Grontmij takes action in slumping economy

- Accelerated reduction in number of temporary staff
- Adjusting portfolio
- Restructuring business units in building and installation market

Due to the economic recession, investments in the public and private sectors in the Netherlands are being postponed and reduced, contributing to increased competition and prices and margins coming under pressure as a result. This effect is reinforced by the increased pension costs with EUR 3 million.

Project results across the board are down on forecasts. Particularly our business units that target the private market are performing below expectations. The building and installation market has to cope with a sharply falling demand for new housing and industrial sites. If this trend in the market continues, the net operating profit for 2003 will emerge considerably lower than last year´s (2002: EUR 13.9 million).

In the face of disappointing results, the number of temporary staff will be reduced faster than planned (contracts for temporary employment and agency staff). This 'flexible employment buffer' is an instrument Grontmij deploys in times of economic downturn to adapt the size of its organisation to the order book. At the end of 2002 the 'flexible employment buffer' was 18% and will be cut back to about 12% of the total number of employees at year-end 2003 (2002: 4.477).

The organisation structure was adapted as from 1 January 2003 on the basis of the 2002-2006 strategy. Two of the divisions address the market for engineering and consultancy services. The more capital-intensive activities are brought together in the third division. These activities are analysed for their contribution to the result and their relation to the core activities of the company.

At the same time, the business units operating in the building and installation market are being restructured, by implementing cost cutting and adapting work processes and the tackling of less profitable activities.


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