HEIJMANS : improves result in difficult market
11/11/2010| 01:30am US/Eastern
Heijmans reports higher profits by lower revenues
· Operating profit margin of almost 2% in the third quarter of 2010,compared to1% in the same period of last year;
· Current order portfolio virtually unchanged from order portfolio at end of June 2010;
· 1.069 houses sold in the first nine months of 2010, compared to708 in the same period of last year;
· Strengthened integrated approach as strategic direction.
Gerrit Witzel, CEO of Heijmans says: "Despite difficult circumstances in the Construction sector, I am fairly satisfied with the course of events. The operatingresults showanimprovementwhilstturnoverdecreases; the order portfolio remains at good levels. The focus on integrated approach, quality improvement and cost control are bearing fruit. We knowhow to operate in a difficult market."
Compared with the third quarter of last year, turnover in the months July-September was down with approximately 10% to around ? 640 million. The selective contracting policy in which margin is more important than volume is bearing fruit. The operating result improved compared with the third quarter of last year. Residential building activities in the Netherlands and the infrastructure activities in the Netherlands and Belgium in particular performed well.
The order portfolio remained virtually unchanged from the order portfolio at end June 2010. In recent months, we received new projects for a total of ? 0.6 billion. The integration of business sectors hereby clearly generates value. This is clear from newly acquired projects such as Sanquin in Amsterdam and the area development project Hooghkamer in Voorhout (around 400 homes). Up to the end of September, Heijmans sold 1,069 houses, compared with 708 in the same period of last year. Of the 385 houses sold in the third quarter, two-thirds went directly to private individuals. The number of unsold completed houses dropped to 63 (70 as per 30 June)). The number of unsold houses under construction dropped to 317 as per 30 September (343 as per 30 June). The capital tied up in land positions increased slightly.
The market for area development is changing. Heijmans foresees a clear demand for area development although the roles of government authorities, housing corporations, investors and developers are shifting. The complexity of projects, city centre projects in particular, is increasing. These large and complex projects demand both creativity and realisation capability. In order to respond to this market development effectively, Heijmans intends to combine the high grade know-how of area development by turning Proper-Stok and the land management of Heijmans Vastgoed into a single integrated organisation. Both labels will remain active in the market.
In addition, Heijmans plans to organise the infra activities into two sectors: `Wegen` (roads and road technology) and `Civiel` (underground and location-dependent infra). This adaptation of the organisation will create more synergies between the various infra disciplines and create a more effective alignment with market requirements. Both movements are in line with the strategy which focuses on an integrated approach to complex projects and continuously optimizing the organisation.
In order to further optimise the quality of projects and processes, Heijmans has launched the improvement program LEAN 6 Sigma. The program`s priority is the reduction of failure costs and the aim to deliver zero defect projects.
Sustainability plays a substantial role in Heijmans` integrated approach. In September, Heijmans Infra reached the highest level in the CO2performance ladder of Prorail, which strengthens the competitive position and accelerates the process of creating a sustainable organisation. Heijmans aims to further reduce its CO2footprint by 10% this year.
The net debt at the end of September is virtually unchanged from the end of June of 2010. The positive general operational developments, limited investments and tight working capital management, resulted in a stable cash flow.
The developments in recent months reinforce our expectation that Heijmans will close 2010 profitably.
Heijmans is a listed company active in property development, housing construction, utility construction, installation engineering and infrastructure. Heijmans has operations in the Netherlands, Belgium, the United Kingdom and Germany. We create added value for our customers by focusing on quality improvement, integrated projects, sustainability and profitability. Heijmans realises projects for home buyers, companies and government authorities. With approximately 9,000 employees and a turnover of ? 1.2 billion in the first half of 2010, we are building the spatial contours of tomorrow. For more information, please see www.heijmans.nl:
Annual results 2010
Heijmans will present the 2010 results on 2 March 2011.
For more information please contact:
+31 (0)73 543 52 17
+31 (0)73 543 52 17
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Source: Heijmans NV via Thomson Reuters ONE