Interim Report January – September 2008
STRABAG SE: Solid 9M earnings – Again record order backlog- Again record order backlog of approx. € 14 billion – increase of 29 % over first nine months of 2007
- Output volume +23 % to € 9,381.8 million in the first nine months of 2008 – EBITDA and EBIT up 22 % and 16 % respectively – consolidated earnings after minorities up 73 %
- Outlook 2008 confirmed: expected growth of output volume to about € 13.3 billion - increase of EBIT margin and even more significant growth of net margin after minorities forecasted
Vienna, 28 November 2008
Construction output and Revenue
STRABAG SE was able to grow its construction output in the first nine months of 2008 by 23 % over the same period last year to € 9,381.8 million. About one-third of this increase was contributed by Germany and the initial consolidation of F. Kirchhoff AG (Germany: +€ 604.7 million to € 3,328.4 million). Significant growth was seen in Russia and Hungary as well. Consolidated Group revenue in the first nine months of the 2008 financial year amounted to € 8,314.5 million, compared to € 6,860.9 million in the same period last year (+21 %). Revenue in the third quarter 2008 was up by 26 % to € 3,537.1 million.
Order Backlog
The order backlog at 30 September 2008 reached a new record high of € 13,966.8 million, up 29 % compared to the first nine months of the previous year. The increase in the order backlog is due two thirds to increases in Central and Eastern Europe – in Russia and Poland, additional projects were generated worth around € 908 million and € 559 million respectively. Worth noting is the fact that Russia, with € 2,088.1 million, already has the second highest order backlog in the STRABAG Group after Germany. The Austrian market comes third, followed by Poland in fourth place. At € 1,106.7 million, Poland’s order backlog has more than doubled since 30 September 2007.
Financial Position, Financial Performance and Cash-flows
The EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization), at € 391.4 million, grew by 22 % over the first nine months of 2007. The EBIT (Earnings before Interest and Taxes) grew by 16 % to € 148.5 million, although the EBIT margin fell slightly from 1.9 % to 1.8 %. Due to the only slightly negative net interest when compared to the same period the previous year, STRABAG’s pretax profit (EBT) improved strongly by 59 % to € 145.3 million. The net profit stood at € 108.7 million (+56 %); the net profit after minorities grew even more strongly by 73 % to € 114.9 million. The earnings per share thus stood at € 1.0.
The EBITDA, the EBIT and the net profit grew by a double-digit rate in the third quarter 2008. While the EBITDA and EBIT margins were down, the net margin (earnings after minority interest) in the quarter grew from 3.0 % to 3.2 %.
The balance sheet total increased from € 7,740.8 million on 31 December 2007 to € 9,740.7 million on 30 September 2008, above all due to the new balance sheet item “Receivables from concession contracts”. This item contains the receivables which are carried at the present value of the payment to be made by the state to the concession company AKA Alföld Koncessizios Zrt., Budapest. In the concession agreement with the Hungarian state, AKA committed to develop, plan, finance, build and operate the M5 motorway. In exchange, AKA receives an availability fee, independent of transit volume, from the Hungarian state for making the motorway available to the public. Due to the resulting increase of the balance sheet total, the equity ratio fell from 40.0 % to 31.8 %. In the medium term, STRABAG is aiming at an equity ratio between 20 % and 25 %.
The previous net cash position developed into one of net debt of € 606.4 million. At € -232.8 million, the cash-flow from operating activities stood below the previous year´s level of € -147.8 million. The cash-flow from earnings nearly doubled, but the working capital also grew due to the Group´s expansion. The cash-flow from investing activities climbed from € -401.8 million to € -995.7 million as a result of the STRABAG Group’s acquisition and expansion activities. While the capital increases during the first nine months of the previous year resulted in an increase of the cash-flow from financing activities to € 702.0 million, the same figure has only reached € 50.5 million in the ongoing financial year.
Employees
As a result of the acquisitions and due to the rising construction activity when compared to the same period last year, the level of employment grew by 17 % to 69,106 persons. Of these, 44,544 were blue-collar and 24,562 white-collar workers. The highest increase was in Germany, followed by the growth markets Middle East, Poland and Russia.
Outlook
STRABAG sees no reliable indications that would require a significant change to the 2008 and 2009 full-year outlook made after the first six months of 2008. STRABAG expects the output volume in 2008 to grow by 24 % to € 13.3 billion over the 2007 financial year. STRABAG is aiming for the ambitious goal of raising its earnings before interest and taxes (EBIT) to nearly € 400 million, which should allow for a slight improvement of the EBIT margin. Following the acquisition of further shares of the publicly listed German subsidiary STRABAG AG, Cologne, the minority interest in the group profit of € 37 million in the 2007 financial year should fall to between € 20 million and € 25 million this year. For this reason, STRABAG expects the margin of the net profit after minority interest in the 2008 financial year to rise more significantly than the EBIT margin.
In 2009, STRABAG expects to increase its output volume and revenues subject to the overall economic development. The EBIT should reach a similar level as in the 2008 financial year. The tax ratio is expected to remain stable at about 25 %. STRABAG estimates the amount of the earnings attributable to minority shareholders at between € 25 million and € 30 million.
Statement Dr. Hans Peter Haselsteiner, Vorstandsvorsitzender der STRABAG SE
“The order backlog currently amounts to nearly € 14 billion. This represents a comfortable reserve for the remaining months of the current financial year as well as for 2009. The Management is in constant contact with our clients to guarantee that the order backlog remains stable and to ensure that no major projects in process fail due to a lack of financing. I expect that the business environment will have only a small effect on our Group in 2008 and 2009. From 2010, we will see which construction companies responded quickly enough to the financial crisis. I am sure that STRABAG SE will be one of them.”
Analyst and investor conference call
The 9M 2008 analyst and investor conference call was recorded and the replay will be available as of 28 November 2008, 2.00 p.m., until 3 December 2008, 2.00 p.m. The replay dial-in numbers are:
+49 (0) 69 7104 8870 (Germany)
+44 (0) 1212 60 48 61 (UK)
+1 (1) 866 268 1947 (US)
+43 (0) 268 2205 9238 (Austria)
+43 (0) 800 10251970 (Toll free Austria)
You will be asked for the code: 4 5 8 0, followed by the # key.