BKW cleans up its services business
Published: Tuesday, Mar 12th 2024, 13:40
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BKW is going over the books in the services business. The management under Robert Itschner is turning away from the network approach of its predecessor. In future, the companies are likely to operate much less independently.
Earnings power is insufficient, said BKW CEO Robert Itschner at the annual media conference in Zurich on Tuesday. For this reason, the company took a very close look at its portfolio in the fourth quarter.
A resulting "2-year fitness program" - as the BKW CEO calls it - has now led to write-downs on projects and other impairments totaling CHF 90 million in the 2023 annual financial statements. The Services segment thus fell into the red: EBIT was -40 million after a plus of 53 million in the previous year.
The division was exposed to strong economic fluctuations, higher material prices and difficult supply chain conditions. But the problems were also home-made: the same standards did not apply everywhere, said Itschner. Investments are now only made again when a company is profitable.
Many more synergies are also to be created across the entire division. However, the degree of centralization depends heavily on the different areas within the service business. However, There should be full transparency in the figures and as much efficiency as possible, said Itschner.
Cabbage and turnips
Under its long-standing predecessor Suzanne Thoma, who was replaced by Itschner in October 2022, the Bern-based energy company made aggressive acquisitions in the services sector for years. This went so far that BKW even ended up taking over a major IT service provider. To put it positively, the result was a "potpourri"; the negative formulation would probably be "cabbage and turnips". Itschner said shortly after taking office that there should now be a stronger focus on organic growth in the service sector.
However, there will be no large-scale job cuts: There are still no plans for a Group-wide restructuring program, said Itschner. There will be selective adjustments to the capacities of the individual subsidiaries, he said when asked about possible job cuts. However, resources would also be rebuilt elsewhere. Of the 12,000 BKW employees at the end of 2023, over 9500 will be working in the low-margin service business.
In the current year, BKW aims to achieve at least the same margin as in 2022 and also match the result from the previous year, when it was 3 percent. The company's forecast for the current year in the services business is "not a home run". But there is still "hard work" to be done before the end of the year. However, the medium-term ambitions have not changed. Most recently, the Bern-based energy supplier had forecast an EBIT margin of 8 percent in the services business.
Strategy update in November
Following the turbulence on the energy markets and the record results in 2022, the financial figures have returned to normal across the Group. Total operating performance fell by 12 percent year-on-year to CHF 4.60 billion in 2023. The bottom line was a 15 percent lower profit of 488 million francs.
According to BKW, this is the second-best operating result in the company's history - after the extraordinary previous year. The company intends to provide a strategy update at an investor day at the beginning of November.
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