Royal Bam’s profit halves after problem jobs
21 Feb 2020 By David Price
Pre-tax profit at Royal Bam Group halved in 2019 because it lost €94m (£77m) on problem jobs in Germany and one project in the Middle East.
The Dutch-based contractor's group pre-tax profit was €74.1m (£61m), down from €153.2m (£126m), according to its results for 2019 released this morning. Investors were warned in July that the company’s profit for the year ending 31 December 2019 would be significantly lower than in 2018 because of the problem projects. Revenue for the group was flat at €7.21bn (£5.93bn).
Results for its UK operations were mixed. Bam Construct increased its pre-tax margin to 3.4 per cent in 2019, up from 3 per cent the previous year. This came about as pre-tax profit increased almost €4m (£3.3m) to €35.7m (£29.4m) while revenue was down slightly from €1.07bn (£880m) to €1.06bn (£870m). The UK market was rated as “supportive” despite the Brexit uncertainty. There was still weakness in the commercial sector, however, with some clients reluctant to push ahead with projects. Orders dropped in 2019 and competition for work increased, but the group said its involvement in large frameworks would help support the business.
The pre-tax margin for the group's civil engineering business Bam Nuttall fell to 2.6 per cent in 2019 compared to 3.2 per cent in 2018. This was due to a €4m (£3.3m) reduction in profit, from €27m (£22m) in 2018, to €23m (£19m) in its latest results. Revenue at the civils firm rose to €876m (£721m) from €843m (£693m). Performance was better in the second half of the year than the first, according to the group. The impact of Brexit was still uncertain, Bam said, but the government’s support for infrastructure investment, including the go-ahead for HS2, was highlighted as positives for the business.
Earlier this week, Royal Bam’s chief executive Rob van Wingerden announce he would leave the business in April after almost six years in charge. Former Kier CEO Paul Sheffield has been drafted in to support the executive team while a search for van Wingerden’s successor is carried out. Chief financial officer Frans den Houter will serve as interim CEO.