Dutch builder BAM plans cuts, divestments after project losses
AMSTERDAM, July 7
AMSTERDAM, July 7 (Reuters) - Dutch construction company BAM Group on Monday promised cost savings and property divestments of some 200 million euros ($272 million) a year in response to losses at two building projects in Germany and Britain.
The builder promised annual cost savings of 100 million euros a year and said it would raise working capital by 300 million euros by the end of 2015. It also said it hopes to raise some 100 million euros a year through property divestments.
The company said it would also consider divesting other assets to improve results. It said the cuts being made were needed to keep the company within its banking covenants.
It said it expected to report a capital ratio of 20 percent at the end of this month.
The project losses totalled 75 million euros and stemmed from two unnamed projects in Germany and Britain. Adverse ground conditions on the German project had required technical solutions that had proved more expensive than expected.
Adverse ground conditions and bad weather had caused unexpected problems in the mid-sized British project.
"Our underlying strategy is the right one, but our delivery has not been good enough," said chief executive Nico de Vries in a statement.
"It is fully clear to the executive board that BAM must act urgently and decisively to get all parts of the group to contribute positively to our results," he added.
The company made a profit before tax, impairments and one-off charges of 49.8 million euros in 2013. ($1 = 0.7345 Euros)
(Reporting by Thomas Escritt; Editing by Kenneth Maxwell)
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