Fundraising

Balfour Beatty CEO resigns after profit warning

Andrew McNaughton, who had only been in the role for just over a year, has left the UK developer with immediate effect.

-

Balfour Beatty, a major player in infrastructure both in its domestic UK market and overseas, has announced the departure of chief executive Andrew McNaughton after just over a year in the job.

The announcement was made at the same time as the release of an interim management statement for the period 1 January 2014 to 5 May 2014 in which pre-tax profits for 2014 were expected to be “significantly lower” than previous expectations in the range of £145 million (€176 million; $256 million) to £160 million.

It said that while most parts of the group were trading in line with expectations, a £30 million shortfall was expected in the firm’s UK construction business. The statement said: “Actions taken in 2013 to improve the operational issues in the UK construction business are taking effect, but at a slower pace than expected.”

Steve Marshall has been handed the task of running the business as executive chairman while a successor for the chief executive role is sought. “Today’s trading update is once again disappointing,” he said in the statement. “The Board is committed to rapidly addressing the root causes.”

McNaughton, who joined Balfour Beatty in 1997, became chief operating officer in 2009, deputy chief executive in July 2012 and chief executive in March 2013. He replaced Ian Tyler at a time when the company faced a battle to revive its fortunes in both the UK and US.

Also today, the firm launched a strategic review which could lead to the sale of Parsons Brinckerhoff, the infrastructure services firm which it acquired for $626 million in 2009, “if it [a sale] provides attractive shareholder value”.

On a positive note, the firm said it was now targeting total public-private partnership disposal gains of £50 million in 2014 – £10 million higher than previously anticipated. It noted a “significant milestone” in early 2014, as it was announced preferred bidder on a project for the first time in Canada – the £196 million BC Children’s and BC Women’s hospital redevelopment project in Vancouver.