Balfour Beatty to close Doncaster unit in UK overhaul

The combination of a weak British construction sector, a lack of major infrastructure projects and poor performance mean the group is expecting a 20 per cent fall in revenue in the UK construction division in 2013.

The three locations to be closed are in Dartford, southeast of London, Rochdale in northwest England and Doncaster in the north. Collectively they account for around eight per cent of the UK regional business, which generated £1.5bn in revenue in 2012, of a group total of £9.5bn.

Balfour Beatty said each of the three offices locations employs between 50 and 90 people. It said it is undertaking consultation processes at all three but said it is “too early to confirm the total number of redundancies” should it go ahead with the proposals.

The firm also said it is addressing specific operational issues across a handful of projects in southwest England, without giving further detail.

Nick Pollard, who has held senior roles at Network Rail, operator of the UK rail network, and has worked as an adviser to the British government, will run the UK division from June 17.

Shares in Balfour Beatty plunged 11 per cent in April when it issued its second profit warning in six months, prompting chief executive Andrew Mcnaughton to take control of the UK construction arm.

The firm has undergone a review of its businesses since then, exiting mainland Europe, looking at a possible sale of its UK facilities management arm and restructuring its UK regional construction units.

Analyst Andy Brown at brokerage Panmure Gordon said it was positive that Mcnaughton could now get back to running the group, having appointed Pollard, but added that the latter must focus on improving his unit’s efficiency in the short term.

“Part of the problem they’ve got ... is that the work isn’t out there, but that is something they have to deal with ... because this is a cyclical industry,” he said.

Shares in Balfour Beatty were down 0.8 per cent in early trading today.