Losses on Manchester project expected to rise as scheme still not finished
Bam has for the first time put a figure on how much money it has lost on its Co-op Live contract with the firm saying its UK construction business slumped £20m into the red for the six months to June.
Announcing its interim results this morning, the Dutch contractor said UK construction racked up a €23.6m (£19.9m) loss during the period which it blamed on project delays and supply chain issues “and included a substantial loss in the second quarter of 2024 for Co-op Live in Manchester”.
The £20m figure is set to grow as the job is still not finished although the firm said that it, along with two problem school jobs in Denmark, “are almost completed”.
Earlier this year, the boss of Co-op Live said Bam has “lost a lot of money” on the scheme, saying the cost of the job had gone up from £365m to £450m.
Bam signed up for a fixed-price deal when it won the job three years ago and Tim Leiweke, chief executive of the Oak View Group, the American operator behind the venue who co-own it, admitted: “Bam got hit hard, they’ve lost a lot of money on this job, I feel bad for them, they’re doing the best they can. Some things we could have expected, some things were unexpected.”
Bam chief executive Ruud Joosten said it had begun a cost-cutting initiative at the UK construction business as a result and had set aside €4m (£3.4m) for restructuring costs.
>> See also: Uh-oh. Co-op Live’s woes leave industry with familiar sinking feeling
Joosten added: “Bam needs to be flexible and adapt to current market conditions and as a result Bam has started a consultation process about reducing staff numbers within the construction segment of the division UK.”
Bam, which employs 2,200 people across its UK construction division, has already begun a cull at construction with 40 jobs going at the Northern and London arms of its construction business.
Revenue at UK construction was down 6% to €468m (£394m) with the firm’s €23.6m (£19.9m) loss down from the €15.5m (£13m) profit it posted for the same period last year.
Meanwhile, its civils business in the UK saw revenue jump 17% on profit up to €42.8m (£36m) from €16.9m (£14m) last time. The UK business’s order book was up 22% to €5.5bn (£4.6bn). Revenue for the UK and Ireland business in the six months to June was flat at €1.6bn (£1.3bn) with profit down 19% to €50.7m (£43m).
Group revenue during the half year was up 6% to €3.1bn (£2.6bn) with profit up 6% to €126m (£106m).
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