Message from the CEO
‘We are committed to innovation and the ever-greater digitalisation of our processes, services and products to reach our goals’
Looking back on my more than two years as CEO of Royal BAM Group, I am proud of what we together have achieved so far. We took important steps to improve BAM’s performance. In 2016, we made good progress implementing the strategy ‘Building the present, creating the future’.
We are focusing our project portfolio by disciplined, data-driven tendering and we have a pipeline with attractive opportunities.
Across our business portfolio, we exited some non-core activities, completed the integration of Dutch Construction and Property, and are refocusing our International infrastructure and German construction businesses.
We are executing our digital strategy by launching a start-up to develop a scalable digital construction platform and using digitalisation to enhance our primary processes.
Our differentiating capabilities are being enhanced by our One BAM culture through learning and collaboration and employee engagement. Four values – predictable performance, scalable learning, proactive ownership and open collaboration – underpin the successful further development of our Group. The positive feedback we received from our stakeholders are a clear indication that we are on the right track.
Despite some headwinds, we delivered a robust adjusted result for 2016 ahead of the previous year, in line with our guidance. The adjusted result before tax improved to €102.7 million. We continued to derisk and strengthen our financial position, and generated a strong positive cash flow, mainly due to working capital improvement. Our return on capital employed – a leading KPI for how we manage our business – started to move upwards thanks to the higher result and lower capital.
BAM’s total revenue of €6,976 million was €447 million (6 per cent) below the level of 2015, of which €245 million was attributable to the weaker pound sterling and €45 million to divestments of non-core activities in the Netherlands and Belgium.
The inclusion in CDP’s Climate A list is a recognition of our efforts to reduce emissions and to achieve a net positive impact. Ensuring a safe working environment remains a top priority for BAM.
BAM was reconfirmed as industry leader and ranked sixth overall in the annual Transparency Benchmark, the leading Dutch corporate social responsibility index.
By adopting the principles of the <IR> Framework and by application of the Global Reporting Initiative (G4, Comprehensive) BAM will continue to provide transparent and more relevant information to all stakeholders.
Our strategy for 2016-2020 allows us to further improve the performance of our current project and business portfolio. In a fragile macroeconomic environment, our objective is to continue to grow profitability and capital efficiency by ‘Doing Things Better’. This means a more disciplined focus on market segments and projects where we can use either scale or expertise as critical success factors.
Secondly, by rationalising our propositions in selected market segments and developing new solutions for clients, we will shape our business portfolio towards ‘Doing Better Things’.
Thirdly, we are investing in digitalisation and new technologies aiming to become an industry leader in what we build and how we build it – ‘Doing New Things’. We are committed to innovation and the ever-greater digitalisation of our processes, services and products to reach our goals.
Our target is to reach a double-digit return on capital employed by 2020.
Looking ahead, the external environment is mixed with on the one hand, stable or slightly improving economic indicators and on the other hand, uncertainty on Brexit and upcoming elections. Despite these notes of caution, I am confident we will continue our positive momentum on strategy delivery in 2017. For 2017, we expect revenue to be slightly lower and the adjusted result before tax to be higher than the level of 2016. We anticipate a significantly lower restructuring charge compared to 2016.
We are all motivated to continue to unlock the still significant upside potential of BAM. We will work together to better serve our clients, improve our financial performance, and be a preferred employer and partner to create a better, more sustainable future. I am more than ever convinced that with our combined capabilities and dedication we can reach our goals.
Also on behalf of Thessa Menssen and Erik Bax, I would like to thank all our stakeholders for their confidence in BAM and especially our employees for their hard work and commitment.
Bunnik, the Netherlands, 20 February 2017,
Rob van Wingerden,
Royal BAM Group nv