Economic growth in BAM’s home countries and international remains vulnerable. In general the market developments show a cautious positive trend, however not all markets benefit from this yet. The prospects for Dutch non-residential construction remains subdued due to oversupply of offices and retail space. In Belgium the uncertainty about government still exists, which will have effect on civil engineering markets. BAM’s international markets are impacted by lower activities in oil and gas.
BAM started the financial year 2016 with an order book of €11.5 billion (2015: €10.3 billion), of which €5.9 billion will be carried out this year. This means that approximately 81 per cent of the revenue for 2016 is already in hand (2015: 79 per cent). The quality of the order book is gradually improving due to the implementation of BAM’s stage gate tendering procedure which was part of the Back in Shape programme.
The PPP market shows a mixed picture; the market opportunities in the United Kingdom remain limited, although civil engineering prospects in Germany look promising. BAM PPP is currently working several active bids which will provide revenue in most of our home markets for the sector Construction and mechanical and electrical services as well as for the Civil engineering sector. BAM will also this year continue to transfer PPP contracts to the PGGM joint venture.
BAM expects that three external forces will shape the prospects for the construction industry in the coming years. The economic growth, currently vulnerable, will have a low to modest positive impact on construction volumes. Mega trends such as urbanisation and energy efficiency are creating areas of higher growth. Digitalisation is increasingly transforming the construction industry and the built environment. Against this background the main focus of the updated strategy for 2016-2020 – ‘Building the present, creating the future’ – is to continue to restore profitability and improve capital efficiency.
Bunnik, the Netherlands,
17 February 2016