Bouygues issues profit warning

Projects at Bouygues’s Energies & Services division, as well as Colas, have hit the company’s profits.

Bouygues Group said the “current operating profit and the current operating margin at the construction businesses are now expected to decline in 2018 versus 2017 (by a few dozen basis points for the current operating margin), versus the previous forecast of an improvement”.

The firm explained that in its Energies & Services division, two biomass power plants in the UK “experienced difficulties” during recent testing, while the data centre in Ireland has “entered a new phase of litigation”.

It added: “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.”

At Colas, the firm said its rail operations in France are facing “a tough situation” that worsened during the second and third quarters of 2018, mainly associated with strikes that impacted both rail works and freight business.

It said Colas’s current operating profit is expected to decline by “around €25m in the first nine months of 2018 versus the first nine months of 2017”.

However, Bouygues added that 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.”

Colas is among the bidders for the first Welsh mutual investment model (MIM) project, the A465.