BESIX: Mixed results for 2019 & uncertainties linked to the consequences of the coronavirus

21 April 2020

Summary

  • In 2019, BESIX achieved a record turnover of 3.33 billion euros, an increase of 32% compared to 2018. The building sector accounts for 65% of the turnover. The order book of 4.8 billion euros is also at a record high. The consolidated net result, at 42.2 million euros, is however below expectations.
  • Contracting remains BESIX's core activity, with iconic projects delivered in 2019, including the Crown Princess Mary Bridge in Denmark, the new DPG Media headquarters in Antwerp and the Forensic Medicine Coroners Court Facility in Australia.
  • Real estate development continues to gain momentum, as do the Concessions & Assets activities. BESIX Real Estate Development matched its record turnover of 2018 with 154 million euros. The Concessions & Assets activities continued to deliver recurring revenues, particularly in the Middle East
  • BESIX has made innovation a priority with, among others, BESIX 3D, BESIX Clean Air, the development of the BESIX Start-Ups Accelerator and the construction of a first 'Smart Building' in Dordrecht, the Netherlands.
  • 2019 was an important year for the sector diversification, with the official opening of the first A-STAY hotel in Antwerp (Belgium), the launch of LN24, the first 24-hour news channel in French-speaking Belgium and the reopening of its renovated Flamant Sablon shop in Brussels, giving the brand a renewed visual identity.
  • The outbreak of coronavirus pandemic has called for an extremely cautious approach and management of the ongoing activities. Many of the group's projects, particularly in Western Europe and Africa, were slowed down or interrupted during March 2020. Measures have been implemented in order to optimally sustain the social and economic consequences. Combined with a slowdown in the Middle East region, as a result of a collapsing oil price, this pandemic promises challenging times for our Group.

Statements of the Chief Executive Officer and the Chairman of the Board of Directors

Rik Vandenberghe, CEO of BESIX Group : “In 2019 we delivered a year of mixed performance with an order book to its highest ever level, a healthy net cash position but a lower than expected net result, partly due to a slow-down on the Middle Eastern market and to our prudent decision to book provisions to reflect our healthy risk management practices. This should not, however, overshadow the strong results achieved along the year, particularly in Concessions & Assets Middle East, Real Estate Development and, in Belgium, most of our Regional and Specialized entities.”
Johan Beerlandt, Chairman of the Board of BESIX Group : “The Board of Directors is prudent in its outlook for 2020. In the many countries of the world where we are present, a majority of our sites had to reduce activities in order to respect quarantine impositions. But, at a time when our businesses are temporarily disrupted, the Board wants to share its confidence in the strength of the Group. We are a smart, passionate and resilient force and we are drawing strength from our committed employees, from the diversity of our business activities and from our robust financial structure. Together, we can and we will face the unknown.”

1. Turnover, net income and order book

  • BESIX closes the year 2019 with a record turnover of 3.33 billion euros, an increase of 32% compared to 2018. This increase is in line with forecasts and is mainly due to the integration of the results of Watpac, an Australian company acquired by BESIX in December 2018, into the Group's scope of consolidation.
    BESIX's activities in Western Europe and Australia contributed 48.5% and 28% respectively to the Group's turnover. The Middle East contributed 16.9%.
    The building sector accounts for 65% of sales and civil engineering works for 16%. Infrastructures and cabling, foundations, marine works and environmental installations, for their part, hover around 5%.
  • The group's net income for the year ending on 31 December 2019 was 42.2 million euros, a substantial decrease compared to 2018, due on the one hand to the unfavourable economic situation in the Middle East, and on the other hand to provisions which were taken in respect of potential losses and ongoing litigations on a limited number of projects.
  • In 2019, BESIX again posted a record order book amounting to 4.8 billion euros, compared to 4.7 billion euros in 2018. Western Europe accounts for 49.7% of orders, the Middle East 18.2% and Australia 16.8%. The figure of 15.2% for the rest of the world indicates a growth in BESIX's international activities, particularly in Africa, Canada and Eastern Europe.
    The building sector accounts for 57.7% of orders, 27.5% for civil engineering works and 7% for marine works.
  • BESIX's consolidated net cash position stands at 141 million euros.
  • The solvency ratio stands at 24.2%, which is well above the average for the sector.

