In general market circumstances are gradually improving in BAM’s home countries, whereas GDP and construction output volume are growing. However, the upcoming elections in several home countries and the impact of the Brexit will influence further improvement. The prospects for Dutch non-residential construction remain challenging due to vacant offices and retail space. In Belgium the continuing political uncertainty will affect civil engineering markets. BAM’s international activities for the oil and gas market remains at the low end. BAM continues to target profitability above revenue and follows the development of product market combination closely to adapt its businesses if needed.
The PPP markets continue to offer an attractive supply of bidding opportunities. Competition continues to be intense and is demonstrated by the increased number of competitors at the prequalification stage. The bidding opportunities are spread reasonably evenly across all of our markets with the exception of the UK. Interest in providing long term debt remains strong from both bank and institutional lenders for both primary and refinancing transactions. steady flow of new opportunities commencing throughout 2017. BAM will continue to benefit from the successful partnership with PGGM.
BAM started the financial year 2017 with an order book of €10.2 billion (2016: €11.5 billion), of which €5.4 billion will be carried out this year.
Due to economic growth, especially in the field of technology, BAM will face a tight labour market. The Group’s challenge to find technical skilled people will increase. This will be addressed in BAM’s employer branding strategy. By offering learning programmes and other opportunities to grow the Group keeps developing the employees.
BAM expects the 2015 Paris Agreement on climate change will have an effect on national and European regulations to reduce energy demand resulting in demand for more energy efficient and energy positive solutions. Linear consumption patterns (‘take-make-dispose’) of products are coming up against constraints on the availability of resources. The construction sector needs to develop new opportunities and realise circular economy ambitions faster, which requires rethinking, redesign and innovative construction methods. BAM will continue its efforts to implement its sustainability strategy to ultimately have a net positive impact innovate and work towards zero carbon and circular products and projects.
BAM expects that three external forces will shape the prospects for the construction industry in the coming years. Economic growth which is currently fragile is expected to have a low to modestly positive impact on construction volumes. We foresee the creation of areas of higher growth as a result of megatrends
such as urbanisation and energy efficiency. And 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.
For 2017, BAM expects the revenue to be slightly lower and the adjusted result before tax to be higher than the level of 2016. BAM anticipates a significantly lower restructuring charge compared to 2016.
Bunnik, the Netherlands, 20 February 2017