UPDATE 1-Bilfinger CEO quits after second profit warning since June

Mon Aug 4, 2014 2:56pm EDT

Related Topics

* CEO Koch says takes responsibility

* Company cuts earnings outlook, citing Power unit again

* Koch's predecessor Bodner to take interim CEO role (Adds details on Power unit, previous profit warning, share performance)

By Ludwig Burger

FRANKFURT, Aug 4 (Reuters) - German industrial services and construction group Bilfinger SE said Chief Executive Roland Koch would quit, taking responsibility for a second cut in its 2014 earnings outlook since end-June.

The group now expects adjusted earnings before interest, taxes and amortisation (EBITA) of 340 million euros ($456 million) to 360 million euros, down from a previous target range of 380-400 million announced on June 30, when it had already cut its outlook.

Koch, a former premier of the German regional state of Hesse, offered to step down on Friday on mutually agreed terms, the company said after the market close on Monday.

He had orchestrated a major reshuffle at Bilfinger away from civil engineering and construction to higher-margin industrial services to ease its exposure to price wars in the building sector.

But the strategy failed to pay off as Germany's big utilities cut back their spending on industrial services.

Koch said in the statement that predictability was important for a listed company.

"As a result of two profit warnings in quick succession, for which I ... take responsibility, this trust has been shaken."

Koch added that he could not agree with some supervisory board members as to how to respond to the latest development.

Supervisory board member Herbert Bodner, who was CEO until Koch took over in 2011, will take back the top job on an interim basis until May next year, or sooner if a permanent successor can be found before that, Bilfinger said.

Bilfinger cut its outlook for adjusted net profit to 205-220 million euros from a previous target of 230-245 million, citing weakness at its Power unit, which lost a project in South Africa among other setbacks.

The Power unit had already been the main culprit when the group slashed its outlook and announced job cuts on June 30.

The Power division, which accounted for about a third of Bilfinger's EBITA last year, derives most of its business from major German utilities such as E.ON, RWE and EnBW and their peers in other countries.

Germany's decision to phase out nuclear power and push into renewable energy means that big German utilities are cutting costs and investing less in industrial services than the company had expected.

The stock has lost more than a third of its value since reaching a record high in April.

($1 = 0.7456 Euros) (Reporting by Ludwig Burger; editing by Jane Baird)

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