UPDATE 2-BAM warns on profit, writes down Dutch property
* To break even in 2010 after 127mln euro property writedown
* Dutch property unit to report 50 mln euro operating loss
* BAM shares tumble 10.2 percent
* Dutch property stocks Heijmans, Ballast also drop on news
(Adds analyst comments, details, updates shares)
By Aaron Gray-Block
AMSTERDAM, Nov 4 (Reuters) - Dutch builder BAM (BAMN.AS) said it would break even this year after taking a 127 million euro ($180 million) property writedown because of an increasingly gloomy domestic housing market.
BAM's profit warning sent its shares down 10 percent on Thursday, and dragged other property stocks lower as it stoked fears the property market could take far longer to recover. BAM, the largest Dutch construction group, said the domestic residential market showed no signs of recovery in recent months, as the number of delayed or discontinued projects is still growing.
The Dutch construction institute EIB said recently it did not expect a recovery in construction until after 2011, adding that it expected employment in the Dutch construction market to fall by 9 percent this year.
BAM said it would write down property positions at its Dutch development firm AM and that it expected AM to report a full-year operating loss of 50 million euros, up from a 20 million operating loss in the first half.
Including the writedown, AM is expected to report a pretax loss for the full year of about 177 million euros.
BAM said profitability of its other sectors was exceeding expectations, however, and the company was expected to report a break-even net result for all of 2010.
Shares in BAM tumbled 10.2 percent to 4.379 euros at 0857 GMT to be the leading decliner in a positive Amsterdam market, while rivals Heijmans (HEIJ.AS) and Ballast Nedam (BALNc.AS) were down 3 percent and 2.3 percent, respectively.
"The impairment was not expected, and that is a nasty surprise," said Tom Muller, an analyst at Theodoor Gilissen, who still kept his "buy" recommendation on the stock because he had already expected AM to report a 35 million euro 2010 operating loss.
"They have taken the pain, and I hope this is all of the pain for 2010," Muller said. "This means that every company in the market has problems. Heijmans has it and Ballast as well. It is the Dutch market, and the Dutch market is not recovering."
BAM had not provided a profit outlook earlier in the year, saying only it expected turnover at around 8 billion euros and that the Dutch residential market appeared to have stabilised, albeit at a low level.
BAM has tried to limit its exposure to residential construction and development and focus on more infrastructure projects to bring its operating profit margin, at 1.1 percent in 2009, in line with the 5.6 percent industry average.
It added on Thursday that at end-September the company met the requirements of its financial covenants and there was no compelling reason to write down the value of the AM unit itself. (Editing by Sara Webb and Will Waterman) ($1=.7071 Euro)
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