BALFOUR BEATTY PLC 
LONDON (Reuters) - Problematic contracts in Britain, the Middle East and the United States will cost Balfour Beatty (>> Balfour Beatty plc) up to 150 million pounds ($230 million) this year, the infrastructure company said, setting it on course for another annual loss.
Britain's Balfour is counting the cost of wafer-thin margins it accepted to win construction business during the financial crisis and which have led to a series of profit warnings over the past two years. It scrapped its dividend in March after suffering a 2014 loss and warned of difficult times ahead.
Under new CEO Leo Quinn, the company said on Thursday it had "continued to identify legacy issues" which would reduce 2015 pre-tax profit by between 120 million and 150 million pounds.
With the market consensus for 2015 pre-tax profit at 77 million pounds before the latest warning, Balfour looks certain to remain in the red. Shares in the group slumped 10 percent at the open and were down 2.8 percent at 0835 GMT.
Quinn was poached to run Balfour last year after he transformed defence company Qinetiq (>> QinetiQ Group plc) during a five-year reign. He took over in January and has been reviewing the firm's contracts around the world.
"Based on the word 'continuing' we suspect more is to come from these three regions," said Westhouse analyst Alastair Stewart, who has a "Sell" rating on the stock.
"It all looks very negative and could run and run."
Analysts said they were not surprised by the timing of the new warning and said it would take time to sift through the contracts.
As well as scrapping its final dividend, Balfour, a 106-year-old business, has cancelled a share buyback and reorganised its pension fund payments to strengthen its balance sheet.
Balfour employs 36,000 people to work on projects such as transforming the London Olympic stadium and major building sites in the United States. Its shares are down 30 percent since a peak in March 2014.
"The issues we are working through are as I set out in March and legacy challenges remain," Quinn said in a statement.
"However, we are making encouraging progress on the group's transformation."
Balfour said cost cuts meant net cash was set to exceed 200 million pounds at the half year end in June, substantially better than last year.
The company reports half year results in August when it is expected to give further details of the contractual problems that prompted the latest profit warning.
(Editing by Keith Weir)
By Kate Holton
