Dutch parent company of Bam and Bam Nuttall to embark on 拢79m cost cutting drive after issues on jobs in UK and Germany
Royal Bam Group will embark on a 鈧�100m (拢79m) cost cutting drive after being hit by 鈧�75m (拢60m) of losses on problem jobs in the UK and Germany.
Royal Bam, the Dutch parent company of its UK-based divisions Bam and Bam Nuttall, said this week the 鈥渃ost reduction programme鈥� would come from 鈥渟treamlining鈥� the structure of its operating companies
The news came as Balfour Beatty issued another 拢35m profit warning last week - its fourth since November 2012 - due to problems in its M&E business, which it will now scale back by around a quarter.
Royal Bam said this week that in the UK 鈥渦nexpected problems at a mid-sized civil engineering project鈥�, bid in 2012, caused by 鈥渁 combination of adverse ground conditions and bad weather鈥�, contributed to the project losses.
A spokesperson for Royal Bam told 黑洞社区 that the firm 鈥渋ntroduced several procedures to review bids鈥� in 2013 to weed out those priced 鈥渢oo competitively鈥�, adding: 鈥淚f these procedures had been in place in 2012 we wouldn鈥檛 have taken on this [problem] project.鈥�
In Germany 鈥渄eterioration of a large civil engineering project鈥�, also due to 鈥渁dverse ground conditions鈥�, was also 鈥渙ne of the handful of loss-making projects鈥�, Royal Bam said.
The firm said it will consolidate its operating structure, sell more of its properties and 鈥渋nvestigate all other opportunities to further strengthen its financial position, including divesting other assets.鈥�
Nico de Vries, chairman of the executive board, said: 鈥淚 am extremely disappointed to have to announce these negative developments.
鈥淥ur underlying strategy is the right one, but our delivery has not been good enough. It is fully clear to the executive board that Bam must act urgently and decisively to get all parts of the group to contribute positively to our results.鈥�
Kevin Cammack, an analyst at Cenkos Securities, said he expected more contractors would 鈥渉ave to deal with the consequence of bidding at zero or negative margins鈥�.
He said bidding on projects 鈥渋n the last 12 to 18 months鈥� could pose problems: 鈥淵ou have to be fearful that firms were taking on very little margin from the outset when they were filling their order books a year ago鈥�.
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