2. Contracting remains the main activity with iconic sites

With a turnover of 3.2 billion euros and an order book of 3.8 billion euros, contracting remains BESIX's core activity. In 2019, important new contracts were won, both in the regions of the world where BESIX Group and its entities have a longstanding presence, namely Western Europe, the Middle East and Australia, and in international markets, particularly in Africa, Canada and Eastern Europe.

Among the iconic projects delivered by BESIX in 2019 are the Crown Princess Mary Bridge, inaugurated by Her Royal Highness Crown Princess Mary of Denmark on 28 September, and the new DPG Media headquarters, symbolising the renewal of the Antwerp Central Station district in Belgium. In Australia, the Forensic Medicine Coroners Court Facility, designed and delivered by Watpac, was named Best Healthcare Building in the 'Excellence in Construction Awards' of the Master Builders Association NSW.

At Tiel in the Netherlands, the group delivered one of the first waste water treatment plants in the Benelux that is 100% energy neutral, i.e. it meets all of its own energy needs by treating sewage sludge.

For their part, the Regional and Specialized entities held by BESIX, active mainly in the Benelux countries, bring their contribution to the Group's turnover to 1.1 billion euros and to the order book to 960 million euros. These include Vanhout, Jacques Delens, Wust, Cobelba, Lux TP, Socogetra, Franki Foundations, BESIX Infra and Van den Berg.

3. Continued organic growth for BESIX RED, while Concessions & Assets activities continue to gain momentum

  • The results of BESIX Real Estate Development (BESIX RED), the Group's real estate entity, remain strong in 2019 with a turnover of 154.3 million euros in line with the ones achieved last year. BESIX RED’s contribution to the group's net result amounts to 15.7 million euros.
    Today active in 14 cities in Belgium, Luxembourg, The Netherlands, Portugal and France, BESIX RED continues its organic growth with large scale projects totalling more than 600,000 m² under development.
    In 2019, the company delivered in joint-venture the new world headquarters of the Ferrero Group - a 29,500 m² built-to-suit office building in the Grand Duchy of Luxembourg.
    2019 also confirmed BESIX RED’s pan-European ambition with the acquisition of a second site in Portugal intended for large residential development (DUUO, 34,000 m², 280 residential units, Lisbon).
    BESIX RED’s outlook remains positive. With the aim of strengthening its geographical and sectorial diversification’s strategy, the developer intends to provide the architectural, technical and operational excellence of its multidisciplinary team to institutional and private investors.
  • The Concessions & Assets activities also recorded good results, particularly in the Middle East, with a net result of 22.4 million euros. Through various types of public-private partnerships, BESIX continues to develop fully integrated offers that combine design, construction, financing, operations and maintenance of environmental and infrastructure assets.
    In recent years, BESIX has become a major player in the Middle East in municipal wastewater treatment, and is now actively developing a portfolio of solid waste treatment projects. The assets under development comprise the largest waste-to-energy plant in the world, which will be built by BESIX and Hitachi Zosen Inova for the Dubai Municipality.
    In 2019, several PPP projects have achieved major milestones. This is the case for the first Refuse Derived Fuel production plant in the Emirate of Umm Al Quwaïn, for which financial close was achieved in April and where construction progresses well.
    Similarly, in the Emirate of Sharjah, BESIX is actively upgrading a wastewater treatment plant in Al Saja'a. Finally, in the greater Rotterdam area, construction works started on the A16 “De Groene Boog” project, which is the 5th PPP project of BESIX in the Netherlands.

4. Innovation as a priority

BESIX has made innovation a priority. The Group's initiatives ensure that it anticipates developments in the construction sector, particularly in the fields of new technologies and the environment.

BESIX supports the development of internal innovation: from opening a 3D-concrete printing unit in Dubai, to manufacturing panels equipped with vegetable moss, intended to reduce locally the concentration of fine particles and improve air quality, many internal initiatives have been commercialized in 2019.

Next to this, BESIX welcomes start-ups active primarily in smart building, robotics, construction 4.0 and artificial intelligence, provides them support and opportunities for experimentation for free during 12 months. Several of them were able to try out their products and services on construction sites during the year.

