Owner of HBG and Edmund Nutall launches investigation after being hit by £78m of losses at German building subsidiary
Royal BAM, the Dutch owner of HBG and Edmund Nuttall, has posted a profit warning caused by a weak performance by a German building subsidiary.
The management of Wayss & Freytag Schlüsselfertigbau will be suspended and the two investigations will be launched into what went wrong.
Royal BAM said this week it would fail to reach its forecasted profit of £122m for the nine months to 30 September. Instead the Dutch company is expecting to post a profit of just £88m.
The profit warning has been caused by its loss making non-residential building arm Wayss & Freytag Schlüsselfertigbau where its losses have grown £78m for the first nine months of the year.
Royal BAM put the poor results down to a number of factors including a £37m loss on current projects and the rapid increase in prices by its subcontractors and suppliers as a result of the recovery in the German construction industry. In order to tackle the problems the reorganisation of Wayss & Freytag Schlüsselfertigbau will accelerated included the sale of the Tiefbau company. The change will lead to loss of around 100 jobs.
Royal BAM has now taken tough measures to stop the problems. The management of Wayss & Freytag Schlüsselfertigbau will be suspended and its day-to-day running handed over to its sister company Müller-Altvatter.
The board of the Dutch group are also launching an forensic investigation into the management as well as bringing in a external consultant to conduct an audit.
Royal BAM is the parent company of the UK’s HBG and Edmund Nuttall. The company has said the loss at Wayss & Freytag Schlüsselfertigbau will overshadow the results of all its others subsidiaries.