Ballast Nedam half year results display a stable outcome

Key figures for the first half year of 2023

• Revenue: €514.7 million (2022: €605.9 million)
• EBITDA: €26.4 million (2022: €23.9 million)
• Orderbook: €1.4 billion (2022: €1.7 billion)

CEO Kemal Sağlam explains: "Ballast Nedam concluded the first half of 2023 with positive financial results. During this period Ballast Nedam achieved an EBITDA margin of 5,1% (2022: 3,9%). The revenue for the first half year €514.7 million is in line with our business plan. The development in the revenue reflects the circumstances in the real estate market and the strategic reorientation of our construction activities. Ballast Nedam is focusing on projects that have well-developed and repetitive construction methods, where expertise can be (re)applied, and risks can be better managed. We will continue to execute major projects in the Netherlands as long as they align with this strategy. The choice of a more selective project acquisition policy is reflected in the solid orderbook, amounting to €1.4 billion (2022: €1.7 billion).

The business environment remains challenging, and the economic slowdown continues in the second half of 2023. The energy crisis contributed to high inflation and interest rate increases, affecting investments in 2023.”

Infrastructure and energy transition

Rijkswaterstaat is also investing considerably less in new projects due to the nitrogen dossier; simultaneously, there is now a greater emphasis on renovation and maintenance. Within Ballast Nedam Infra Projects, we are also focusing on renovation and maintenance activities more. This summer, we have been extensively engaged in renewal and renovation work on the Roertunnel and Tunnel Swalmen (A73). By securing the project A27 Everdingen-Hooipolder, we created a solid basis for the medium term. We see growth opportunities in the energy transition market and we will further expand our activities in this sector, both in the Netherlands and internationally. Recent examples include Windpark Maasvlakte 2 and Windplanblauw, which have recently been completed, and there are several new projects within the energy transition market that are expected to get the green light soon.

Housing market

We are closely monitoring the housing market. Despite the significant need for (new-build) homes in the Netherlands, there has been a decrease in sales. This is largely attributed to higher mortgage rates, declining consumer confidence, and increased construction costs. As a result, fewer projects are being put up for sale in some regions. Lengthy approval processes, the nitrogen dossier, as well as numerous objections from the community, contribute to extended project timelines. Uncertainty surrounding the regulation of mid-range rental market is also inhibiting housing production. An extensive stimulating package of measures from the government is needed to enable planned projects in the Netherlands -that are still in the pipeline- to be built. The policy recently initiated by caretaker Minister de Jonge is a welcome first step in getting projects started. To achieve a stable construction and real estate sector, more large-scale construction sites are required.

International ambitions

Ballast Nedam has the ambition to expand further internationally. Ballast Nedam International Projects is involved in projects in Guinea, Luxembourg, and Sint Maarten, and the water purification and distribution project in Sri Lanka was completed in the first half of 2023. Furthermore, we are focusing on new projects in Africa, the Caribbean, Scandinavia, and we are exploring opportunities in Eastern Europe. Especially in marine and water works, as well as wind energy projects, Ballast Nedam sees the potential to gain ground internationally.

Thanks to our broad product and service portfolio, we are capable of resiliently navigating challenging market conditions. With our 146-year history, we have amassed significant knowledge and expertise that we can leverage to the fullest. By further enhancing our processes, and optimising our operational excellence, we create added value to our clients."

Domestic projects

Ballast Nedam achieved several milestones in the Netherlands:

• In May 2023, Project Jonas was completed. Ballast Nedam West executed this project and placed a strong emphasis on sustainability, achieving three BREEAM Outstanding certificates.
• The construction of the second phase of the urban development project Cartesius Utrecht, undertaken by Ballast Nedam Development and MRP, has officially commenced. This phase is being built by Ballast Nedam West and our subsidiary Heddes Bouw & Ontwikkeling. With this urban development, we will realise a total of around 3,000 homes and various amenities.
• The new Gerda Tarobrug in IJburg, Amsterdam, has been completed, built by Ballast Nedam Park & Connect. The bridge features a steel-reinforced concrete structure. The construction of these integrated steel-concrete structures is a rarity in the Netherlands.

Completion of high-risk projects

In previous years, Ballast Nedam decided to revise its strategy by limiting one-off construction projects with high-risk profiles and the reorganisation and the winding down of the projects still within the portfolio is nearly completed. Currently, Ballast Nedam is involved in a limited number of contractual disputes with our (former) clients, most notably Schiphol - A-pier and Nitrogen installation Zuidbroek. All these projects have been operationally concluded, and we strive to achieve financial and contractual settlements (within or outside the legal process).

Safety, sustainability and digitalisation

One year after the launch of the new safety campaign Take Care, the initial results are impressive. There has been a notable 60% decrease in the number of absentee incidents, which we hope is a lasting improvement. Safety remains a top priority, as every incident is one too many. In the realm of sustainability, Ballast Nedam is taking steps that can make a genuine impact. We have set a clear deadline for ourselves: by 2030, we aim to make all construction sites 100% CO2-neutral. We are reducing waste as much as possible and we are increasing the level of circularity. By 2040, we intend to take it a step further and be energy-neutral. Consequently, we are making substantial investments in green energy, creating a zero-emission vehicle fleet, and establishing our own independent energy sources. In alignment with this energy-neutral ambition, we are also focusing on enhancing biodiversity in our projects and adopting the use of biobased materials.

Digitalisation revolves around intelligent solutions for practical challenges. The new bricklaying robot, for which Ballast Nedam is the launching customer and participates in its further development, is a good example of how to deal with challenging market conditions. It eases the burden of strenuous physical work and addresses the challenges of a scarce labour market. Two bricklaying robots are currently being used on our projects. We are also focusing on the application of new systems for our business processes, such as the development of progress monitoring, asset monitoring, and the use of robotic process automation.

Outlook

By maintaining flexibility in our operations and delivering quality products in close collaboration with our clients, we create an impact. Together, we ensure that we can continue to grow steadily, both in the Netherlands and abroad. We are focused on managing risks and increasing profitability. Above all, our priority is to ensure we work in a safe and socially responsible manner. We will continue building a healthy organisation, with corresponding positive outcomes anticipated by the end of the year."