Profits up over 30% at firm with contract to build Luas extension

PROFITS AT the building company which earlier this year won the €150 million Luas extension contract increased by more than 30 per cent to €19 million in 2008.

BAM, the Dutch-owned civil engineering contractor, had a turnover of €460.7 million last year, a fall of just over 2 per cent on the €470 million it recorded in 2007, accounts filed with the Companies Registration Office show.

Lower costs improved overall profitability. The group had an operating surplus €18.9 million last year, 32 per cent up on its 2007 operating profits of €14.4 million.

The group paid its parent a €12 million dividend, a 66 per cent increase on 2007’s €7.2 million payment. A €10.3 million loss on its pension scheme resulted in the company charging a €2.6 million loss to reserves.

BAM was known as Ascon until late last year, when it changed its name to that of its Dutch parent.

The company specialises in large-scale building and civil engineering work and is frequently involved in public projects such as road building. Earlier this year, it won the €150 million contract to extend one of Dublin’s Luas lines from Tallaght to Citywest in Saggart.

A group of businesses – developer Jim Mansfield’s HSS, Davy Hickey Properties and Harcourt Developments – are footing half the bill. Their involvement helped to guarantee that the line would be extended. The Railway Procurement Agency will pay the balance.

The company notes in its accounts that 90 per cent of its turnover comes from State-backed projects and warns that, as a result, it relies heavily on the public capital spending programme.

“The Government’s commitment to the programme is unclear in the current economic circumstances,” BAM says.

It adds that projects have been cancelled and delayed, while competition for new projects has intensified.

The Government pledged in its April budget to spend €6 billion a year on capital projects.

However the Construction Industry Federation has warned that the rate at which plans for new projects are coming on stream means this spending will not materialise, with consequences for the industry as a whole.