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Bilfinger chief sets out latest attempt to revive ailing company
February 14, 2017 / 1:04 PM / 7 months ago

Bilfinger chief sets out latest attempt to revive ailing company

The logo of German industrial services provider Bilfinger is pictured outside its headquarters in Mannheim, Germany, May 11, 2016. REUTERS/Ralph Orlowski

MANNHEIM, Germany (Reuters) - Bilfinger’s (GBFG.DE) new chief executive has set out the latest attempt to revive the German industrial firm’s failing fortunes, consolidating what remains of the group into a new structure and promising to rekindle a sense of pride.

Tom Blades, Bilfinger’s fourth CEO in six years, on Tuesday outlined a vision of a company that could build on more than a century of engineering expertise to grow again, after years of battering by a collapse in its markets and poor management.

Bilfinger, once a leading name in German construction, became notorious for issuing six profit warnings in the space of two years before Blades’s arrival in July 2016. One CEO after another sold off some of the company’s crown jewels.

The group is left with the design, construction and servicing of industrial plants - a difficult business in an environment of volatile raw-materials prices - and some activities catering to power utilities.

“We have tasks ahead of us,” Blades told a news conference on Tuesday at the company’s headquarters in Mannheim before a meeting with analysts. “It’s not rocket science, it’s simply doing what we’re good at and doing it every day.”

His comments came after Bilfinger late on Monday announced new mid-term targets, a surprise share buyback and an unexpectedly high dividend, lifting its shares which closed up 3.9 percent after hitting an eight-month high.

Blades, a 61-year-old Briton who is an engineer by training and former manager at industrial gases group Linde (LING.DE), said he had the backing of activist investor Cevian, which holds 26 percent of its stock, for his strategy to build up the group.

He plans to simplify its structure into one arm focusing on engineering and technology and another on after-sales service.

Blades was recruited by Cevian partner Eckhard Cordes, now Bilfinger’s chairman.

“A break-up was never an issue for me. I never talked to the supervisory board about it,” Blades said. “If that had been the case, they would have installed an accountant or a lawyer, not an engineer.”

Cevian declined to comment.

Bilfinger sold its construction business in 2014 under then-CEO Roland Koch, a former politician who tried to focus the group on higher-margin service activities. It sold its real-estate services operations, its most profitable business, last year.

Analysts said Blades and his team had time to prove themselves, although the company had a long road ahead.

“The new management is slowly starting to win the confidence of the market,” Metzler Bank analyst Jasko Terzic said. “Blades’s technical knowledge and understanding of how the business works is impressive. But it’s still very early days.”

Editing by Maria Sheahan and David Holmes

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