nader toegelicht
Royal Bam suffers £133m half-year loss as coronavirus bites
03 Jul 2020 By David Price
Royal Bam Group suffered a €150m (£133m) pre-tax loss in the first half of the year as coronavirus shut down its operations.
The Dutch-based group said that more than €50m (£44m) of its loss was linked to the disruption caused by coronavirus, with the UK one of the worst-affected markets. Interim chief executive Frans den Houter said: “In Ireland, Belgium and a large part of the UK, construction was shut down completely for several weeks. Towards the end of the second quarter, most sites were in the process of reopening.”
The group’s output dropped to around 65 per cent during the first two months of the pandemic. It has now returned to around 80 per cent and den Houter said this should rise in the coming months. “We have learned how to operate in this new reality,” he said.
Royal Bam made the surprise announcement yesterday that it would close its Bam International business. The division had been in a turnaround phase after suffering losses, but workers at Bam International were told on Thursday morning that the business was being wound down. “This is a painful but necessary decision,” den Houter said. “We have concluded the company has not succeeded in turning around and we do not a recovery in the oil and gas markets activity any time soon.”
The group attributed a €60m (£53m) loss to the business, which operates outside of Europe and turned over €410m (£364m) in 2019. The loss was due to variation orders, slow delivery, the impact of COVID-19 and the loss of a dispute with a subcontractor. Bam International employs 600 people directly and currently has 12 projects under construction, the majority of which will be completed by the end of 2021.
The final component of Bam’s €150m (£133m) hit was a €40m (£35m) settlement over a fatal accident during the construction of the Cologne Metro more than a decade ago. Two people were killed when the city’s archive collapsed in March 2009 while the joint venture, which Bam was a part of, was working on a tunnel beneath the building. Bam and its JV partners each agreed to pay the City of Cologne €200m (£177m) last week. Royal Bam said around €160m (£142m) of its share would be covered by insurance with the contractor paying the rest. “I cannot say how much Bam, and me personally, regret this,” den Houter said. He called it a “fair outcome” and added that Bam was “relieved we can close this file”.
Den Houter said the first-half results had been “a disappointment”, but said the business expected to improve in the second half of the year and highlighted the group’s liquidity as a positive. The company's cash reserves increased from €944m (£839m) to €1.2bn (£1.06bn) since the first quarter of 2020. The improvement was mainly due to VAT deferral and other government support measures.