Royal Bam forecasts improved margins in Q1 trading update

Royal Bam Group, parent company of UK contractors Bam Construct and Bam Nuttall, has reported what it called “strong operational performance” in a first-quarter trading update.

It revealed adjusted EBITDA earnings of €97.3m (£82.8m) in Q1 2022, before one-off charges, including restructuring costs, on revenue of €1.55bn (£1.32bn). These results yielded an EBITDA margin of 6.3 per cent for the quarter.

The company said it expected full-year 2022 figures to improve on its 2021 EBITDA margin of 3.8 per cent.

The Dutch group is currently in the second year of a three-year reorganisation that has seen it divest non-core operations and reorganise into two geographical divisions, replacing role-based business units, with the goal of growing revenues in the UK, Ireland and the Netherlands. Former Kier director John Wilkinson took charge of operations in UK and Ireland in November 2021.

In the trading update, Royal Bam said revenues across the UK, Ireland and the Netherlands had increased by 5 per cent, compared with the first quarter a year earlier, despite revenue across the whole group falling by 6 per cent “due to divestments”.

Commenting on the results, chief executive Ruud Joosten said: “Our order intake remains satisfactory, although the market outlook is uncertain. We continue to face industrywide pressure in some parts of the supply chain, including uncertainty regarding energy prices, and high competition to attract and retain employees.”

In an apparent reference to the impact of the war in Ukraine, he added: “The current geopolitical situation has increased these uncertainties.”

In a subsequent call with investment analysts, Joosten explained that the company had seen “more hesitance” in large, non-residential projects in both the Netherlands and the UK, “because the business cases are getting more difficult, with interest rates and some doubts on the course of these projects with regard to inflation”.

He added: “We still have an interesting list of projects on the way, but there are some time delays in the decision-making for these projects – I think that’s the biggest impact today.”

Joosten also cited “positive movement” on infrastructure development in the UK: “We see an investment programme by the Johnson government with [a total value] of about £700bn. So that will be a long-term, strong market for us, because we have a pretty strong position there with Bam Nuttall.”

In March, Bam was reappointed to two lots within the ProCure23 capital projects framework, a £30bn Crown Commercial Service framework covering civil and construction works in the UK and Northern Ireland.

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