * Shares down 9 percent (Adds details, share price) LONDON, April 29 (Reuters) - Infrastructure firm Balfour Beatty warned that its 2103 profit would be significantly below its expectations, hit by worsening market conditions and poor operational performance at its UK construction arm. The company, whose recent projects have included the 2012 Olympics Aquatics centre, the modernisation of Blackfriars Station and the widening of the M25 motorway, cuts its full year guidance by around 50 million pounds ($77 million) on Monday. Analysts had expected pre-tax profits of around 252 million pounds, according to Thomson Reuters estimates. Balfour said its chief executive Andrew McNaughton, who took the helm this month, would take charge of the UK construction unit to address the operational issues. Shares in the FTSE-250 listed company, which have fallen 12 percent over the past three months, fell 9 percent to 224 pence by 0725 GMT on Monday. Construction services accounts for 65 percent of Balfour Beatty's business. The sector has struggled to recover since the 2008 property bust in the United States and Britain, under the weight of public sector cuts and deteriorating business confidence which has squeezed margins across the industry. Balfour said the findings emerged as part of an internal review and that its balance sheet remained strong. The company, which reported a 7 percent fall in 2012 profit last month, has been restructuring its British construction business to reduce costs, and plans to sell most of its businesses in mainland Europe in favour of seeking growth in Australia and elsewhere. It said trading in its other businesses was broadly in line with expectations, with a 10 million pound profit fall in rail operations in Germany and some weakness in its Australian professional services unit. ($1 = 0.6455 British pounds) (Reporting by Brenda Goh, Editing by Rosalba O'Brien) Link this Share this Digg this Email Reprints

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