Semi-annual statement 2012
STRABAG SE HALF-YEAR EARNINGS AS EXPECTED CONSIDERABLY IN THE MINUS – BURDEN BY NON-OPERATING EFFECTS- Output volume slightly (-2 %) lower than in the six-month comparison period
- Order backlog 2 % higher, however – large-scale orders in Italy and Germany
- Non-operating effects push six-month EBITDA down from € 197.18 million to € 16.14 million
- EBIT therefore in negative territory with € -166.72 million, result per share after six months: € -1.51 (comparison value: € -0.10)
- Outlook unchanged since July
Vienna, 31 August 2012
Today, Friday, STRABAG SE, Central and Eastern Europe’s largest construction company, announced its figures for the first half of 2012. In July, the company had disclosed a downward revision of its outlook for the full-year 2012, citing delays of public authorities in Central and Eastern Europe in dealing with claims, the cautious valuation of some construction projects and the ruinous price war in the raw materials business as reasons, among others. It accounted for the largest part of the effects, which had led to the revised outlook, in the second quarter. Therefore, earnings before interest and taxes (EBIT) were far below the earnings of the previous year’s second quarter, which in addition had been especially good.
“If we want to manage the future, we will have to create the best possible conditions for doing so. Things will certainly become more difficult than we have been accustomed to. The challenge will be to position the group in such a way that we have the decisive competitive advantage, that we belong to the ones who prosper – this is what I see as my task”, said Hans Peter Haselsteiner, CEO of STRABAG SE.
Output volume and revenue
The STRABAG Group’s output volume in the first half of 2012 – as in the first quarter – fell slightly by 2 % to € 6,036.18 million. The largest reduction was registered in Poland due to the end of the construction boom in that country. For some time a clear trend has been developing toward a reduction of the output volume in the Transportation Infrastructures segment with simultaneous growth in the other segments. The consolidated group revenue amounted to € 5,701.12 million, down 4 % relative to the previous year. In the second quarter, a decline of the revenue was registered by 5 % to € 3,508.46 million.
Order backlog
The order backlog reached € 15,124.13 million at the end of the second quarter 2012, a 2 % plus over the end of June the year before. While the high order backlog of the previous year from the large infrastructure projects in Poland was continuously worked off and transformed into output, STRABAG was awarded several new large projects at the beginning of 2012: the Pedemontana Lombarda project to build a bypass around the city of Milan, Italy, added about € 1 billion to the STRABAG order books, and in Germany a STRABAG subsidiary was awarded several important building construction contracts.
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.
The earnings before interest, taxes, depreciation and amortisation (EBITDA) was down significantly from € 197.18 million to € 16.14 million in the first half of 2012. This is due above all to non-operating effects in the second quarter – the second-quarter EBITDA fell from € 256.99 million to € 90.48 million: the unusually high other operating expenses include, among other things, damage compensation expenses in the amount of € 43 million related to the ruling by an arbitral tribunal regarding the failed acquisition of the Cemex activities in Hungary and Austria – a ruling which STRABAG has appealed – as well as noteworthy transfers of losses by consortia. The EBITDA was further burdened by a loss of associates resulting from the inclusion of an equity investment in a cement company in Central and Eastern Europe.
The depreciation and amortisation rose slightly by just 1 % to € 182.86 million. Last year, STRABAG had, for the first time in company history, reached the break-even point in earnings before interest and taxes (EBIT) in the second quarter – instead of in the third quarter as usual. This year, the EBIT after the first half stood at € -166.72 million. At € -30.66 million, the net interest result was significantly more negative than in the same period the previous year (€ -4.13 million) as this figure contained currency exchange rate differences of € -19.00 million compared to FX gains of € 5.07 million in the first half of 2011. This led to a result before tax of € -197.38 million after € 12.54 million the year before. Accordingly, the income tax was in positive territory with € 40.70 million and thus provided some relief so that the net income stood at € -156.67 million versus € 8.82 million the previous year. The third-party shareholders enjoyed earnings of € 1.59 million (following an unusually high share of € 19.75 million in 2011), resulting in a net income after minorities of € -158.26 million.
Due to the ongoing share buyback programme, the number of weighted outstanding shares was down in the first half of 2012 from 114,000,000 to 104,670,434. The result per share thus amounted to € -1.51 after € -0.10 in the first half of the previous year.
Financial position and cash-flows
At € 10,351.35 million, the balance sheet total remained more or less unchanged in comparison to the end of 2011. The equity ratio fell from 30.3 % at the end of 2011 to 28.5 %, which can be explained by the losses sustained in the year to date. Instead of a net cash position, as was the case at year’s end and after the first quarter, the seasonal losses and the capital expenditures led to net debt in the amount of € 458.20 million. Despite the negative cash-flow from earnings of € -26.97 million in the first half of 2012, the cash-flow from operating activities, at € -327.40 million, was just 12 % more negative than during the same period the year before. This is due to the lower growth of current trade receivables, particularly thanks to the completion of a large Danish project.
Caution with investments in property, plant and equipment, with intangible assets and with enterprise acquisitions resulted in a decline in the cash-flow from investing activities by approximately a quarter from € -301.64 million to € -220.20 million. The cash-flow from financing activities was shaped by a significant repayment of bank borrowings, which, however, was compensated by an increase of the funds from the bonded loan and from the bond. As a result of the dividend and the buyback of own shares, the cash-flow from financing activities still moved into negative territory from € 45.85 million to € -67.07 million.
Employees
The lower output volume resulted in a reduction of the workforce by 3 % to 72,871 employees. Most of this reduction can be explained by the completion of large-scale projects, for example in Poland, the Middle East or Chile. In many other markets, workforce reductions were necessary due to cyclical factors in the construction economy.
Outlook
On 25 July 2012, STRABAG SE published ad hoc an update of its outlook for the full year 2012. The management board of STRABAG SE now believes that the target of € 300 million for the 2012 earnings before interest and taxes (EBIT), which had previously been classified as “more than ambitious”, could be reached only by about two thirds.
STRABAG SE is one of Europe’s leading construction groups. With 76,900 employees, STRABAG generated a construction output volume of € 14.3 billion in the 2011 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. More information is available at www.strabag.com.
Contact
STRABAG SE
Diana Klein
Investor Relations & Corporate Communications
Tel: +43-1-22422-1116
diana.klein@strabag.com