News on 16 February 2001

HBG pursues profit through restructuring

Dutch construction group Hollandsche Beton Groep (HBG) aims to raise its profitability rapidly over the next three years. At a meeting for investment analysts in Amsterdam, the group's president CJA Reigersman said HBG would "more than double" its earnings before interest and taxes (EBIT), to at least €200m in 2003.

HBG announces its 2000 results next month but has already made provisions which will result in a net loss of around €68m.

At the end of September last year the group embarked on a 'strategic reorientation' beginning with an analysis of its business against international competitors. It concluded that the group needed to improve results in the construction and real estate and civil engineering sectors (together accounting for over 85% of turnover) before considering acquisitions or disposals. Within a group profit margin target of 4%, construction and property is expected to achieve 3.6%, while consultancy and engineering should deliver 7%.

A programme of efficiency improvements and cost-cutting is expected to produce €135m worth of savings, comprising €70 m from improved operating results, €40m from savings on purchasing costs and €25m from reduced overheads and "general savings" at all business units.

The Group said it will seek to expand its activities with greater added value, such as project development and PFI projects. HBG Construction in the UK launched a facilities management arm last year (see News story).

In the medium term, HBG will "withdraw from any markets in which its operating companies are not either market leaders or have the ability of swiftly gaining a leading market position through acquisitions or organic growth."

www.hbg.nl

Richard Byatt

 

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