In addition to the effect Covid-19 crisis, BAM's performance has been impacted by continued losses at BAM International, the recent Cologne metro settlement and to a lesser extent by underperformance of the German construction and Dutch civil engineering business, it said.
It expects an adjusted loss before tax of approximately €130m-€150m for the first half year. However, BAM said that it has a strong order book and that the results over the full year are expected to improve compared to the first half of 2020.
The executive committee has decided to start the process of winding down BAM International and retrench in its European home markets.
BAM International will deliver its current order backlog in line with client expectations and contractual obligations, but will not tender for new projects. BAM will retain the necessary staff to complete the current project portfolio.
Currently BAM International has approximately 600 staff on payroll and 12 active projects around the world. BAM International reported a substantial loss in 2019 and expects to report a loss of approximately €60m for the first half of 2020.
Royal BAM Group interim CEO Frans den Houter said: “It is clear that Covid-19 is causing unprecedented challenges for society and our industry. As a first priority, we have taken measures to safeguard a healthy and safe working environment for our people and others involved. Our various markets have been impacted very differently by Covid-19. Some were shut down completely, while others remained open. We lost approximately 35 per cent operational efficiency through the first two months of the crisis and are now getting back to 80 per cent.
“In the first quarter, we reported that the results of Dutch civil engineering and German construction, and of BAM International were disappointing. The combination of Covid-19 and the ongoing underperformance of BAM International in the second quarter, has led to a severe impact on profitability. We will immediately start the process of winding down BAM International, which was already under strategic review. This is harsh for the employees involved, however it is necessary and cannot be delayed.
“It is good to see that other businesses continue to perform satisfactorily under difficult market circumstances, especially our Dutch construction and property activities and BAM PPP. Our order book remains strong. The intended wind down of BAM International and the Cologne metro settlement result in a significant improvement of our risk profile.
“Whilst governments are re-opening their societies and productivity is recovering, our focus remains on mitigating the Covid-19 impact, cash generation, cost reductions and resolving the performance issues. As management we have a full focus on implementing all necessary measures to protect and improve our operations. We continue to accelerate a number of strategic initiatives and to further build on our resilience and strong cash position.”
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