This Week's Falling Knife: Balfour Beatty
Nov 9th 2012 10:12AM
Updated Nov 9th 2012 10:20AM
LONDON -- Shares in Balfour Beatty (ISE: BBY.L) plunged by 20% to 245.60 pence yesterday after announcing that its order book fell 4% in the third quarter, due to a "weaker-than-anticipated" U.K. performance and a depressed U.S. construction market, the company's two major markets.
Market deterioration has pushed Balfour Beatty to migrate toward "smaller contracts in a market with very few major projects," with around half the order book now in regional business, compared to approximately a third at the same point last year.
Accordingly, full-year profits for the U.K.'s biggest construction company have been revised to a figure approximately £10 million lower than previously expected. Elsewhere, Balfour Beatty's professional services division continues to perform strongly, while support services saw trading "consistent with expectations in the period."
There were few, yet some positives to take from the Q3 interim management statement, including the prospects for Balfour Beatty's U.S. civil infrastructure business, with some "large design-build and PPP projects being tendered into the market."
The construction company also declared that it has been managing its business on the basis that market conditions would be tough, and swift measures -- such as Balfour Beatty axing 660 back-office jobs as part of cost-cutting measures -- show a firm statement of intent to mitigate adverse impacts.
So the question is whether the share-price crash is a buying opportunity for investors? Back in August the company lifted its dividend, offering a 4.7% yield.
If you are keen to earn handsome profits from shares, then this free Motley Fool report -- "10 Steps to Making a Million in the Market" -- can help you on your way. The report explains how taking a contrarian view and backing unloved companies is a vital step on the path to the magic million milestone.
Warren Buffett buys British! The legendary investor has recently topped up on his favorite U.K. blue chip. Discover what he bought -- and the price he paid -- within our latest free report!
Further Motley Fool investment opportunities:
The article This Week's Falling Knife: Balfour Beatty originally appeared on Fool.com.Sam Robson does not own shares in any of the companies mentioned. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.