Troubled construction giant Balfour Beatty made a mammoth £304M pre-tax loss on continuing operations last year, it revealed this morning.
Profit from discontinued operations – including consultancy arm Parsons Brinckerhoff, which was sold to Canadian firm WSP last autumn - took Balfour to an overall loss of £59M in the 12 months ended 31 December 2014.
This was still a bigger loss than the previous year’s £35M, while revenue also dipped, from £8.85bn to £8.79bn.
Having previously cancelled a share buyback, and re-phased pension fund payments, Balfour today said it had decided not to recommend a final dividend this year.
The company’s construction services division made a £391M loss from operations. Accountants KPMG earlier this year laid bare a number of problems in the way the division had been run.
Group chief executive Leo Quinn – appointed in October – admitted today that the firm faced “major” challenges.
“Over the next two years we should work through the severe legacy of ‘problem’ construction projects,” he said.
“However, in tackling the cultural change required to ensure these issues are behind us, we face major short-term challenges. The key is that we are determined to address this through self-help. Our transformation programme, Build to Last, is gaining rapid traction and we are driving initial improvements of £200M cash in, £100m cost out over 24 months.
“In addition, our Investments portfolio will provide the financial flexibility of both reliable income and the sale of maturing assets into a strong market.”
He added: “I remain convinced that all our operations can achieve industry-standard performance as markets improve. The real prize is a sustainable return to profitable growth, built on the group’s unique capabilities, underpinned by leaner, stronger processes and flawless execution.
“Longer term we believe that as a leader in its core markets, Balfour Beatty should be able to deliver superior returns to the benefit of its customers, employees and shareholders.”