Colas takes hit in Central Europe

03 September 2010

Better-than-expected sales figures for the French-based Bouygues Group for the first half of 2010 have been tempered by a difficult first half for its Colas road construction subsidiary, which is cutting 2400 jobs in Central Europe.

Colas said the jobs were going because of a -33% drop in revenue in Central Europe. This is especially the case in Croatia, Romania and Slovakia, where the government has decided to shelve the D1 highway contract.

An operating loss at Colas for the first half of this year of € -47 million, contrasted with € +75 million profit for the same period of 2009. This was attributed to the further decline in Central Europe, where operating profits totalled € -57 million, and harsh competition, especially in mainland France. A lack of major projects - including the abandoning of contracts for the Tram Train in Reunion Island and the Slovakian highway - and the political situation in Madagascar were also cited, as was the poor weather in the first quarter.

The board said that the Colas Group posted consolidated revenue totalling € 5002 billion, compared with € 5116 billion to the end of June 2009. This was a -2,2% decrease, -3,3% with identical exchange rates and scope of business. According to Colas, business in the second quarter of 2010 helped catch up a good part of late first quarter activity, mainly as a result of work postponed through the unfavourable weather conditions.

The board said that after hitting what could be a low point, efforts in each profit centre to adapt to their own market should pave the way to a return to improved profitability in 2011.

Colas parent group Bouygues described its first-half sales of € 14,7 billion as "better than expected". It was down -1% on the first half of 2009 and 2% like-for-like and at constant exchange rates. Operating profit amounted to € 698 million (-10%) and net profit to € 532 million (-3%). Bouygues said the financial structure was very healthy and net debt was in keeping with the improvement seen at the end of December 2009.

It said Bouygues Construction had seen a satisfactory first half, with sales in line with the full-year target. This amounted to € 4530 million - a drop of -5% (-6% in France and -3% on international markets). The operating margin was virtually stable at 3,2% , and the company said that low interest rates continued to impact on net profit, down -26% at € 89 million.

It added that in the first half of 2010, order intakes reached an all-time high of €6,1 billion - a +38% increase on the same period last year. This was +12% in France and +73% internationally.

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