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Dutch builder Royal BAM optimistic on prospects after 'solid' results

By Federica Mileo

(Reuters) -Royal BAM Group is optimistic about prospects for its construction businesses despite an uncertain economic backdrop after reporting a rise in 9-month core earnings.

The company, which operates in the Netherlands, the UK, Ireland and elsewhere, reported an adjusted EBITDA of 229.3 million euros ($223.48 million) versus 223.3 million for the same period last year.

"We continue to face industry-wide pressure in the supply chain, cost inflation and high competition to attract and retain employees," CEO Ruud Joosten said.

However, he said the group was able to mitigate most of these headwinds through sourcing arrangements, contract terms and pricing.

ING analysts said BAM had released a solid update on 3Q22 trading conditions. "9M22 EBITDA, excluding the book gain on the sale of Wayss & Freytag, arrived at €229.3m, c.4% above our forecast," they said.

BAM's order book remained solid at 10.0 billion euros in the nine months, but this was down from the level of orders in the first half partly due to the divestment of engineering business Wayss & Freytag and also the impact of a UK government review of a regional road development programme.

BAM said the fluctuations in the British pound led to a negative impact of around 300 million euros on the order book for the first nine months.

The company highlighted a "very turbulent" phase in UK politics and government budgeting.

"Let's wait and see what the new government will do there. In the longer term we see a big appetite in the UK for investment in infrastructure", finance chief Frans den Houter said during an analyst call.

When asked about demand in the housing market, den Houter said a shortage of houses in the Netherlands was balancing out a rise in interest rates and a fall in consumer confidence. He also said BAM had some "very good" deals in the pipeline, referring to the housing market.

"I think also in 2023 that will be the case and so we do not see a strong signal that we cannot sell the things we're developing and building", he said.

The Netherlands' highest court on Wednesday ruled that an exemption for building activities from European regulations on nitrogen emissions could no longer be used, potentially causing delays for projects throughout the country.

Regarding that, Joosten said any delays could be kept to a minimum and larger infrastructure projects would face limited delays.

BAM shares were down 1.7% at 1120 GMT.

($1 = 1.0261 euros)

(Reporting by Federica Mileo in Gdansk; editing by Tom Hogue, Jason Neely and Jane Merriman)