Sell off planned at Bilfinger
By Sandy Guthrie08 May 2014
A major restructuring of German engineering and services group Bilfinger will see a significant part of its civil engineering business being sold off.
Bilfinger said it was intensifying its focus on its core business – engineering and services for industrial facilities, power plants and real estate. The company plans to part with significant portions of its civil engineering business, with units from the construction business segment put up for sale. In 2013, the segment generated volume of approximately €800 million.
The sale will not include its offshore wind business, the construction of power grids and units specialising in steel construction, with a volume of about €200 million in the past year. The offshore wind and power grid businesses, which in 2013 together generated an output volume of €140 million, will be brought together in a new division and allocated to the power business segment.
Bilfinger said it still considered its building construction activities in Germany as part of its core business, and an integral part of the group's real-estate competence in the building and facility business segment.
CEO Roland Koch said, “We are and will remain one of Germany's largest building construction companies, generating a volume of over €700 million annually in the design and construction of buildings – clearly putting us among the most profitable companies in its industry. This unit is irrevocably linked to our real-estate services.”
It plans to report on the business activities that are to be sold as “discontinued operations” beginning in the second quarter of 2014. The company expects that the selling process can be completed within a year.
Bilfinger claimed to have started 2014 with a stable first quarter. Output volume and adjusted EBITA (earnings before interest taxes and amortization) were said to have increased slightly as a result of acquisitions. Orders received and order backlog were at the levels of the previous year.
Koch warned that “in our business, the first quarter is of only limited relevance for the development of the full year. Output volume is normally lower than in the following quarters, which also has an impact on earnings generated in the first quarter.”
Bilfinger’s civil engineering business was reduced from €4.2 billion in 2008 to €1.7 billion in 2010, and approximately €1 billion in 2013.
Koch said, “Even though innumerable successful projects throughout the world established the strong reputation of our company, this focus was necessary in order to improve continuously the risk profile of the group.
“In civil engineering on an international scale, a certain critical mass is a decisive success factor. Today we must acknowledge that the consistent application of our risk criteria threatens to reduce the business to a size that, in the long term, could jeopardize its competitiveness.”
Bilfinger divested itself of its concessions portfolio last year.