3 July 2014 – trading update
Another disappointing trading update from Balfour Beatty has hit the share price of the group with its UK business once again the culprit. It is the mechanical and electrical engineering part of the UK construction business which has seen a further deterioration in its trading and this has led to the company warning of a £35m shortfall to profits this year. However, full year guidance on pre-tax profits remains unchanged as the shortfall will be made up by targeted PPP gains in the second half. Thus full year pre-tax profits are expected to be in the range of £145m/£160m. Although this would only give earnings per share of around 16p, a strong recovery is expected over the medium term as new management gets to grips with the situation. We continue to believe that the shares are a BUY FOR RECOVERY.