November 10, 2016 / 12:35 PM / 3 years ago

UPDATE 1-Bilfinger expects more job cuts next year as orders fall

* Bilfinger CEO says expects more cuts in power division

* Third-quarter order backlogs and output volumes fall

* New strategy to be presented on Feb. 14, 2017 (Recasts to include CEO comments on potential job cuts)

FRANKFURT, Nov 10 (Reuters) - Struggling German engineering services firm Bilfinger will unveil a new cost cutting programme in February including more job reductions at its power division, new Chief Executive Thomas Blades said on Thursday.

Although the company is in the midst of implementing job cuts at its headquarters in Mannheim, Germany, the scale of potential staff reductions in other parts of the company has not yet been determined, Blades said.

“We sold our building facilities division, and had to make adjustments for that in our headquarters. In the divisions it is different, we will adapt according to how each business performs,” Blades said in a call to discuss quarterly results.

Bilfinger has been plagued by mismanagement, strategy U-turns and a collapse in its client base over the past few years but is now trying to steer a steady course focused on its plant engineering unit, which caters mainly to the oil and gas sector.

The company said it would give more details on Feb. 14 of its new strategy under Blades who took up his position in July to become Bilfinger’s fourth CEO in two years.

“In the power division we are missing orders and will have to adjust the business accordingly. This will definitely cost some jobs,” said Blades, adding that a formal redundancy programme had not yet been started.

Bilfinger said even though third-quarter operating profit rose 40 percent, mainly thanks to one-off gain from the sale of its real estate services division, order backlogs and the value of work done both fell.

Bilfinger has suffered from the turmoil in the energy sector, its main client base since it switched its focus to plant engineering services from construction several years ago.

The company reiterated that it expected a significant fall this year in the value of work done, or output volume, to about 4.1 billion euros from 5 billion a year ago and a significant improvement in adjusted earnings before interest, tax and amortisation (EBITA).

In the third quarter, its EBITA was 21 million euros on output of 1.02 billion. (Reporting by Edward Taylor; editing by Victoria Bryan and David Clarke)

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