October 15, 2015 / 12:40 PM / 2 years ago

UPDATE 1-Bilfinger shrinks focus, sees 2016 as transition year

* Net loss of about 500 million euros for 2015 seen as bottom

* Businesses not necessarily for sale

* Shares up 2.2 percent (Releads with strategy presentation, new throughout)

By Georgina Prodhan

MANNHEIM, Germany, Oct 15 (Reuters) - Struggling German engineering services firm Bilfinger said it had identified more than a billion euros ($1.1 billion) of businesses whose future it would consider during 2016, which would be a year of transition, and beyond.

Bilfinger, which in its heyday built the Sydney Opera House and Munich Olympic stadium, acquired hundreds of businesses during a growth spree.

It switched focus to power and industrial plant servicing to escape a construction slump but was then caught out by crises in first the utilities and later the petrochemicals sectors that were its major clients.

“The message is focus, focus, and focus,” said new Chief Executive Per Utnegaard, the former Swissport CEO who was appointed by Bilfinger’s activist shareholder investor Cevian after six profit warnings.

“We have to concentrate on what we’re good at,” he told reporters at a strategy presentation, saying Bilfinger’s 100 top clients - who include BASF and BP - accounted for 80 percent of its output and deserved more attention.

Bilfinger said on Thursday it expected a net loss of about 500 million euros this year, hit by losses and writedowns at the power plant services business it put up for sale in June when the new CEO took the helm.

Shares in Bilfinger, which have lost more than a fifth of their value this year, rose 2.2 percent to 37.39 euros by 1050 GMT, outperforming a 0.5 percent gain in Germany’s mid-cap index and recouping Wednesday’s losses.

“There are some thoughts on portfolio streamlining, which is good and kind of interesting as it means further downsizing,” said DZ Bank analyst Jasko Terzic, also welcoming Bilfinger’s reiteration of its full-year targets.

“It’s nice to know, however, for the time being confidence can only be achieved by a strong belief in the CEO and CFO as it is hard to grab any numbers,” Terzic added.

Bilfinger said it may decide to keep some of the non-core businesses, which include U.S. oil and gas construction, water technologies, its Centennial U.S. government services company, offshore systems and Asia-Pacific engineering services.

Together with the Power unit that is already classified as discontinued operations, they represent about 30 percent of Bilfinger’s 2014 output.

“It’s a mixed bag. We have loss-making units, we also have pearls. All options are open,” said Utnegaard, adding that it could take anything from one to eight years to decide the future of any given business. “Non-core doesn’t mean for sale.”

He said he was not under time pressure from 26-percent shareholder Cevian to deliver better profits or face a separation of the remaining Industrial and Building and Facility units, though they would be run more independently than before.

“The supervisory board is in agreement with our milestones and our strategy in the future,” he said, adding that detailed 2016 and mid-term financial targets would be given at another strategy update next spring.

$1 = 0.8747 euros Reporting by Georgina Prodhan, editing by David Evans and Elaine Hardcastle

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