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Metronet losses hit Balfour Beatty hard

Contractor Balfour Beatty’s rail division has entered a critical few weeks as it fights to retain around £200M per year of work worth around 25% of its existing rail turnover.

The contractor last week confirmed it had written off £122M against its activities on the London Underground upgrade.

The figure included an £87M write off of its stake in Tube contractor Metronet and £35M in one-off contract losses. The blow was softened by a £19M exceptional tax rebate.

Balfour Beatty put the losses down as a one-off exceptional item in its half year accounts, but could still lose £80M to £90M of work a year if whoever takes over Metronet’s Tube upgrade franchise declines to retain Balfour Beatty.

Balfour Beatty is also in a sixway battle to hang on to one of Network Rail’s e £100M per year track renewal frameworks.

Network Rail is to slash the number of contractors on its framework from six to four in the second week of September. The other contractors facing the chop are Amey, Carillion, First Engineering, Grant Rail and Jarvis.

This means Balfour Beatty Rail could see a total of £190M cut from its annual turnover, which last year stood at £766M.

A Balfour Beatty spokesman said: “There is no reason the new owner will defi nitely want us and there’s no reason to say they would not either.” Balfour Beatty’s civils profi ts rose by 30% to £26M for the first half of the year.

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