The share price of construction group Balfour Beatty has collapsed this morning (May 6th) on the back of the latest financial results issued by the company.
Chief executive Andrew McNaughton stepped down from his role with immediate effect as a result of the firm's worsening financial situation and he will be replaced on a temporary basis by Steve Marshall until a permanent successor for the position can be appointed.
Balfour Beatty announced in a statement that its 2014 profits would be significantly lower than expected, which the firm said was due to its British construction business. It is forecast that this part of the company is facing a £30 million shortfall in 2014, which means the firm's overall pre-tax profits for 2014 are likely to be between £145 million and £160 million.
The revelation from the business comes only a few weeks after it stated it was expecting to make a modest level of progress during the course of 2014, but those predictions have now been left in tatters by the profit warning and the shock departure of Mr McNaughton.
Mr Marshall, who steps up to take over, described the trading update as a "disappointing" one for the company, but he stressed the board is committed to tackling the root causes.
He said: "As a result, action is being taken to improve operational delivery in the UK construction business. Our recent strategic review meanwhile has concluded that a sale of Parsons Brinckerhoff could deliver attractive shareholder value and make Balfour Beatty a simpler and more focussed group going forward.”
Balfour Beatty's professional services, support services and investments divisions were hailed as continuing to perform well, with the firm pointing out that all three of them are in line with management expectations.
Following the news of the profit warning and the subsequent departure of the company's chief executive, the share price of the business plummeted on the London Stock Exchange this morning. By 11:36 BST, stocks in the firm were over 16 per cent down on the start of the session and were continuing to fall steadily despite the bullish comments of Mr Marshall.
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