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Royal Bam hit by Q1 loss as problem contracts bite

Legacy problem contracts in its operational business and high overheads in the Netherlands have contributed to Royal Bam’s €21.1m (£15.2m) pre-tax loss for the first quarter of 2015.

The Dutch engineering giant said that €7m (£5m) of its losses were a result of restructuring costs and impairments, giving an adjusted pre-tax loss of €14.1m (£10.1m).

First quarter revenue was up from €1.57bn (£1.13bn) to €1.64bn (£1.18bn)

The results represent a decline from the same period last year, when the group made a pre-tax profit of €4.6m (£3.3m), adjusted to €5.2m (£3.7m).

Over the full year in 2014, Royal Bam made a pre-tax loss of €122.4m (£88.1m) after incurring exceptional losses on problem jobs in the UK and Germany. Its adjusted results showed a profit of €62.2m (£44.8m) for the year.

In a trading update this morning, the group said it expected adjusted pre-tax profit for 2015 to outstrip last year, as its operational businesses recovered.

It also said it was “making good progress” on its ‘Back in Shape’ programme, which aims to take €100m (£72m) of costs out of the business. The programme is expected to cost the group €30m (£21.6m) this year.

Group chief executive Rob van Wingerden said: “As expected, the adjusted result was down mainly due to the absence of book profits at the investment sectors.

“The performance of the operational sectors this quarter was at the low end of our expectations due to ongoing challenges to complete some older projects and still too high  overhead cost base, especially in the Netherlands.

“Looking ahead, I remain confident but cautious. As I said, there are ongoing challenges as we work through the backlog of older projects.

“The market environment is mixed but generally more positive than a year ago, which is reflected in the growth and improving quality of our order book.”

Earlier this month, UK construction subsidiary Bam Construct revealed a 39 per cent drop in its profit line, from £10.9m in 2013 to £6.6m in 2014.

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