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BAM Construct: “We cannot earn enough from construction alone”

1 July 2019 | By Neil Gerrard

BAM Construct has signalled a potential move into new, more profitable potential work streams to boost investment in people and technology for the future.

The news came despite the fact that the firm boosted its margin to 2.8% in 2018, up from 1.5% the year before, according to its latest financial results.

BAM recorded turnover of £949.8m for the year, down 0.3% on 2017, while profit before tax and exceptional items was £27m.

The company also reported what it termed a strong order book of £1.76bn and no debt, with £83 million cash reserves.

James Wimpenny, chief executive of the firm, whose parent company Royal BAM Group is 150 years old this year, said: “Our increased profitability reflects our business reducing risk by selective tendering and working smarter. Ultimately this consistency benefits both us and our clients in a sector which has experienced recent instability.

“We are assisted by having a good balance of work between the private sector (58%) and public sectors (42%) and 65% of our work is repeat business, as clients that we have worked with before re-engage us. That is something I believe shows that our collaborative culture is one that our clients appreciate adds value to their projects. I am also pleased with progress at our growing FM business.”

But he added that BAM was likely to diversify further in order to prepare itself for the future: “We cannot earn enough from construction alone to provide the investment we need in our people and the technology they need for the future. We have therefore embarked on feasibility studies for potential work streams that would generate higher levels of profit to enable growth. There will be no sudden moves. Entry to new markets will be carefully planned with assistance from experts both inside and outside the group.”

Meanwhile, the company, which has 2,549 employees and completed 33 construction projects in 2018, reduced its carbon emissions (tCO2e) by 13% to what it claimed was an all-time low of 11,488 tonnes.

The company has 2,549 employees. It completed 33 construction schemes in 2018 and secured 39 more.

Comments

If management is not capable of making profits from construction, how can shareholders have any confidence in management making profits in another business area?

It was always my understanding, it was the shareholder who had a balanced protfolio and they were not looking to invest in companies with diverse income streams.

MKF, 1 July 2019

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