BAM announces new structure and gives details of change programme

Rob van Wingerden, CEO since 1 October: ‘Our recent performance shows that we need to change in order to deliver on our Group strategy and capitalise on our potential. So we are reshaping our operational model by strengthening our culture, simplifying our structure and sharpening our processes. That will translate into better project control, a lower cost base and stronger balance sheet. And that in turn will improve our competitive position and create more value for our shareholders.’

Bundling operating companies

BAM is simplifying its organisational structure in the Netherlands and Belgium by merging companies. In the Netherlands, twelve companies will be bundled into two companies, one in each of the two business lines 1) Construction and property and 2) Civil engineering. The Dutch Central Works Council has given positive advice regarding the new structure.

In Belgium, six companies will operate from one company BAM Belgium, across both business lines.

Each of the new companies will be headed by a management team, including directors for Finance and Human Resources.

In order to keep the business units close to clients, BAM remains committed to having a strong regional presence.

The other home countries plus BAM International were already set up as one or two companies, which will be assigned to the two business lines.

Reduction FTEs (mainly Netherlands)

The organisational changes are intended to make BAM more effective externally in its markets, and more efficient internally. As a result of de-duplication and economies of scale in the simplified structure, the number of FTEs will be reduced during 2015 by approximately 650, mainly in the Netherlands and mainly in back office positions. The number of FTEs in the Netherlands was approximately 9,700 as at year-end 2013.

Management Committee

BAM has introduced a Management Committee, composed of the Executive Board members, the managing directors under the new structure, and directors of key service departments.

Programmes and targets

Cost reduction: BAM will achieve cost savings of at least €100 million as an annual run-rate by end-2015. There will be an exceptional restructuring cost in the second half of 2014 and the first half of 2015 of €80 million to €100 million. The relating cash out will be predominantly in 2015.

Project control: The Back in Shape programme will improve BAM’s tendering processes and project execution. This improvement will centre on better insights into project risks and opportunities, financial as well as operational. As a result, the quality of new order intake will continue to improve, while at the same time BAM works through its backlog of older projects. BAM aims to get its results on projects into a 2 to 4 percent range in the longer term.

Working capital reduction: BAM will achieve a sustainable reduction in trade working capital of at least €300 million by end-2015.

Divestments: BAM maintains its existing target for divestments of at least €100 million per year. So far in 2014, BAM has achieved divestments of property for a total of €160 million. BAM expects divestments in the rest of 2014 and in 2015 to come mainly from sales of commercial properties, plus small divestments of non-core assets as part of establishing the new organisation structure. The timing of divestments depends on market conditions.

Third quarter Interim Management Statement

BAM does not release any new trading information at today’s presentation. The next scheduled update will be the nine-month and third quarter Interim Management Statement on 6 November.

Live video webcast

Today’s presentation for capital markets will be in Amsterdam between 11.00-13.00 CET. This meeting can be followed via a live video webcast (www.bam.nl).

Further information:

• press: Arno C. Pronk, +31 (0)30 659 86 21;
• analysts: Joost van Galen RA, +31 (0)30 659 87 07.