Dutch results hold back Bam

Dutch contractor Bam has said it is making good progress towards its full-year outlook in a trading update for the first nine months of the year.

It said, however, construction and M&E (mechanical and electrical) services had been held back by weak results in its Dutch activities.

Civil engineering, it reported, had seen another quarter of restored profitability, while good property results had been driven by sales of non-residential property.

Public-private partnerships (PPP) recorded a strong performance thanks to transfers to joint venture and tender wins.

Revenue for the first nine months of 2015 was €5.36 billion, compared to €5.16 for the same period a year ago.

In the construction and M&E services division, revenue rose by €214 million, mainly in the UK as a result of the stronger UK pound. The overall loss for the sector was because of negative results in the Netherlands on some older non-residential projects as well as under recovery of overheads.

BAM said it would implement further measures to improve the performance of its Dutch construction activities. The order book was down by 4% to €4.3 billion.

Revenue in civil engineering increased by €88 million. This was driven by Bam International, the UK – where the currency had an effect – and Ireland. The Netherlands was said to be down as a result of the focus on higher margin projects in competitive markets. The sector result improved to €42 million – compared to a loss of €6 million in the first nine months of 2014 – driven by the Netherlands, BAM International and Ireland.

The order book grew by 10% to €5.7 billion, mainly because of intake of some larger projects in the Netherlands and Ireland.

At BAM International the order book was lower, which it said reflected developments in the oil and gas industry.

The result in PPPs for the first nine months of 2015 was driven by the transfer of two projects to a joint venture with non-profit pension fund administrator PGGM, compared to six projects transferred in the same period in 2014. So far in 2015, the tender hit rate has been 60% with three new project wins in Ireland and the Netherlands. Bam said the bid pipeline remained healthy.

Back in Shape

CEO Rob van Wingerden said that Bam had come a long way in the year since the start of its Back in Shape programme.

“We have realigned much of the organisation,” he said, “redesigned many key processes, and reinvigorated our corporate culture. We are driving down our costs and working capital.

“The better risk profile of our order intake supports the ambition to restore profitability.”

He said Dutch Construction activities were still unsatisfactory because of working through the older order backlog and under recovery of overheads.

“We are currently developing our strategy for 2016 to 2020, which we will communicate in February 2016. This will build on the good work of Back in Shape to improve further our performance and to address underperforming activities.

“With three quarters of the year behind us, we are on track to deliver cost savings of at least €100 million and a reduction in trade working capital of at least €300 million by year-end 2015.”

He said there would be a restructuring charge for Back in Shape of approximately €30 million in 2015.

“We expect the total group adjusted result before tax for 2015 to be higher than the level of 2014 (€62.2 million), with a larger contribution coming from the operational sectors.”