The company’s adjusted pre-tax result for the first half of the year was €57.8m (£52m). The total order book rose by €0.2bn in the first half of 2018, mainly due to the award of the Afsluitdijk project in the Netherlands. In the first half of 2018, the average margin on the new order intake was well within the strategic target margin of 2% to 4%.
Dutch residential property development has driven an improvement in margin. In civil engineering, the previously reported cost overrun on the Dutch IJmuiden sea lock project was largely offset by improved results outside the Netherlands.
Royal BAM Group CEO Rob van Wingerden said: "Despite the previously announced €30 million additional cost overrun at sea lock IJmuiden, our first half result was above last year’s. Most of our businesses showed improved results supported by some settlements.” He added that the cash outflow for the first half of 2018 was higher than in the first half of 2017 mainly due to IJmuiden and the absence of large non-residential property divestments but that the financial position remains solid.
“Half-way through our 5-year strategic period we are not yet where we want to be, although we have made good progress in many areas,” he said. “As we need to further improve our performance and predictability, we will be even more selective in tendering for large projects. We are discussing with our public sector clients on ways to improve the risk and reward balance and contract conditions. We are also revitalising our working capital programme. Overall, we are confident that more rigorous strategy execution will enable us to deliver on our 2020 targets supported by our digital and sustainability agenda.”
Conditions in most of markets are favourable, although challenges like supply chain pressure remain. The company has confirmed its outlook for full year 2018 of an adjusted result before tax margin of around 2%.
In the Netherlands, there is strong demand for new-build homes but supply remains constrained due to a lack of permitted locations. Non-residential construction and property markets are still improving. Civil engineering remains challenging for regional and larger multidisciplinary projects.
In the UK, non-residential construction and civil engineering markets remained stable. Uncertainty regarding Brexit unchanged.
The construction and civil engineering markets in Germany are stable and competitive, said BAM, with promising opportunities for public infrastructure/road projects.
Irish markets remain positive especially in construction and there are opportunities in housing.
Revenue was €3,237m, up by €125 million (4%) compared to the first half of 2017, with the rise driven by civil engineering. The adjusted result before tax for the first half of 2018 rose to €57.8 million, giving a margin of 1.8% (first half of 2017: 1.3%). This was driven by construction and property where most businesses reported improved results. The margin at Civil engineering was held back by the Netherlands, partly offset by improved results at all other activities.
The overall sector order book at the end of June 2018 was stable at €6.8 billion. The UK order book grew, supported by former Carillion projects for existing clients and the Atlantic Square office development in Glasgow.
In Civil engineering, revenue grew by 9% overall, driven by the Netherlands, the UK and Germany. There was a loss of €27.8 million in the Netherlands due to the €30.2 million cost overrun at the sea lock IJmuiden and challenging conditions in regional infrastructure markets. Excluding IJmuiden, the sector delivered an adjusted pre-tax margin of 1.5%. The first caisson of the sea lock IJmuiden is currently in the process of being immersed into its final position: the second will be finalised over the summer of 2019.
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