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  • Writer's pictureSafer Highways

BAM UK profit rebounds as orders surge

Dutch construction giant Royal BAM’s UK combined construction and civils operations’ profits more than doubled last year to £71m as the firm recovered from its legacy student project. Revenue was also up 21% to £1.9bn driven by HS2 and major project wins by the construction arm. Civil engineering arm BAM Nuttall delivered the strongest performance of the two UK businesses with revenue up a third to £1.1bn and EBITDA jumping 75% to £34m. This lifted margin to 3.2% from 2.4% previously.

Strong growth at BAM Nuttall saw the performance in the UK exceed the Dutch Group Royal BAM’s home market performance in civil engineering for the first time.

BAM’s UK construction and property business also enjoyed a strong improvement last year, achieving a margin of 2.9% after a more dismal 2020 impacted by its problem University of Sheffield job where BAM was forced to tear down the concrete frame of its £65m Faculty of Social Sciences project.

Ruud Joosten, CEO of Royal BAM Group, said 2021 was helped by a stronger first half year, which included a positive claim settlement at the business.

The construction arm order book in the UK grew by over £400m to £1.4bn, including £100m due to the stronger pound, with large project wins in 2021 including the Co-op Live Arena in Manchester, and Space House and 11 Belgrave Road in London.

Joosten said: “In the United Kingdom, the government has committed to significantly increase public investment over the next four years, resulting in a positive outlook for health, justice and education.

“The government is encouraging modern industrialised construction with Design for Manufacture and Assembly techniques. The private market is a mixed picture, with lower demand in retail and some hesitation in offices, partly offset by logistics and pharmaceuticals.”

Across the group, he said the new plan to concentrate on core Dutch and UK markets was advancing well.

“We are one year into our three-year strategic plan to create a more predictable, profitable and sustainable company.

“We have made good progress with de-risking of the group.

“We divested several business units including BAM Swiss, BAM Deutschland and BAM Galère in Belgium, with combined annual revenues of approximately €600m. In addition, this week we announced the divestment of BAM Contractors in Belgium. We are in the final phase of the wind-down of BAM International.

“At the same time, we have increased our emphasis on modern and sustainable building methods and invested in industrialised and modular construction capacity. We implemented a new operating model from 1 January 2022, which will drive further operational excellence, knowledge sharing and development of life-cycle solutions.”

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