Results for the half-year to June 28 2013 show the construction division slumped to a £41m loss on turnover of £3,151m from a £59m operating profit last time.
Balfour issued a £50m profit warning in April after unearthing problem contracts at its UK regional construction business.
The UK construction woes were a major contributor to group pre-tax profits falling 70% to £45m from £150m last time as revenue dipped 3% to £4,967m.
Balfour has taken swift action to turn the business around and is confident the measures are now working.
The company is exiting from its mainland Europe rail business and cutting costs in the struggling Australian professional services market.
It also announced the sale last week of the UK FM business Workplace for £190m.
In the UK construction division, Balfour said: “We commenced a comprehensive piece of work to evaluate the regional business in its entirety as a result of which we took the decision to close those regional delivery units with weak future prospects.
“In addition, we focussed the management team on an action plan that would deliver a consistently high standard in disciplines such as planning, cost estimating and commercial governance going forward.
“With new leadership in place in the UK and barring unforeseen circumstances, the construction business is equipped and motivated to achieve a profit level in the second half similar to that achieved in the second half of 2012.”
The company also revealed that it had spent £17m restructuring its UK operations and £20m in redundancy payments across the group so far this year plus £8m on advice from external consultants.
Andrew McNaughton, Chief Executive Officer, said: “Our markets continue to be challenging, but our actions are delivering the intended results.
“With sustained focus on operational delivery, we expect to achieve a performance in our continuing operations that is in line with the current market expectations for 2013.
“In the longer term, our goal is to capitalise on the growth in global infrastructure from an international footprint of local businesses.
“The benefits from this focus combined with the impending recovery in some of our mature markets position us well for the future.”
