Group chief executive to leave 鈥渨ith immediate effect鈥� after further UK construction losses discovered

Balfour Beatty

Balfour Beatty global chief executive Andrew McNaughton has resigned as the troubled UK contracting giant reveals a 拢30m profit warning in its UK construction division.

The firm said the write-down, which was due to problems in its major projects and M&E businesses within UK construction, would result in 鈥渟ignificantly lower pre-tax profits in 2014鈥� than the business had been expecting at the time of its results announcement in March.

Balfour Beatty also said it was looking to sell infrastructure consultancy Parsons Brinckerhoff, which it bought for 拢380m in 2009.

The firm said in a statement to the City that Andrew McNaughton, who succeeded long time chief executive Ian Tyler in April last year, had stepped down as chief executive of the group and as an executive director of the board 鈥渨ith immediate effect.鈥�

His place will be taken in the interim by Steve Marshall, Balfour Beatty鈥檚 non-executive chairman, with the firm looking to announce an appointment process to replace him 鈥渟hortly鈥�.

Marshall said: 鈥淭oday鈥檚 trading update is once again disappointing.

鈥淭he board is committed to rapidly addressing the root causes. As a result, action is being taken to improve operational delivery in the UK construction business.鈥�

Balfour Beatty鈥檚 share price was down 18% in early trading this morning following the news.

The latest profit warning comes a year after Balfour Beatty announced a 拢50m profit warning in its UK construction business.

Last year revenue in its UK construction business tumbled 12% to 拢2.8bn, with profit 拢60m short of expectations.

In its statement this morning the firm said that actions taken last year to improve the performance of the UK construction business 鈥渁re taking effect, but at a slower pace than expected鈥�.

鈥淭here has been significant performance improvement in the regional construction business, but the M&E and major buildings projects businesses have both experienced significant operational issues,鈥� the firm said.

The firm said the M&E business had experienced 鈥渁n extremely challenging first quarter鈥�, due to 鈥渁dverse market conditions鈥�; 鈥減oor operational delivery issues on a number of contracts鈥�; and 鈥渓ow order intake鈥�.

In the major projects business, the firm said it had experienced 鈥渇urther cost increases and delays鈥�.

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