Bilfinger SE, Germany’s second-biggest builder, plans to cut 1,250 office jobs over the next two years by merging units in an effort to reduce annual costs by at least 90 million euros ($122 million).
Thomas Toepfer, who leads the industrial-services and concessions unit that’s being broken up and partly sold, will leave at the end of October following disagreements on how the business should be run, the Mannheim-based company said in a statement. He will be replaced by 57-year-old Pieter Koolen.
“Our strength lies in the diversity of our service range and in efficient cooperation among our operational units,” Chief Executive Officer Roland Koch said in a separate statement outlining corporate strategy and workforce reductions. “We will ensure that our combined expertise is geared toward the creation of greater value added for our clients.”
Koch has been transforming Bilfinger from a construction company into a services provider and is targeting 45 percent growth in net income to about 400 million euros in 2016 from 275 million euros in 2012. In addition to revenue from the planned sale of the concessions business, the former politician has 850 million euros available to fund acquisitions to reach the goal. Part of the plan is to reduce exposure to higher-risk, lower-margin construction projects.
Bilfinger has bought at least 12 companies since Koch took over as CEO in July 2011, according data compiled by Bloomberg.
“Bilfinger has been pretty active in acquiring, which results in structures which are inefficient, so it’s time to set things straight,” Norbert Kretlow a Frankfurt-based analyst at Commerzbank AG who recommends buying the stock, said by phone. “The implied negative news is that markets are worse than expected, but the positive is that they’re doing something about it, so the net balances out.”
Bilfinger fell as much as 1.2 percent to 76.37 euros and was trading down 0.9 percent at 11:21 a.m. in Frankfurt. That pared the stock’s gain this year to 4.9 percent, valuing the construction company at 3.52 billion euros.
The company plans to eliminate so-called subgroups to centralize administrative functions into 14 divisions, it said. The reorganization will generate personnel-cost savings of 80 million euros to 90 million euros, plus additional spending cuts in a “double-digit million range,” as of 2015. Bilfinger has 70,000 employees.