Balfour Beatty, the UK's largest construction company, dropped the most in 14 years after saying the outlook for profit margins has faded because of a lack of building work in Britain.
Balfour's order book decreased by 4 per cent to £14.4 billion pounds in the three months through September, weighed down by a deteriorating UK construction industry, the London-based company said in a statement today.
The stock dropped as much as 16 per cent, its worst intraday tumble since October 1998.
There has been a "real slowing down of deal flow," deputy chief executive officer Andrew McNaughton said in a phone interview.
"The US has not gotten any worse, though we are not seeing a recovery in the way we thought it would."
Chief executive Ian Tyler faces the challenge of defending margins as the number of major building projects that require higher-margin services dry up in the UK and business in the U.S. struggles to recover.
Balfour forecast that profitability will reduce "slightly" as it hasn't been able to negotiate lower prices with suppliers to reflect market conditions.
Balfour was down 15 percent at 259.1 pence as of 9.34am in London, the worst decline among stocks on the FTSE All-Share Index. Carillion Plc, a Wolverhampton, England-based competitor, fell 4.4 per cent.
Bloomberg
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