Koninklijke Bam Groep NV (FRA:BGPA) Full Year 2024 Earnings Call Highlights: Strong Order ...

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Fri, Feb 14, 2025, 12:04 AM 4 min read

Adjusted EBITDA: EUR333 million, reflecting a margin of 5.2%.
Revenue Growth: Increased by 3% in 2024.
Net Income: EUR82 million, with earnings per share of EUR0.31.
Order Backlog: Increased by 33% to EUR13 billion.
Dividend Proposal: EUR0.25 per share, a 25% increase from last year.
Share Buyback: EUR50 million planned return to shareholders.
Netherlands Division Adjusted EBITDA: EUR161 million, margin of 5%.
UK and Ireland Division Adjusted EBITDA: EUR114 million, margin of 3.7%.
Construction UK Adjusted EBITDA Loss: EUR48 million.
Cash Flow from Operations: EUR284 million.
Liquidity Position: EUR0.8 billion.
Solvency: 23%.
Trade Working Capital Efficiency: 11.7%.
Invesis Divestment: Expected cash proceeds of EUR105 million.
Depreciation and Amortization: EUR128 million, a 5% increase from last year.
Restructuring Costs: EUR12 million.
Effective Tax Rate: 6% for 2024, expected 17%-19% in coming years.

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Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Koninklijke Bam Groep NV (FRA:BGPA) reported an adjusted EBITDA of EUR333 million, reflecting a margin of 5.2%, indicating strong financial performance.
The company's order backlog increased by 33% to EUR13 billion, showcasing a robust pipeline of future projects.
A dividend of EUR0.25 per share is proposed, reflecting a 25% increase from the previous year, along with a EUR50 million share buyback plan.
The company received a CDP Climate A rating for the sixth consecutive time, highlighting its commitment to sustainability.
The Dutch residential market showed strong performance with an 11% increase in home sales, contributing positively to the company's results.

Negative Points

Challenges in the UK construction sector, particularly with the Co-op Live project in Manchester, resulted in an adjusted EBITDA loss of EUR48 million.
The Danish schools projects negatively impacted the company's EBITDA, highlighting ongoing challenges in non-residential construction in Denmark.
The effective tax rate was unusually low at 6%, which may not be sustainable in the long term, with expectations to rise to 17%-19% in the coming years.
The divestment of Invesis resulted in a non-cash impairment of EUR107 million due to increased interest rates.
The UK construction market remains under pressure, with commercial construction facing challenges, impacting overall profitability.

Q & A Highlights

Q: Why is the guidance for 2025's EBITDA margin around 5% when the underlying performance seems closer to 6%? A: R.J.M. Joosten, CEO, explained that the strategic range is 4% to 6%, and the guidance is conservative, reflecting the early stage of the year and ongoing market uncertainties. The company prefers to provide a prudent outlook, with more detailed guidance expected later in the year.

Q: What caused the year-on-year decline in the Dutch division's EBITDA margin from 6% to 5%? A: The decline was primarily due to challenges with Danish school projects, which impacted the overall results. However, the Dutch businesses performed well, with strong house sales and contributions from civil engineering and residential sectors, as noted by both R.J.M. Joosten, CEO, and Leendert den Houter, CFO.

Q: Why did the UK construction division report the same loss in the second half as in the first half of the year? A: R.J.M. Joosten, CEO, attributed the continued losses to the Co-op Live project in Manchester, which is nearing completion. The commercial construction market in the UK is under pressure, contributing to the division's challenges. The company expects to conclude the Co-op Live project soon.

Q: What are the drivers behind the margin expansion in civil engineering, and is it sustainable? A: R.J.M. Joosten, CEO, highlighted the strategic focus on energy transition projects, particularly in the UK and the Netherlands. The company has shifted from highway projects to rail and energy transition projects, supported by government investments. This focus is expected to provide long-term growth and profitability.

Q: How does BAM plan to address the challenges in the Dutch housing market, and what are the expectations for housing sales? A: R.J.M. Joosten, CEO, expressed optimism for long-term growth in the Dutch housing market, driven by strong demand. However, permitting and political decisions are critical for accelerating construction. The company aims for at least an 11% increase in housing sales, contingent on improved permitting processes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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