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The French parent of construction group Bouygues Construction Australia has been forced to inject close to $300 million into its local arm as expected losses on its suite of infrastructure projects continue to eat into its balance sheet.
Bouygues Construction Australia's 2019 accounts filed in March show the parlous financial state of the local arm of the French construction giant after cost blow-outs at projects including the troubled Melbourne Metro rail tunnel and Sydney's WestConnex tollroad. The subsidiary booked a $322 million loss during the year to December 2019, going deeper in the red after the $202 million loss it posted a year earlier.
Metro Tunnel's first tunnel-boring machine which ground to a halt for three days.CREDIT:JASON SOUTH
Bouygues Construction Australia's projects include the $11 billion Melbourne Metro rail tunnel and two NSW road projects, the $16 billion plus WestConnex tollroad and the $3 billion NorthConnex tollroad. All three projects are thought to have experienced billion-dollar-plus cost blow-outs and delays.
The accounts show that the local company increased the expected losses on its projects by $159 million. The increased provision for foreseeable losses across its businesses takes Bouygues' estimated losses on projects to $263 million.
During the year, Bouygues Construction Australia received an additional $294 million lines of credit from its parent in France to prop up its business.
The loan injection helped take the group's total debt pile to $1.52 billion in 2019, up from $1 billion a year earlier. A $150 million increase in contract liabilities also added to its liabilities. Meanwhile, the amount of current liabilities it has minus its assets immediately on hand such as cash - also known as its net current liability position - is $814.9 million. The group continues to be cash rich, with $573 million in cash on hand at December 31.
Bouygues' local directors said that despite these financial issues raising concerns about its ability to continue as a going concern they were confident of the ongoing support of its French parent. The company was contacted for comment.
Bouygues' financial issues come as rival major constructor John Holland stood down hundreds of staff working at the West Gate Tunnel road project in Melbourne.
This article first appeared on www.smh.com.au
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