Old projects affect Bam

The construction and M&E (mechanical and electrical) sectors of Dutch contractor Bam were hit by subcontractor bankruptcies at older projects, according to figures for the first quarter of 2016.

Revenue for the quarter was down slightly on the same period a year earlier at €1,542 million compared to €1,638 million.

Bam said that construction and M&E services revenue was flat, and said project postponements in Germany were offset by higher activities in the Netherlands and the UK. The figures were lower because of losses relating to subcontractor bankruptcies at some older projects in Germany and Belgium, it said.

Dutch activities in this sector were profitable in the quarter, said Bam, which added that restructuring plans for the further integration of Dutch activities would be finalised in the second quarter.

The order book fell slightly reflecting the lower Pound Stirling, despite strong order intake in Germany, it said.

A positive result in civil engineering revenue was said to have been driven by an improved contribution from the UK and Germany offset by the seasonal pattern in the Netherlands.

Margins at BAM International were lower as a result of shrinking activities in oil and gas. The civil engineering order book grew in Germany but reduced overall mainly because of the cancellation of a Belgian PPP (public-private partnership) project, low order intake at BAM International and the weaker Pound.

Rob van Wingerden, CEO of Royal BAM Group, said, “In the first quarter of 2016, which is a year of reinforcement for BAM, we moved in the right direction largely according to our expectations.

“The result contained a strong performance in the investment sectors and mixed results for the operational sectors. BAM also benefited from the release of a provision for the divestment of the Van Oord stake in 2011.”

He said the company was “confident but careful” about the outlook for 2016, given the mixed market conditions.

“We announced our strategy Building the Present, Creating the Future in February, and the implementation is in full progress. We expect the adjusted result before tax for the full year will be higher than the level of 2015.”

He added that Bam expected a restructuring charge of approximately €20 million, mainly related to the company’s Dutch activities.