Heijmans N.V. will close 2005 in line with its previously announced profit expectation. Revenue will come out at approximately 2.8 billion, while net profit will be 85 million or approximately 3% of revenue. The profit for each ordinary share thus comes out at approximately 3.60.
Heijmans is profiting both from the number of homes sold and from the result of a good market for owner-occupied homes. A positive element is the substantial contribution made by the major infrastructure projects which will be completed in 2005. The current market for infrastructure is not yet showing any recovery of prices despite the increased amount of work. The oversupply in the offices market is not showing any decrease. Outside the Netherlands, the UK is continuing to deliver an outstanding performance.
As indicated in the half-year report, the expected net profit of 85 million contains a once-only benefit of 6 million before tax due to the release of a provision in connection with the termination of the management participation plan and a once-only benefit of 5 million before tax as the result of profits on the sale of the subsidiary Opstalan. The expected net profit of 85 in 2005 is 21% higher with respect to 2004 (compared to the net profit in 2004 before the once-only charge in connection with the investigation into the building industry). Revenue in 2005 will increase by about 8% compared to 2004.
Development of activities in the housing market
The demand for homes remained high in 2005 as a consequence of the delay in the supply of new homes due to undiminished long planning procedures. The government has expressed its ambition to produce 90,000 homes a year for a number of years with the aim of catching up on its estimated shortage of 170,000 homes. Production in 2005 is estimated to come out at approximately 70,000 as opposed to 62,000 in 2004. The price level has shown no exorbitant increases in recent years and was in line with inflation in 2005 too.
Heijmans' activities in the owner-occupied sector are expected to have a good year. The total number of homes sold by Heijmans in the Netherlands is expected to rise in 2005 to over 3,700 (2004: 3,419). About 60% of homes sold were built on land controlled by Heijmans; approximately 40% came from competitions won. In the last few months Heijmans has won development rights through competitions for approximately 600 homes in Roosendaal, Rijnswoude and Den Helder, to name a few. These involve the full development of an area, including homes, shops and other facilities.
Development of activities in the property market
The offices market still has vacancies to contend with. There has been a perceptible shift of tenants from old to new property for some time now, helping to reduce vacancies in new offices. This is expected to lead to a limited reduction in the number of unsold and unlet metres for Heijmans.
The building division is compensating for the decrease in the level of activities in the commercial office market by activities for the healthcare and education markets. Although the level of activities is good in this division, prices are very competitive, putting pressure on margins.
Development of activities in the infrastructure market
It would seem that the low point in the infrastructure market with regard to price formation was reached some time ago. The major projects finishing in 2005 are contributing substantially to Heijmans' positive results in this sector. A few major projects won in 2005 will ensure the deployment of capacity that becomes available, although with considerably lower margins than in the projects just finishing. A number of new projects are expected to come onto the market within the foreseeable future. In its September 2005 budget, the government announced an investment programme for infrastructure, particularly in new developments and road and railway maintenance. Price levels in the infrastructure market are nonetheless still extremely competitive at the moment. For that reason it is uncertain whether new orders will provide