Bouygues profit warning over biomass plant problems

Grant Prior 8 years ago
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Bouygues has cut its group construction profit forecasts by £123m due to ongoing problems with two biomass power plants in the UK and a data centre in Ireland.

The group confirmed in a financial update that the “situation worsened during third-quarter 2018.” in the Bouygues Energies & Services division.

Bouygues said: “The two biomass power plants in the United Kingdom experienced difficulties during the recent testing and commissioning phases, related mainly to malfunctions on certain equipment, leading to delays, additional costs and compensation paid to customers.

“The data centre in Ireland, which was terminated by the client, has entered a new phase of litigation following the request by the client for payment of the maximum amount of compensation.

“As a result, Bouygues Construction’s current operating profit should decrease by around €140m in the first nine months of 2018 versus the first nine months of 2017.”

One of the projects is a flagship gasification facility in Hoddesdon, Hertfordshire, which is running more than a year behind schedule. The £60m advanced conversion treatment plant was expected to become operational in early 2017.

The group also highlighted problems in France for Colas which will hit profits by a further £22m.

Bouygues had forecast an increase in profit and margins at the construction division but these will now decline on last year.

It added: “In contrast, the building and civil works activities of Bouygues Construction and Roads Mainland France at Colas will post good results in the first nine months of 2018.

“The Group is therefore confident in the strengths and the good positioning of its construction businesses in a market exhibiting strong worldwide demand over the long term.”

Bouygues UK recently revealed that it returned to profit in 2017.

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