Mixed fortunes in Europe

12 May 2011

A snapshot of first quarter results from contractors Bilfinger Berger, Astaldi and Peab reveals mixed fortunes, but a generally confident outlook for construction in Europe for 2011.

In Sweden, contractor Peab reported a strong recovery in construction in Nordic markets, and said it expected the Swedish civil engineering sector to grow by +3% in 2011, mainly due to greater public investments in roads and railways but also through private investments related to energy supply.

Similarly in Finland, the construction and civil engineering markets are expected to grow by around +3% this year, with even stronger growth expected in Norway.

Peab's upbeat outlook for the Nordic markets was accompanied by positive first quarter revenues. Net sales increased to SEK 8,7 billion (€ 969 million), compared to SEK 7,1 billion (€ 791 million) during the first quarter of 2010, but net profit for the period slipped to SEK 74 million (€ 8,2 million), compared to SEK 104 million (€ 11,6 million) for the first three months of 2010.

Peab said its orders received during the first quarter increased by +20% to SEK 10,3 billion (€ 1,1 billion), while its construction and civil engineering order backlog grew by +11% to SEK 29,7 billion (€ 3,3 billion).

UK-based contractor Bilfinger Berger, meanwhile, said it expected a stable year in terms of output volume, after reporting +4% year-on-year increase for the first quarter to € 1,8 billion.

The company's net profit for the first three months of the year jumped +331% to € 207 million, boosted by gains from last year's sale of Valemus Australia to Lend Lease, which was completed in March. Bilfinger said it expected the cash inflow from its sale of Valemus to continue to boost net profit throughout the year.

However, due to the downsizing of its construction business, Bilfinger's orders received and order backlog decreased slightly to € 1,9 million and € 8,6 million respectively in the first quarter. Indeed, the company forecast improving results in all its business segments, with the exception of the construction business, which it said would see a fall in output volume

The construction unit's activities are focused in Europe, and Bilfinger forecast austerity measures to lead to weaker demand for civil engineering in the large German market, while stable demand was expected in the rest of Europe.

In Italy, meanwhile, contractor Astaldi reported increased construction activity, particularly transportation infrastructure.

Astaldi reported a +45% increase in first quarter operating revenues in Italy to € 228 million, while operating revenues in the rest of the world increased +55% to € 261 million during the three-month period.

Construction of the new Milan underground helped boost revenues, while other major European projects such as the Milas-Bodrum Airport in Turkey and a railway project in Romania also fuelled the results.

But Astaldi is keen to diversify, and said that while construction would continue to represent its core business, it was placing greater emphasis on concessions projects in Italy and abroad in 2011.

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