The Royal BAM Group's UK construction operations have been hit a 40% fall in pre-tax profit from £81m to £49m for the year ending 31 December 2009.
The combined turnover for BAM UK, which comprises BAM Construction, BAM Nuttall, and BAM PPP, was up marginally at £1.8bn (2008: £1.75bn).
The order book for the group stood at £2.74bn at the end of 2009, though it has now passed the £3bn mark with contract wins during 2010.
The chief reason for the profit fall was a decline in margin at BAM Construction. Turnover increased £1.13bn (2008: £1.06bn) but profit was down to £29.9m (2008: £52.3m), with operating margin shrinking from 4.94% to 2.63%.
BAM Construction also had to make a cost provision of £10.3m (2008: £7m) against the carrying value of its current property developments in the UK.
Graham Cash, chief executive, BAM Construction UK, said: “Over the past year we have demonstrated the ability and flexibility to withstand the very difficult market conditions. Although we have made another prudent cost provision in our property portfolio, this has been compensated for by a strong position in our construction turnover.
“No one expects 2011 to be an easy year. BAM Construction UK’s strategy will be to continue to enhance our expertise and delivery, to perform well on all our frameworks and to encourage our private sector clients back to the market.’
BAM Nuttall experienced a marginal fall in turnover to £643.7m (2008: £650m), while its profit before tax dropped 16% from £28.2m to £24.1m. Operating margin shrank from 4.3% to 3.7%.
The civil engineering firm's order book stood at £715m at 31 December, and it has received “a number of significant awards in January and February 2010”.
Steve Fox, chief executive of BAM Nuttall, said: “With public spending cuts on the horizon, BAM Nuttall continues to focus on projects and sectors where there is greater security of funding.
“This can be seen in the substantial contracts that have already been secured in the waste, energy and rail sectors.”
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