Interim Report January–March 2013
STRABAG SE: Late start of the building season weighs on results for the first quarter 2013- Output volume (-6 %) and EBIT (-5 %) lower due to weather-related delay to the start of the building season
- Interest income helps improve net income after minorities by 7 %
- Order backlog remains high at € 13.8 billion, although -12 % versus Q1/12
- Outlook confirmed for FY 2013: expected output of € 14.0 billion and EBIT of at least € 260 million
Vienna, 29 May 2013
Today, Wednesday, STRABAG SE, Central and Eastern Europe’s largest construction company, announced its figures for the first quarter of the financial year 2013. As expected, the adverse weather conditions weighed on the output volume and on earnings.
“When we talk about the climate in the construction industry these days, we really do mean the weather. On the one hand, it is to blame for a late start of the building season – and we have to report a 6 % lower output volume in the first quarter of 2013 as a result. Given the lack of a fixed cost cover in the winter, we always report a loss in the first quarter; this time, however, the loss is 7 % less thanks to a better interest income. On the other hand, the cold weather also has a positive effect on road construction – in the form of increased need for repair of transportation infrastructure. My management board colleagues and I are therefore staying with our previous estimate for 2013: the output volume should remain more or less stable at € 14.0 billion. We are also standing by our forecast for earnings before interest and taxes of at least € 260 million”, comments Hans Peter Haselsteiner, CEO of STRABAG SE.
Output volume and revenue
Because of the late start of the building season, the output volume of the STRABAG SE Group in the first quarter of 2013 decreased by 6 % versus the first quarter of 2012 to € 2,135.12 million. Weather-induced declines were registered especially in Germany and in Poland. The consolidated group revenue amounted to € 1,995.40 million, 9 % lower than the same period the previous year.
Order backlog
At the end of March 2012, STRABAG had reported a record-high order backlog. The completion of large projects in countries such as Poland, Canada, Romania and Austria significantly reduced the order backlog for the first quarter of 2013, which fell by 12 % to € 13,818.94 million, although it still remains at a relatively high level.
Financial performance
The limited capacity for construction in winter results in significant seasonal effects on the development of earnings and other financial figures of STRABAG SE. The first two quarters of the year typically have a negative effect on results, which is then overcompensated by results in the second half of the year. As a result of the seasonal effects, a quarterly comparison makes little sense.With the lower revenue, the earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by 5 % from € -74.34 million to € -77.79 million in the first quarter of 2013. As the depreciation and amortisation increased by 5 %, the earnings before interest and taxes (EBIT) decreased by 5 % to € -172.30 million. A forecast for the business development of the full year cannot be derived from the first quarter, however. The interest income improved significantly: The € -34.52 million of the comparison quarter had included negative currency exchange rate differences in the amount of more than € 30 million. In the first quarter of 2013, exchange rate gains of nearly € 9 million were registered instead, so that the interest income amounted to € -0.56 million. In total, this resulted in a profit before tax of € -172.86 million after € -199.18 million the year before. Accordingly, the income tax was again in positive territory with € 31.63 million and thus provided some relief. This left 11 % better negative – this is usual in the first quarter – earnings after taxes of € -141.24 million. The minority shareholders helped bear a loss of € 0.95 million, resulting in a consolidated result of € -140.29 million.
Due to the share buyback programme, the number of weighted outstanding shares was down from 104,907,599 to 103,018,317. The result per share thus amounted to € -1.36 after € -1.44 in the first quarter of the previous year.
Financial position and cash flows
The balance sheet total decreased by 7 % to € 9,456.30 million. The lower total results from the typical first-quarter effect of a reduction of current trade receivables with a simultaneous reduction of trade payables.
The equity ratio showed little change, settling at 31.7 % after 31.2 % on 31 December 2012. In response to seasonal losses, the net debt position rose from € 154.55 million at year’s end to € 444.52 million after the first quarter of 2013.
At € -100.79 million, the cash flow from profits was less deep in negative territory than at the end of the same quarter the year before. In 2012, a strong reduction of trade receivables related to the completion of a large project in Denmark had resulted in a significant inflow in the cash flow from operating activities – this no longer took effect in the first quarter of 2013. The result was a decline in the cash flow from operating activities from € -47.57 million to € -215.46 million. The cash flow from investing activities, however, could be contained by 37 % and amounted to € -67.98 million. The purchase of property, plant and equipment and intangible assets was handled even more restrictively than previously and no enterprise acquisitions took place. The cash flow from financing activities moved into negative territory from € 19.81 million to € -22.14 million. The bank borrowings were not reduced to the same degree as during the same quarter last year, but, unlike this year, a bonded loan in the first quarter last year had brought a liquidity boost.
Employees
Despite the significantly reduced output volume, the number of employees fell by just 1 % to 69,998. Two large changes nearly balanced each other out here: on the one hand, the workforce in Poland was scaled back for market reasons; on the other hand, three new large projects in Africa resulted in the addition of more than 1,000 jobs.
STRABAG SE is one of Europe’s leading construction groups. With 74,000 employees, STRABAG generated an output volume of € 14.0 billion in the 2012 financial year. From its core markets of Austria and Germany, STRABAG is present via its numerous subsidiaries in all countries of Eastern and South-East Europe, in selected markets in Western Europe and on the Arabian Peninsula. STRABAG’s activities span the entire range of construction services (Building Construction & Civil Engineering, Transportation Infrastructures, Special Ground Engineering and Tunnelling) and cover the entire value chain in the field of construction.