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| BAM expects profits of €130 mln  Before trading opens on Thursday, 30 November, Royal BAM Group will report on business during the first nine months of 2006. In advance of that report, BAM announces that the 2006 loss forecast of German non-residential building company Wayss & Freytag Schlüsselfertigbau has been raised to €115 million. Despite the favourable operating results from its other activities, BAM expects that it will be unable to achieve its profit forecast of approximately €180 million for 2006 as announced when the half year figures were presented. Based on current information, BAM expects to record a profit of approximately €130 million for the 2006 financial year.The dramatic drop in the results of Wayss & Freytag Schlüsselfertigbau during the third quarter was caused by a number of factors. A careful evaluation of the Wayss & Freytag Schlüsselfertigbau portfolio meant that, in addition to further provisions for losses from current projects (around €55 million for the whole of 2006), provisions have also been formed in connection with specific risks. Those risks primarily concern accounts receivable and/or claims on principals and warranties (totalling approximately €50 million for 2006). The evaluation revealed that the contract and project management conducted was insufficient. Another reason for the losses was the rapid increase in prices of subcontractors and suppliers as a result of the recovery of the German construction economy, which had not been sufficiently anticipated. The reorganisation based on the operating company's earlier losses will also be accelerated and expanded. According to current expectations, the related provisions will total approximately €10 million. The loss-generating Tiefbau department in Göttingen will be disposed of (approximately seventy jobs). The other jobs, which will disappear, are mainly staff positions (approximately thirty). Wayss & Freytag Schlüsselfertigbau will cease to exist as an independent market player, and its management has been suspended. Its activities have been transferred to the management of sister company Müller-Altvatter, which will receive support from other parts of the group. Müller-Altvatter is known to be a profitable operating company that has been active on the German non-residential building market for several years. write your comments about the article :: © 2006 Construction News :: home page |