Qinetiq loses mighty Quinn to Balfour

Chief executive Leo Quinn has handed in his notice at Qinetiq to take the top job at struggling construction firm Balfour Beatty. And such is Quinn's reputation that investors clearly see this as a huge loss for the defence firm whose shares slumped by over 10% to 195p. Balfour, on the other hand, rocketed; Quinn clearly seen as the right man for the job.

Why not? Quinn oversaw a transformation at banknote printer De La Rue before joining Qinetiq in November 2009. Prior to his arrival, Qinetiq shares were trading at about 137p, yet despite a severe global recession and swinging cuts to western defence budgets, the past four years have been a huge success and Qinetiq's share price topped 230p earlier this month.

This year alone, Quinn and his team negotiated the sale of the underperforming US services division and began a £150 million share buyback. This really does look like Qinetiq's loss and Balfour's gain.

"People with Quinn's vision and capabilities are very hard to find," said defence industry expert Howard Wheeldon. "I may sincerely hope that whoever they do eventually find has innovation, research and technology development blood running through the veins not to mention the ability to develop and run agreed strategy, please investors and motivate staff."

Until they find that person, finance director David Mellors will take the helm.

But while Balfour may have struck gold, there's an awful lot to do there, and as we wrote recently, "Balfour Beatty's fifth warning may not be last."

Westhouse Securities appears to agree. "Despite his well-established track record of corporate turnarounds at QinetiQ and De La Rue, we fear that he may not be able to stem the potentially open-ended losses in Balfour Beatty's UK construction division, where costs and supply chain failures appear to be mounting," warns Westhouse Securities analyst Alastair Stewart. "Our view is to sell into any short-term strength."

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.