Finally in 2019, BESIX built its first 'Smart Building' in Dordrecht, the Netherlands. This building, which houses the headquarters of BESIX Nederland, is now considered a European reference in terms of energy management and efficiency. In collaboration with key players on the market, BESIX is also participating in a pilot project focusing on the development of an Internet of Energy that allows buildings to act as vital components in a renewable energy landscape.

5. People assets

  • BESIX Group closed the year 2019 with 13,351 staff members.
  • In terms of Health and Safety, many sites celebrated several millions of LTI (lost time through injury)-free man-hours in 2019 marred by 1 fatal accident in December in one of BESIX Workshop. More than 695 safety walkabouts were done by Group executives around the globe. BESIX Group and its subcontractors have a Lost-Time Injury Rate of 0.50 per 200,000 man-hours. A total of 173 BE SAFE Ambassadors have voluntarily joined the newly designed BESIX Behavioural Based Safety Program, actively supporting the shaping of the Company Culture of Safety.
  • BESIX Foundation celebrated its 10th anniversary in 2019. In 10 years, the Foundation has funded 300 projects, donated 4 million euros to selected associations active in education, construction and environment, benefitting 160,000 beneficiaries thanks to the involvement of some 5,000 volunteers.
  • In 2019 and for the 7th year in a row, Six Construct, BESIX’s entity active in the Middle East, received the CSR Label framework awarded by the Dubai Chamber in recognition of its outstanding efforts and commitment towards CSR & sustainability practices in the region.
  • Early 2020, BESIX Group was officially certified as a Top Employer. This label acknowledges the work of recent years. Under the heading "#WeCare" BESIX Group is clearly following an ambitious path to offer excellent working conditions, stimulate and develop talents, and constantly strive to optimise the working environment.

6. Further diversification

2019 was an important year for the diversification started by BESIX in 2017.

In November, A-STAY opened a first hotel in Antwerp (Belgium). A few months earlier, the foundation stone was laid for a hotel in Chisinau, Moldova, and planning permission for the Diegem hotel in Brussels was granted by the competent authorities. A-STAY is an innovative accommodation concept, offering apartments for short or long term stays. It is based on the use of new technologies such as the IoT, biometric recognition and algorithms in order to offer its occupants added value at an advantageous price.

In September, LN24, the first 24-hour news channel in French-speaking Belgium, began broadcasting its programmes free of charge, both on television and on the Internet. The television channel, in which BESIX is a shareholder, was created in 2018 by well-known Belgian journalists.

In October, the interior decoration brand Flamant, taken over by BESIX in 2017, reopened its renovated Sablon shop in Brussels and presented its new visual identity.

7. Outlook 2020: Uncertainties for the future linked to coronavirus

While BESIX Group's results, and in particular the diversity and quality of its order book, are promising for the years to come, the heavy human, social and economic consequences of the coronavirus pandemic around the world call for an extremely prudent approach and management.

There is no doubt that the current crisis will have a significant impact on the Group’s results in 2020: the Group's businesses, which were initially expected to grow, will inevitably decline; the extent will depend on the duration of the containment measures in place in the countries where the Group operates, their evolution and any restrictions that may follow.

At the time of publication, governmental measures to flatten the curve have interrupted work on a very large number of worksites around the globe. As a result, activity in the Group’s construction businesses has currently either slowed down considerably or is completely shut down. The Group is actively preparing for the gradual restart of activity, although it is unclear how fast this will be.

In the meantime, all the Group’s business segments are working hard to ensure that business continues when possible, and are rolling out business continuity plans to reduce the impact of this crisis. Expenditure is being kept under tight control whilst focusing on core projects.

BESIX Group has reported a strong cash position during 2019 and is sufficiently liquid to deal with the corona crisis.

The Group has decided to postpone the decision of the payment of a dividend till after the corona crisis. Senior management has reduced their salary by 30% for as long as the pandemic lasts.

The Group has empowered its local entities and its Foundation to redirect efforts and resources to the most meaningful COVID-19 relief efforts in their community. From donating critical supplies to local hospitals and laptops to children in need for online schooling, to 3D-printing essential parts of protective masks, BESIX Group and BESIX Foundation are stepping in to respond to emerging community needs.

For further information: www.besix.com