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Bam Construct profits fall by a third

Bam Construct saw its construction operating margin dip to 1.2 per cent in 2011 as profits dropped by a third.

The construction business of the Royal Bam group reported £11.5m of pre-tax profits for the year ending 31 December 2011, compared with £17.1m the year before.
Revenue fell by 9 per cent, from £1.04bn to £945.9m.

Graham Cash, chief executive of BAM Construct UK, said the company has demonstrated “great flexibility and versatility in 2011”, completing projects that ranged from £1m to £132m in value.

He said: “We remain dominant in the education and health care sectors but also work on leisure and on renovating and refurbishing buildings that are part of Britain’s heritage.”

Facilities management, design and services engineering businesses did well, he said.

He added: “Meanwhile, our property arm bucked the market by achieving a number of sales and lettings at full value.

“We are not complacent: we expect market conditions to remain demanding in the medium term.

“However, I believe that the BAM Construct UK has the ambition to continue to perform well and to be distinctive for the way we work with our customers to deliver their aspirations.”

Bam Nuttall reported a record turnover of £809m for 2011, but price competition put pressure on margins.  The engineering arm of Royal Bam said revenue increased 16.6 per cent, while profit before tax was down 9.5 per cent, from £15.7m to £14.3m.  Operating margin dipped from 2.2 per cent to 1.8 per cent.

The private public partnership division saw £3.1m of profit on £55.7m turnover, down from £3.9m on £60.9m sales, while work in hand halved from £839.9m to £483.6m.

The combined turnover for the companies amounted to £1.8bn, with a combined pre-tax profit of £28.9 million and a margin of 1.6 per cent. The combined forward order book is £2.8m.

Martin Rogers, member of the executive board of Royal Bam Group, said: “The steady performance is the result of a heightened focus on prudently managing the difficulties inherent in the UK market.

“The companies have resisted the temptation to bid at unsustainable prices, have concentrated on maintaining standards and additional management and supervision of the supply chain.”

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