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Five FTSE construction firms issue profit warnings in Q3 2014

There were nine profit warnings from six construction companies in the first three quarters of 2014, more than there were in the whole of 2013.

Last year there were seven profit warnings from five companies, according to new research from Ernst & Young.

Three of the profit warnings in 2014 so far have been from Balfour Beatty in 2014 – the first coming in May, followed by a profit warning in its M&E division in July and finally a £75m warning issued in September.

Other major companies that have issued profit warnings include T Clarke, which said it expected a “sizeable loss” in October, and Morgan Sindall, which saw its construction margins fall to 0.5 per cent in November.

Engineering firm Hyder Consulting also issued a profit warning in February this year, after delayed starts to its overseas contracts.

More than a fifth (21 per cent) of FTSE construction companies had issued profit warnings in the year to date – ahead of the market average of 14 per cent.

In the last quarter, four FTSE construction and materials companies issued a profit warning, representing 12 per cent of the total – only food and drug retailers (15 per cent) and gas, water and utilities (13 per cent) had proportionally more during Q3 2014.

In total, the percentage of all FTSE companies in the market issuing profit warnings increased from 14.5 per cent in 2013 to 15 per cent in the 12 months to the end of Q3 2014.

The Ernst & Young research highlighted that “the majority of profit warnings in 2014 relate to contract issues including cost overruns, adjustments or delays”.

 

Readers' comments (1)

  • StreetwiseSubbie

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