The continuing slowdown in the Dutch and Belgian economies during the first half of 2002 was noticeable in the trend in Royal BAM NBMÂ's turnover, with business shrinking by 4% on an organic basis. Acquisitions added 2%, however, so that turnover fell by only 2% on balance, to €1,302 million.
High+ights
· First-half net profit Royal BAM NBM (stand-alone) up 10% at € 20.1 million
· Order book remains at a high level: € 4.5 billion
· Full-year 2002 forecast: net profit up by around 10%
· Acquisition of approx. 78% of the HBG activities cleared by the competition authorities
The successful integration of the former NBM companies coupled with the good range of activities meant that the level of profits showed a further increase. The Dutch construction industry suffered from the decline in economic growth in the first half of 2002, which was particularly noticeable in telecoms (pipes and cables) and commercial property. The open tender market was also hesitant.
Within Building and Property Development, there was a stable picture in general construction, while housing and property development turnover fell. In the first half-year, general construction and development represented about 60% of the total turnover of this division, with house building and housing development accounting for 40%. Organic growth achieved by the Infrastructure Division was 5%, with BAM NBM Rail performing particularly strongly. The consolidation of De Meyer added about 6% to turnover of the Infrastructure Division. The Mechanical & Electrical Contracting Division suffered a slight decline in turnover.
The result before tax and amortisation of goodwill saw an increase of 7% in the first half of the year to € 31.8 million. On this basis, the margin was 2.44% of turnover (2.25% in the first half of 2001). As expected, BAM Wilma (housing) made a positive contribution but its result is still too low and offers scope for improvement. The sharp improvement in results at Infrastructure was due to organic profit growth of close to 25%, the contribution from De Meyer and a book profit on the sale of part of the interest in Railpro. The contribution by Mechanical & Electrical Contracting was under pressure during the first half of 2002 but – with a margin of 4.6% – is still at a good level.
Earnings per share
Net earnings per share for the first half-year were €1.96, an increase of 11%. The number of shares entitled to profit fell marginally compared with the first half of 2001 as a result of repurchase of shares by the company, mainly during the second half of 2001. There were 10,261,257 shares entitled to profit as at 30 June 2002.
Given full conversion of the convertible bonds, earnings per share for the first half of 2002 would have been € 1.69. Some 180,000 shares were added during the third quarter as a result of conversion (reference date 11 September). A total of 14% of this loan has now been converted.
Prospects for 2002
Based on current information and on the strength of a healthy order book in terms of both volume and quality, Royal BAM NBM expects to achieve an increase of about 10% in net profit on a stand-alone basis in 2002. Turnover is expected to be at about the level of 2001, i.e. € 2.9 billion.
HBG
On 3 September 2002, the European Commission formally decided to declare the consolidation in the industry resulting from the acquisition of HBG’s activities outside the Netherlands compatible with the EU’s common market. Acquisition of the dredging and consultancy & engineering activities has also been cleared as compatible. The latter activities and the international activities for which clearance has been given together accounted for approximately 78% of HBG’s total turnover in 2001. Investigation of the implications of the planned consolidation for the Dutch construction market (approximately 22% of HBG’s turnover) has been referred to the Netherlands Competition Authority (NMa). According to current information, the NMa will take a decision in the first half of October.
