National children’s hospital builder posts 12% fall in profits

BAM Ireland, firm behind spiralling cost site, says building industry in ‘fragile state’

Work in progress at the national children’s hospital site at St James’s earlier in 2019. Photograph: Dara Mac Donaill

Work in progress at the national children’s hospital site at St James’s earlier in 2019. Photograph: Dara Mac Donaill

 

Profits at BAM Ireland, builder of the seriously over-budget national children’s hospital, fell 12 per cent last year to €13.7 million, the latest figures show.

Dutch-owned BAM ended up at the centre of a political storm after it emerged that the cost of building the hospital had ballooned to €1.4 billion from an original €650 million estimate. Fears subsequently arose that the final bill could be €2 billion.

BAM said on Thursday that turnover grew 13 per cent last year to €523.6 million from €465 million in 2017. Profits fell 12 per cent to €13.7 million in 2018 from €15.9 million the previous year.

Chief executive Theo Cullinane singled out the Government decision to name BAM Ireland as the main contractor for phase B of the national children’s hospital as one of the highlights of the year.

BAM had already been chosen as the main contractor for the first phase of the project, close to St James’s Hospital in central Dublin.

“Our turnover has increased by 13 per cent year on year, spurred on by the continuing upturn in construction activity seen across Ireland in recent years,” Mr Cullinane said.

BAM is a big beneficiary of State spending on construction. The company is also the main contractor on the N25 New Ross bypass road, a public-private partnership valued at €230 million.

Barrow bridge

That project includes the Rose Fitzgerald Kennedy Bridge across the river Barrow, between Stokestown in Co Wexford and Pink Point in Co Kilkenny. The 887m bridge will be the Republic’s biggest when it opens in the coming months.

It built the new air traffic control tower at Dublin Airport for the Irish Aviation Authority, the State’s air travel safety regulator, as well as constructing schools and courthouses.

Private-sector projects include One Microsoft Place, a 35,000sq m office for the US multinational in Leopardstown, Dublin, where more than 2,000 people work.

BAM is a partner in Horgan’s Quay in Cork with Clarendon Group. The pair are building offices, apartments and a hotel on a site next to Kent Railway Station in the city centre.

Also in Cork, BAM worked on Navigation Square on the Beamish & Crawford brewery site on South Main Street, which will house the city’s event centre.

Working capital

BAM paid a €7 million dividend to its Netherlands-based owner, Royal BAM Group, in 2018. It ended the year with €128.5 million in cash, €34 million less than 12 months earlier.

The company said increased activity boosted its need for working capital, leaving it with less cash at the end of 2018. Net assets on December 31st were €80.2 million, slightly ahead of the €78.3 million it recorded at the end of 2017.

Despite his company’s strong performance, Mr Cullinane claimed the Republic’s building industry was in a “fragile state” with the Government making little progress on much-needed infrastructure.

“Margins remain far too low and make reinvestment difficult,” he said. Mr Cullinane argued that the current system for hiring contractors for State projects cast doubt on the Government’s ability to pay for the Project Ireland 2040 national development plan.