Dutch contracting giant keeping an eye on Brexit as UK profit falls

Bam plant content

Royal Bam鈥檚 UK arm posted a 38% fall in pre-tax profit for the first six months of 2019, despite delivering what the Dutch contracting giant called a 鈥渞obust performance鈥�.

The group said its UK construction and property arm made a 鈥渟olid contribution鈥� while the country鈥檚 civil engineering operation saw a slow start to the year.

Bam鈥檚 UK business delivered total revenue of 鈧�883m (拢807m), down 3% and pre-tax profit of 鈧�15.7m (拢14m), down 38%.

The group said uncertainty was continuing around Brexit and that while civil engineering remained relatively stable it was seeing some some slowdown in construction and property.

The UK business recently won the 拢65m job to redevelop the art, architecture and design school in east London known as the Cass.

But its role in the 拢1bn Silvertown Tunnel scheme as part of the Transport for London-appointed Riverlink consortium was thrown into doubt after reserve bidder Silver Thames Connect (STC) 鈥� a joint venture which includes German construction company Hochtief and Spanish engineers Dragados and Iridium Concesiones de Infraestructuras 鈥� issued a legal challenge.

Royal Bam said cost overruns totalling 鈧�94m (拢86m) on projects in Germany, the Netherlands, Ireland and the firm鈥檚 international operation resulted in a total group pre-tax loss for the six months to the end of June 2019 of 鈧�27.2m (拢25m) on turnover of 鈧�3.5bn (拢3.2bn), up 7%.

Bam said it was in talks with clients to recover the costs, but it could not say how much it might be able to claw back, or when.

The group said it expected to deliver a 1% pre-tax margin for 2019, half of 2018鈥檚 figure, on turnover which it expected to be 鈥渟lightly higher鈥� than last year鈥檚 鈧�7.2bn (拢6.6bn), when it posted a pre-tax profit of 鈧�153m (拢140m).

Bam said it hoped to be able to deliver a margin of between 2% and 4% in 2020.

Rob van Wingerden, Royal Bam鈥檚 chief executive, said he 鈥渞egretted鈥� the negative impact of the extra costs on projects in Germany and across its international business.

The Bam boss also said the firm was 鈥渕onitoring the situation around Brexit carefully鈥�.

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