BAM Abbreviated Annual Report 2011 - Siteseeing in the world of ...

Outlook
Royal BAM Group started 2012 with an order book worth
€10.4 billion (year-end 2010: €12.1 billion). This reduction
is reflected in every sector, mainly through selective
tendering policies. Of the total order book, it is expected
that €5.8 billion will be carried out in 2012 and €4.6
billion in subsequent years. This means that
almost 80 percent of the anticipated turnover
for 2012 is assured. This percentage is the same
as at year-end 2010. Taking into account market
circumstances and expected market
developments, the size and quality of the order
book provide a solid basis for 2012.
Royal BAM Group is confident about its prospects
based on a sharp focus on its core business
activities, its scope to promote synergies across
the Group, its strengthened financial position and
its prospects for growth in new markets.
However, BAM is not yet issuing any profit
guidance for 2012.
The Euroconstruct forecasts of November 2011
for construction output in 2012 show a reduction
in output in the construction and mechanical and
electrical services sector, mainly in the United Kingdom.
Output is forecast to increase once again after 2012.
According to Euroconstruct (November
2011), the short-term outlook shows
improvement in the residential
construction segment. BAM is highly active
in this segment in the Netherlands. BAM
has not yet experienced this improvement,
however. The turmoil in the financial
markets, the limitations on the banks’
willingness to issue loans and the low level
of consumer confidence are causing
demand to be – excessively – low for
housing (in the Netherlands and Ireland).
BAM expects demand for new-build homes
to hit rock bottom in 2012 and then start to
recover slightly.
According to the Euroconstruct forecasts
(November 2011), the picture in the civil
engineering sector will be mixed. The
picture for the markets shows a drop in
Ireland and Germany, an increase in the
United Kingdom and a drop in the
Netherlands followed by an increase in the
following years, and growth in Belgium
which will be more than negated by a sharp
drop in 2013 and 2014.
At present, a large number of bids for PPP contracts
involving the Group are pending in various countries. The
number of new contracts remains high, given the current
economic climate. In accordance with the strategic plan,
the Group expects to be able to make further investments
in PPP contracts to the extent that approximately
10 percent of BAM’s total revenue could ultimately consist
of PPP contracts. Royal BAM Group set up a joint venture
with PGGM in 2011 for investments in PPP contracts, and
the Group expects to be able to transfer more investments
in PPP contracts to the joint venture in 2012 and beyond.
The Group’s turnover in 2012 is expected to be composed
as shown in table 1. The market shares predicted for the
Group in 2012 are shown in table 2 based on the Group’s
expected turnover and the market output forecast
according to Euroconstruct.
BAM has launched new growth tracks outside of its
home markets by establishing permanent branches in
Switzerland and Luxembourg and strengthening the
market positions of BAM International in growth markets
outside Europe (South-East Asia, Australia, Africa and the
Middle East).
Table 1 Turnover forecast for 2012 per sector, as a percentage of total gross turnover*
Non-
Mechanical
and
electrical Civil
residential Residential contracting engineering Property Total
Netherlands 11 7 3 20 7 48
Belgium 6 - 1 4 1 12
United Kingdom 13 - - 8 1 22
Ireland 1 - - 2 - 3
Germany 7 - - 4 - 11
Worldwide - - - 4 - 4
38 7 4 42 9 100
* Turnover forecast based on the activity mix of the different operating companies (excluding turnover
offset between sectors). This may be different from the primary segmentation in the financial statements.
Table 2 Expected market share in 2012 for the construction and mechanical and
electrical services and civil engineering sectors
Construction and
Civil
mechanical and electrical services
engineering
Netherlands 2.8% 8.7%
Belgium 3.5% 4.2%
United Kingdom 1.4% 2.7%
Ireland 8.2% 3.9%
Germany 0.7% 0.7%
5
2011