German engineer Bilfinger, which was forced to make a string of profit warnings last year, has said that it will pay its shareholders a larger dividend than expected, and will change its business strategy to target higher value work.
The firm, which is the 27th largest construction company in the world, made a loss of $81m last year, compared with a profit of $197m in 2013. The firm described this performance as "unsatisfactory" and blamed it on "negative developments in the power business segments".Â
The company said it planned to cut its exposure to electricity generation, which has been affected by a move away from conventional generation on the part of utilities such as RWE and E.on in response to Germany’s "Energiewende"policy of transitioning to renewable energy.Â
The statement said: "Bilfinger was affected by a difficult situation in the European power plant sector and general hesitation on the part of customers in the process industry. Although outputÂ increased slightly to $8.7bn, orders received declined to $7.5bn."
The goal was to clean house and to put the company in a clear position for the future– Herbert Bodner, Bilfinger interim chief executive
It is also parting with its civil engineering business: Swiss contractor Implenia will acquire the construction division, which works mainly in Europe. This part of the business employs nearly 1,900 people and in 2014 had an output volume of about $680m. The transaction is expected to be finalised at the beginning of next month. The firm is also selling its Polish construction arm, and said it was in talks with "interested parties".Â Â
Another significant disposal is the company’s offshore wind turbine and marine construction division, which it said "no longer complies with Bilfinger’s risk profile". The Offshore Systems and Grids division will be disbanded and the overhead power lines business, which was also a part of that division, will be allocated to the Power Systems.Â
The Mannheim-based company’s four profit warnings last year led to the replacement of its top management. Per Utnegaard, a Norwegian who presently heads airport services company Swissport International, will reportedly take over a chief executive from Roland Koch, who resigned last year, although Bilfinger has yet to confirm this.Â
Joachim MÃ¼ller, the present chief finance officer will be replaced by Axel Salzmann, the head of finance at German broadcaster ProSiebenSat, with effect from 1 April.Â Â
Herbert Bodner, the interim chief executive, told journalists on a conference call that he was confident his successor would take over a stronger firm as a result of the changes. He said: "The goal was to clean house and to put the company in a clear position for the future. It does not look as though we will rise from the ashes like a phoenix in 2015 but I am confident that Bilfinger has a good future."Â
Shareholders reacted positively to the news, and the company’s share price rose 10% after the announcement.