Ability to learn and adapt key success factors for Ballast Nedam

03 September 2020

Our half-year annual results show that we are in line with our business plan for 2020. Given the current COVID-19 circumstances, being resilient is more relevant than ever before. It is the result of being flexible; of our ability to learn and to adapt. These key success factors, together with our focus on strong relationships, help us to continue work and stay in line with our business plan.

Effects of COVID-19

Our main focus throughout this period naturally was on our people and their safety. We took abundant safety measures to protect our employees and therefore also our business. The pandemic created a high level of commitment and care within our company.
Thanks to the professionalism and dedication of our employees, all projects remained operational during the outbreak of COVID-19. The effects of the pandemic caused a decrease in productivity throughout our business. Within our company at its peak, close to 3 percent of the population was reported ill or was having COVID-19-related symptoms. We now see these numbers decreasing and employees on foreign assignments are also returning back to work. Also, we were able to tackle most delays on delivery of materials.

Flexibility as a mindset

In our 140 years existence as a company, we have dealt with many challenges. To overcome these, we need to continuously be flexible, adapt and look for new possibilities. This mindset is one of our biggest strengths.

As our newly appointed CEO Kemal Sağlam explains: “Our key success factors are our ability to learn and adapt. For example, during COVID-19 we found out that our international supply chain, something we are very proud of, became a threat during lock-down. We had delays in materials such as elevators from Italy. We realised that we had to work differently to keep our operations ongoing. Decision making, processes, resource allocation and communication all had to adapt to the new reality. It taught us to better spread our risk, to organise alternative supply chains and adapt our business strategy to come out stronger. This ability to adapt is a key success factor and not only in construction: companies with high learning and adaptation curves will have bigger chances to survive.”

Focus on process deliverables and stakeholder relationships

As a construction- and development company we focus on our project deliverables. Safety, quality, in-time delivery and (cost)efficiency are our licence to operate. Besides that, we focus on our process deliverables. “Our way of working is a key focus point”, states Sander Lefevre, Board Member since 2016. “That means being client-oriented, transparent and open-minded to change. It is about sincere willingness to cooperate with clients, partners and subcontractors with a strongly committed team that is led by ambitious leaders.”

We are focused on looking for possibilities and solutions together with our stakeholders. “For example when crises like PAS, PFAS and COVID-19 came along, we tried to seek solutions within the sector to deal with the new circumstances and to keep our mutual goals alive. Our strong relationships with our clients, suppliers, subcontractors and local communities and our flexibility to adapt enabled us to stay on track.” To quote Charles Darwin: “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”

Financial Results

Looking at the half-year financial results, we are in line with the forecasted business plan for 2020. Our half-year revenue from Q2 is EUR 396.5 million. Our EBITDA is EUR 10.8 million. We remained good quality of the order intake and a solid order book which is still stable at EUR 1.4 billion.

Project highlights

A selection of project highlights which took place in the past six months:

  • IXAS | Opening of the two northern tunnel tubes of the A9 Gaasperdammertunnel, the longest land tunnel in the Netherlands. The goal is to improve the accessibility of the northern Randstad and to increase the quality of life in Amsterdam Southeast where Ballast Nedam is part of the PPP consortium. It is a great example of collaboration, sustainable solutions and technological excellence.
  • De Groene Loper | This project in Maastricht once again proved to be one of the most sustainable area developments in the Netherlands. The Dutch Green Building Council (DGBC) has assessed Phase 2A of the project with 4 stars. This assessment is entirely in accordance with the ambitious sustainability and circularity standards.
  • Project Jonas | Newly acquired project from Amvest. Project Jonas, inspired by the legend 'Jonas and the whale' is a remarkable project, centrally built in the IJburg Bay in Amsterdam. A total of 273 apartments will be realised and a wide range of functions, including a roof beach, commercial plinth, parking basement and the impressive 'canyon'.
  • Hart van Zuid | Cultural hotspot Hart van Zuid, where Ballast Nedam is part of the PPP consortium, is where the new Theater Zuidplein has been completed. In addition to two theatre halls and a café-restaurant, it also houses a new branch of the Rotterdam Library: Zuidplein. It is the second major milestone of Hart van Zuid, the area development project that is working on a vibrant city centre for Rotterdam South.
  • MindLabs | Ballast Nedam Zuid signed the contract for the construction work of MindLabs in Tilburg. MindLabs will focus on innovation in areas such as robotics, language technology, serious gaming and artificial intelligence. The current steel frames of the connecting Hall 70 will form the heart of MindLabs. Next to this hall the new transparent, 5 layer building will be realised.
  • Acquisition Heitkamp Construction Swiss | Since March 31 2020, Ballast Nedam holds 49% of the shares in Heitkamp Construction Swiss. As a tunnelling expert, well known for building the Gotthard base tunnel, Heitkamp Construction Swiss strengthens the tunnelling portfolio of Ballast Nedam and its (international) Infra division.
Outlook: modestly positive

When we continue this path we will manage to remain financially stable and our outlook will be modestly positive. It is still uncertain though what effects will occur in the future due to COVID-19, for example due to delayed investment decisions. It will undoubtedly have effect on new project assignments; how big this effect will be, remains difficult to predict. Its impact will depend on government initiatives and legislation, international trading possibilities and the restoring of trust. Looking at infrastructure projects, government support is required to boost our industry. Also delays on housing development are expected although demand still continues to grow.

Our Chairman of the Board of Management, Cenk Düzyol shares his clear vision on the future of Ballast Nedam: “With our compass on the future, we are optimistic and we have faith in our own capabilities and strengths. Rönesans Holding is our solid parent company that was ranked 23rd in the list of the world’s largest international construction company according to ENR, coming from the 33rd position in 2019. We have many successful Business Units, skilled staff and a lot of experience amongst us. We will continue this path as we set out, continuously monitoring and reflecting our business operations. We will embrace new challenges, learn and adapt and come out stronger."