黑洞社区

Balfour Beatty chief executive Leo Quinn has said he is targeting turning around the troubled contractor within two years, .

Today鈥檚 profit warning is the firm鈥檚 sixth in two and a half years, the latest resulting from an independent review of the contractor鈥檚 UK construction business being carried out by KPMG.

Asked today how long it would take to turnaround Balfour, on a conference call with journalists, Quinn said: 鈥淚鈥檇 be disappointed if we are not at a point 24 months from now where we鈥檙e comfortable, fully operational and performing well.鈥�

Quinn, who joined Balfour at the start of this month, said the firm should be more 鈥渇ocussed on the knitting鈥�, after KPMG鈥檚 review uncovered more problem contracts in the firm鈥檚 UK construction business.

Quinn also raised the prospect of further downsizing of the contractor, acknowledging the firm would be a different shape and size under his leadership, adding he would seek to determine 鈥渢he optimal size and risk portfolio [of the firm], and I鈥檒l take a judgment over time.鈥�

He added: 鈥淲e have to cut our cloth to what is a low margin industry.鈥�

Quinn emphasised he placed a high value on Balfour鈥檚 investment business, after the firm rejected a 拢1bn bid for it by John Laing Infrastructure Fund last month.

Balfour revised up the value of its investment portfolio to 拢1.3bn this morning, the second upward revision in value in five months.

Quinn said construction and investment were 鈥渢he ying and yang of construction and we see that relationship moving forward.鈥�

Asked if Balfour was putting out a possible 鈥榩rice tag鈥� out in the market for the investments division, Quinn said: 鈥淚f we were hanging out a price tag we wouldn鈥檛 be saying how integral it is to our business鈥�, but when pressed said 鈥渕y job is to maximise value for shareholders.鈥�

On problems in the UK construction business, Quinn said he believed 鈥減oor tendering and a conspiracy of optimisim got in the way of good judgement.鈥�

He said: 鈥淚t鈥檚 all fixable, it just takes time [鈥�] It鈥檚 wrong to say 鈥榟ow badly has that been mismanaged鈥�, our attention was not focused on the knitting.鈥�

He said he was 鈥渇rom the school of second chance鈥� when it came to Balfour bosses who had made mistakes on contracts.

Quinn said the firm was aiming to achieve 鈥渋ndustry margins鈥� of around 3% in construction.

Quinn highlighted that the firm had 鈥済rown rapidly鈥� in recent years and should now shift its focus from 鈥渢he top line鈥� to 鈥渃ash flow and profitability鈥�.

He added: 鈥淚鈥檇 love to see it restored to strength [鈥�] It鈥檚 a challenge and we鈥檒l give it our best shot.鈥�

In May 2014 Balfour Beatty UK construction chief executive .

Analysts raised doubts as to whether Balfour鈥檚 bad news is behind them, after Balfour said this morning it may make a further assessment on contract risk when it posts its full-year results in March.

Balfour said it would 鈥渁ssess the overall level of contract risk provisions in the UK construction business in light of the operational issues identified [by KPMG] and will announce the outcome at the full year results in March.鈥�

Cenkos analyst Kevin Cammack said: 鈥淨uinn has clearly left the door open for further big write-downs in March. So one of the big questions is, what鈥檚 the scale of the further provisioning that needs to be made? Is it half a percent of contract value? 1%? 2%?鈥�

Balfour Beatty鈥檚 share price was trading over 3.5% up at around 213p a share mid-afternoon on Thursday.