Dutch parent of Bam Construct and Bam Nuttall has reported heavy losses in its civil engineering and construction arms but has broken even thanks to gains in its property and investments businesses.
Turnover in the first half of the year increased by 5 per cent to €3.38bn (£2.7bn), from €3.23bn (£2.58bn) in the first half of 2013, due to the sale of commercial properties.
However, it reported a zero per cent margin and made no profits from its operations.
For the full year, it said it expected profit before tax and restructuring costs of €20m (£15.9m) – less than half its 2013 pre-tax profits of €49.8m (£39.8m) – but warned “there will be restructuring charges in the second half of 2014 and in 2015”.
Royal Bam chairman Nico de Vries, 63, will retire from the board from 1 October after 38 years with the group to allow his successor Rob van Wingerden to take responsibility for improving performance.
In civil engineering, turnover grew 4 per cent to £1.86bn in the first half of 2014, from £1.79bn in the same period in 2013.
However, it made a loss of €19.2m (£15.3m), compared with profits of £9.9m last year.
Royal Bam confirmed losses of €68m (£54.4m) on two civil engineering projects, in Germany and the UK, which it had warned the market about in July.
The losses were slightly lower than the €75m (£59.3m) expected last month and Mr de Vries described the projects as “stable”.
The construction and mechanical and electrical services business made a loss of €6.8m (£5.4m) in the first six months of the year, following on from a loss of €1.1m (£0.8m) last year.
Turnover also fell by 16 per cent to €1.36bn from €1.42bn last year. Royal Bam said its lower turnover and results were due to Dutch deals that were signed “when market conditions were at their worst”.
In the UK, the group made a loss of €3.8m (£3m) on a turnover of €927m (£741m), compared with profits of €9.1m (£7.3m) on a turnover of €861m (£688m) in the first half of 2013.
Royal Bam said the losses in the UK related mainly to its problem civil engineering job, which it bid in 2012.
The company had said in July that the project had suffered due to bad weather and adverse ground conditions.
In 2013, Bam Nuttall had turnover of £756m and posted pre-tax profits of £10.7m.
Mr de Vries said: “The results for the first half of 2014 show a mixed performance. In our two operational sectors, we continue to work through orders booked under very difficult market conditions - especially in the Netherlands.
“The two civil engineering projects with major losses which we announced on 7 July are stable; other projects delivered strong results, supporting the overall sector result for the first half.”
Losses in the civil engineering and construction businesses were offset by profits from the group’s property and PPP investment arms.
Royal Bam reported €14.7m (£11.7m) of profits from its property business and €13.7m (£10.9m) of profits from its PPP arm.
At 30 June 2014, the group’s order book stood at £10.7bn, up from £10.6bn at the 2013 half-year which it said was due to growth in construction and M&E services, civil engineering and PPP.
Royal Bam said the preparation phase for its €100mm cost reduction and restructuring programme, and its €300m working capital improvement programme, was nearly complete.
Mr de Vries said: “I confirm the scope of the improvement actions we announced on 7 July. Some initiatives in cost reduction and working capital management are underway; others are still in the preparation phase, which will be completed early in October.”
He added: “I have taken the decision to retire from the executive board with effect from 1 October. This will allow my successor Rob van Wingerden to take complete responsibility for the actions to improve performance and lead the next phase in Bam’s development.
“I thank all my colleagues at Bam for their support and contributions in the past four years.”
Mr van Wingerden joined Royal Bam in 1988 and has worked in various management roles and has been a member of the executive board of the group since 2008.