Bilfinger blues

Scaffolding to Services

Thomas BLADES,Mitglied des Vorstandes,Gestik, Einzelbild,angeschnittenes Einzelmotiv,Portraet,Portrait,Porträt. THE LINDE GROUP Bilanzpressekonferenz am 10.03.2018 in M u e n c h e n, [ Rechtehinweis: Verwendung weltweit, usage worldwide ]
Bilfinger CEO Thomas Blades, Picture Source: DPA
  • Why it matters

    Why it matters

    The new CEO of Bilfinger is determined to stem an exodus of employees from the company and develop a new strategy. The company has been in crisis for several years, and has seen several CEOs come and go in that time.

  • Facts

    Facts

    • Tom Blades aims to continue his predecessors’ strategy of transforming the company from a construction company into an industrial services provider.
    • The company has sold off its construction and real estate division, but Mr. Blades wants to hold onto the two remaining divisions: power and industry.
    • Portions of the energy division will also be sold.
  • Audio

    Audio

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Tom Blades is a straight talker. The new chief executive of Bilfinger introduced himself in telegram style during a press conference on the company’s semi-annual figures: “An Englishman born in Hamburg, studied in Salford, U.K., and Lyon.”

He also said that he had spent many years working at Schlumberger, then at Siemens and most recently at Linde.

Mr. Blades, who has headed Mannheim-based Bilfinger since July, left no doubt that he supports the strategy of his predecessors. “I believe the development of Bilfinger from a construction company into an industrial services provider is the right approach,” he said.

Stop the brain drain, stop the cash drain and develop the strategy.

Mr. Blades, who speaks German fluently, stated his three most important objectives in English: “Stop the brain drain, stop the cash drain and develop the strategy.” The ongoing crisis has unsettled the workforce, especially managers. Many have left the company, and Mr. Blades wants to stop this. He also wants to correct what he called “operational weaknesses.”

Especially in the company’s power division, which provides services for the energy sector, there are worrisome project risks, and financial holes need to be plugged.

Clearly, Bilfinger needs a new strategy now that the company has lost a key contributor to revenue with the sale of the construction division.

Bilfinger has mostly been the source of bad news in the last two years, ranging from numerous profit warnings to abrupt changes at the top of the company including  former Hesse governor Roland Koch, Herbert Bodner and Per Utnegaard. Business declined sharply in the once profitable energy division. And this year, Bilfinger even had to sell its table silver: the lucrative construction and real estate division.

The new chief executive officer wants to hold onto the power systems unit and the industry division. The energy division was also slated for sale, because fewer and fewer energy companies are investing in natural gas and coal-fired power plants.

Chief Financial Officer Axel Salzmann blocked the sale, claiming that “no offer reflects the value of power.” Still, Mr. Blades wants to sell off at least individual parts of the energy division. The strategy discussion in the coming debates will reveal which ones.

 

Drilling workers two peopelp dpa Julian Stratenschulte
Building up a new company. Source: DPA, Julian Stratenschulte

 

Unlike his predecessor Mr. Utnegaard, who resigned after only one year at the helm, Mr. Blades also wants to focus on the international market. “There is a very high probability that we will acquire stronger orders from outside Europe in the future,” he said, noting a recent contract from Iran.

Mr. Blades is also open to acquisitions, for which he will have €900 million ($1 billion) available from the sale of the construction and real estate division to Swedish financial investor EQT. “We want to strengthen the Industry division,” he said.

Most of all, the new chief executive needs to make the company profitable again after a shortfall of €500 million last year. The consolidated income figures for the first half of 2016 still showed a deficit of €134 million. The restructuring includes job cuts, but Chief Human Resources Officer Michael Bernhardt has yet to disclose numbers.

For the entire year, Bilfinger expects significantly improved earnings before interest, taxes and depreciation. “We can reach zero with EBITA,” which was negative €23 million in 2015, Mr. Salzmann said.

 

Georg Weishaupt covers companies and markets for Handelsblatt. To contact the author: weishaupt@handelsblatt.com

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