* BAM Q1 pre-tax profit 25.9 mln euros (Rtrs poll 28.3 mln)
* Heijmans says Q1 revenue increased slightly
* Dutch housing market still weighs on performance
* BAM shares down 3.4 pct, Heijmans down 0.5 pct
(Adds analyst comment, detail, shares)
By Greg Roumeliotis
AMSTERDAM, May 19 The two largest listed
construction groups in the Netherlands, Royal BAM (BAMN.AS) and
Heijmans (HEIJ.AS) are still battling a subdued domestic housing
market that is hampered by stricter mortgage-lending
requirements and tax uncertainties.
But the two firms have benefited from a pick-up in
non-residential construction, spurred partly by government cash
BAM said on Thursday uncertainty caused by stricter
requirements from banks asked to provide mortgages was an
important obstacle to the Dutch housing market's recovery.
Both BAM and Heijmans have suffered from a protracted
property downturn but have seen a recovery in infrastructure
projects, thanks to government investment which rose 10.6
percent in the first quarter in the euro zone's fifth-largest
Shares in BAM and Heijmans were down 3.4 percent and 0.5
percent respectively by 0828 GMT, underperforming a flat
Amsterdam midcap index .AMX.
This reflected fears over their exposure to the residential
construction market, mainly because of uncertainty over mortgage
lending and tax treatment.
"The provision of mortgages is an issue, but so is
uncertainty over tax deductibility on mortgages and low overall
consumer confidence," said Rabobank analyst Michel Aupers.
BAM said it made a small first-quarter profit of 2 million
euros in property after an 18.3 million euro loss a year ago.
Its Dutch stock of finished, unsold and unlet property
increased to 279 homes from 111 homes three months ago. But BAM
managed to break even by selling 662 homes from its own Dutch
development projects, compared to 553 homes a year ago.
Heijmans sold 355 homes in the first four months of the
year, compared to 400 in the same period in 2010.
"Looking ahead, we maintain our expectation of a net profit
level of 120 million euros for 2011, taking account of increased
pressures on margins for new orders," BAM Chief Executive Nico
de Vries said in a statement.
BAM more than doubled its first-quarter result before tax
and impairment to 25.9 million euros on revenues of 1.675
billion. Analysts in a Reuters poll had forecast 28.3 million
and 1.639 billion euros respectively.
In a trading update, Heijmans said its first-quarter order
book rose by 3 percent to 2.3 billion euros and that revenue
from continued operations in that period increased slightly
compared to the previous year.
BAM said the value of the work in its order book at the end
of March fell by 1 percent to 11.9 billion euros compared to
three months ago. Results at its construction and civil
engineering segments were similar to last year.
Both groups said their construction activities had benefited
from mild weather conditions. Heijmans attributed most of the
rise in its order book to its infrastructure, non-residential
building and technical services.
BAM also announced a joint venture with Dutch pension fund
administrator PGGM in public-private partnerships in which it
will transfer 150 million euros of its current contracts while
PGGM will co-fund 240 million euros targeted for future
contracts, easing pressure on the Dutch builder's balance sheet.
Analysts said the deal made it less likely that BAM would
turn to shareholders for cash again. Last June BAM carried out a
240 million euros rights issue which it said was primarily to
fund investments in public-private partnerships.
BAM's Chief Financial Officer Jan Ruis told analysts that
its 2011 net profit outlook remained unchanged in spite of the
PGGM deal because some profit as a result of equity sales in
projects had already been factored in in its earlier outlook.
(Editing by Sara Webb and Jane Merriman)