Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Koninklijke Bam Groep NV (KBAGF, Financial) reported a 6% increase in both adjusted EBITDA and group revenue for the first half of 2024, reaching EUR126 million and EUR3.1 billion respectively.
- The company's order book increased by 12% to EUR11 billion, aligning with its strategic objective to expand in sustainable solutions.
- The Dutch residential market showed improvement, with the sale of 832 homes, significantly higher than the previous year.
- The liquidity position remained solid with a cash position of around EUR450 million, and the company did not utilize its revolving credit facility.
- The Irish division showed substantial improvement, supported by a partial claim recognition for the National Children Hospital project, enhancing overall results.
Negative Points
- The adjusted EBITDA margin guidance for the full year was revised down from 4%-6% to 4%-5%, indicating potential challenges in the second half of the year.
- Significant losses were incurred from the Co-op Live project in Manchester and two school projects in Denmark, impacting overall profitability.
- Construction UK reported an adjusted EBITDA loss of EUR24 million due to project delays and supply chain issues.
- The Fehmarnbelt Tunnel project, expected to be completed in 2030, remains a long-term commitment with potential risks.
- The company continues to face challenges in attracting and retaining staff, with a high number of vacancies remaining unfilled.
Q & A Highlights
Q: Why has the EBITDA margin guidance for the full year been adjusted from 4%-6% to 4%-5%?
A: Leendert den Houter, CFO, explained that the adjustment is within the strategic bandwidth of 4%-6% presented earlier. The current guidance reflects the results of H1 and ongoing de-risking activities within the portfolio.
Q: Why are the Netherlands construction and property margins perceived as downbeat despite stable housing sales?
A: Leendert den Houter, CFO, stated that profitability is in line with past performance. The Dutch residential market's strong home sales have supported results, despite headwinds from projects like the schools in Denmark.
Q: Is there upside potential in the Dutch residential market with the new government?
A: R.J.M. Joosten, CEO, expressed optimism for the mid to long term due to strong demand for affordable homes. The new government's plans look promising, but execution is key. BAM is positioned to provide sustainable, affordable homes.
Q: Regarding the settlement on the new children's hospital in Ireland, does this reduce project risk significantly?
A: R.J.M. Joosten, CEO, confirmed that the settlement, including a EUR107 million award and a time extension, significantly reduces risk. The project is over 90% complete, and risk decreases as it nears finalization.
Q: Can you provide an update on the legacy projects and their expected completion?
A: R.J.M. Joosten, CEO, noted that most legacy projects will be completed within a year, except for the Fehmarnbelt Tunnel, which is scheduled for 2030. The company has significantly reduced its high-risk project portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
