Bilfinger Shakeup Deepens as Two Board Members Step Downby
Chairman Cordes nominates replacements `at short notice'
Deuring, Heck nominated to replace outgoing Feldmann, Ring
Bilfinger SE made last-minute proposals for new directors to be elected Wednesday after two board members at the embattled German engineering services company unexpectedly left amid a top management shakeup and widening losses.
“Our company is in a phase of profound reorganization,” Chairman Eckhard Cordes told a shareholders’ meeting in Mannheim. “It is of elementary importance that the supervisory board and management are working hand in hand.”
Amid heckling from the audience that forced him to repeatedly interrupt his speech, Cordes said the departing directors were “not available” for re-election and substitutes were found “at short notice.”
At least one of the defections was due to a clash over strategy, intensifying a crisis at the German company, which only this month hired a new chief executive officer, Thomas Blades, from industrial gases company Linde AG after the abrupt departure of CEO Per Utnegaard in April. Utnegaard lasted less than a year at the helm, accelerating the revolving doors at what was once one of the country’s preeminent construction companies. Blades is scheduled to start the job by the third quarter of this year and has been appointed chairman of the executive board.
Bilfinger shares fell 2 percent to 38.665 euros at 11:24 a.m. in Frankfurt. They have declined more than 50 percent since their high in April 2014.
Cordes told shareholders he has nominated Dorothee Anne Deuring and Ralph Heck to replace departing directors John Feldmann and Hans Peter Ring. Feldmann won’t stand for re-election “due to differences of opinion with regard to the strategy and positioning of Bilfinger,” the company said Tuesday in a statement. Ring won’t stand for “personal reasons.”
Swedish activist shareholder Cevian Capital is Bilfinger’s largest shareholder, owning about 25 percent of the stock. Cevian is known for lobbying companies to sell divisions to generate greater returns, and Utnegaard had announced plans to sell Bilfinger’s power division -- the cause of a flurry of profit warnings. The investor has also built stakes in other European industrial companies, including steelmaker Thyssenkrupp AG.
The departures come after Bilfinger announced a cost-saving plan that aims to wring 100 million euros from the company, in part by cutting jobs. The company scrapped its dividend in March after the 2015 net loss widened almost sevenfold.
In the latest quarter, the net loss widened to 76 million euros ($87 million) from 17 million euros in the same period last year, according to the earnings statement. The company confirmed a financial outlook for the full year and said it expects a “slight increase in earnings.”
“In 2015 we proved our strategy,” Chief Financial Officer Axel Salzmann said at the meeting. “2016 will be a transition year.”
Industrial, oil and gas customers are less willing to invest in new projects, he said, adding that once Bilfinger is “repositioned” it will play a role in consolidation of the industry.
Bilfinger will also work to improve and monitor compliance, which wasn’t up to standards required by U.S. authorities, he said.