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Balfour Beatty’s share price has lost 23% over the past 12 months, and the UK’s struggling construction sector precipitated two profit warnings from the company. The share price hasn’t fully recovered to the level it was at before the second profit warning in April, but it has managed to pull back most of the losses. Last week, Balfour Beatty sold off its 60% stake in Exeter International Airport, having purchased a share in the transport hub in 2007, just when the UK economy was at its peak. The number of people using the airport has fallen dramatically in the past few years, and the firm’s decision to sell its stake is a part of strategy to raise cash and dispose of non-core assets.
When a company issues a number of profit warnings, it can often have difficulty obtaining financing from banks. By selling off assets and raisings funds, Balfour Beatty is therefore reducing its dependency on external financing. The share price has been in a clear downward trend over the past year, but we may now see some bargain hunters enter the market.