There has been further deterioration at a large civil engineering project in Germany, which is one of a handful of loss-making projects reported by the company last year. The problems are due to adverse ground conditions and the technical solutions that have been implemented to keep the project on schedule have proved more expensive than anticipated.
There are also unexpected problems at a mid-sized UK civil engineering project, which was bid for in 2012. This is due to a combination of adverse ground conditions and bad weather.
Nico de Vries, chairman of the Executive Board, said: “I am extremely disappointed to have to announce these negative developments. Our underlying strategy is the right one, but our delivery has not been good enough. It is fully clear to the Executive Board that BAM must act urgently and decisively to get all parts of the Group to contribute positively to our results.”
BAM is now intensifying, accelerating and enlarging its programmes to improve the group’s operational and financial performance. It will also implement a new cost reduction programme, which is intended to deliver annual cost savings of at least €100m by the end of 2015. Some of these savings will arise from a streamlining of the structure of the operating companies.
The group will also implement a programme to improve working capital by at least €300m, to be achieved by the end of 2015. This will involve scaling up a recently completed successful pilot scheme in the Netherlands to cover all group companies.
The property divestment programme will continue as before, with an ambition of realising at least €100m per annum. BAM will also investigate all other opportunities to further strengthen its financial position, including divesting other assets.