Interim Report January – September 2010
STRABAG SE: Results after nine months 2010 confirm outlook of stable full-year figures- Slight output volume decline of 3 % to € 9.1 billion in the first nine months of 2010
- EBITDA up 8 % to € 476 million, EBIT up 10 % to € 193 million – lower comparison basis of previous year and positive extraordinary consolidation effect
- Earnings per share rises 5 % from € 0.90 to € 0.95
- Balance sheet total passes € 10 billion mark for first time
- Order backlog reaches € 14.9 billion, a plus of 2 % over the level from the comparison period in the previous year
- Outlook 2010: expected output volume of € 12.9 billion, adjusted EBIT of € 280 million – largely stable over the year before
Vienna, 29 November 2010
STRABAG SE, Central and Eastern Europe’s largest construction company, confirms its outlook on stable output volume and earnings for the full year 2010 on the occasion of the nine months results release. “For the current year, we still expect the output volume to show relatively flat development over the previous year, ending at
€ 12.9 billion (2009: € 13.0 billion). Our expectation regarding the adjusted earnings before interest and taxes (EBIT) stands at € 280 million for 2010”, stated Hans Peter Haselsteiner, CEO of STRABAG SE.
Output Volume and Revenue
A number of factors influenced the output volume in the first nine months of the 2010 financial year, resulting in development in opposing directions. The construction boom in Poland had a positive effect on output and, above all in the Transportation Infrastructures segment, made up for the disadvantageous weather conditions in Europe at the beginning of the year. In comparison, considerable declines in output volume were seen in the Transportation Infrastructures segment in Germany and Hungary. The output volume in the Building Construction & Civil Engineering segment in Germany also was considerably below the level of the first nine months of the previous year. This, together with the lack of projects in tunnelling, added up to a 3 % reduction of the consolidated output volume to € 9,096.94 million. The picture was nearly the same with the consolidated group revenue, which fell by 2 % to € 8,889.24 million in the first nine months of 2010. In the third quarter of 2010, the revenue, in comparison, was 3 % above the levels of the same period the year before.
Order Backlog
New orders developed satisfactorily and the order backlog reached € 14,850.84 million, a 2 % plus over the previous year’s level. Contributing to the development was the expansion in northern European markets and the Middle East, while declines were registered at the same time in Germany and Hungary. In Slovakia, the full consolidation of railway construction subsidiary Viamont DSP a.s. in the first quarter of 2010 had a positive effect on the order backlog.
Financial Performance
Expenses for raw materials, consumables and other services, as well as the employee benefits expense, remained stable in the first nine months measured in terms of the revenue. The earnings before interest, taxes, depreciation and amortisation (EBITDA) nevertheless gained 8 % over the last year. For one thing, an extraordinary write-off was made in the third quarter of the previous year on the subsidiary EFKON AG , at the time still reported in the balance sheet using the equity method, which had a negative effect on equity-method investments. The higher EBITDA is also due to the inclusion in the first quarter of a measurement through profit or loss for railway construction company Viamont DSP of € 24.60 million.
The depreciation and amortisation increased by 6 %. This results in earnings before interest and taxes (EBIT) of € 192.74 million, which corresponds to a plus of 10 % over the comparison period of the previous year. A positive trend could be seen in the third quarter 2010: the EBITDA grew by 4 % to € 289.47 million, while the EBIT registered growth of 9 % to € 203.10 million. This is also due to the negative effect from the EFKON write-off of the previous year.
At € -27.51 million, the interest income in the first nine months was deeper in negative territory than in the comparison period of the previous year (€ -14.09 million). This was due to the impact of foreign exchange differences from group-internal financing. The pre-tax result was € 165.22 million after € 160.52 million in the first nine months of 2009 – a low plus of 3 %.
In response to the higher tax rate of nearly 30 %, the earnings after taxes fell slightly to € 116.37 million. This decline could be compensated by the reduced earnings attributable to minority shareholders, leading to an increase in the consolidated net result by 5 % to € 108.27 million and placing the earnings per share after the first nine months of the 2010 financial year at € 0.95.
Financial Position and Cash-Flows
The balance sheet total as of 30 September 2010 passed the € 10 billion mark for the first time in company history. Worth mentioning in this respect is the increase of the intangible assets in comparison to 31 December 2009, which to a significant degree is the result of the additional goodwill from the Viamont acquisition. The inventories grew considerably due to STRABAG’s strong commitment to the project development business. As a result of the significantly lower level of cash and cash equivalents, the net cash position at the end of 2009 turned into net debt of € 26.97 million at the end of September 2010. The equity ratio remained relatively stable at 31.4 % after 32.2 %.
Despite the nearly stable net income, the cash-flow from profits stood at € 335.43 million, 9 % below the level after the first nine months of 2009. This was the result of non-cash earning effects (initial consolidation of Viamont). The build-up of the working capital led to a negative cash-flow from operating activities of € -206.93 million. In the same period of last year, STRABAG reported a positive cash-flow from operating activities of € 17.91 million. For the full year 2010, the company expects the working capital development to approach the level of 2008 and the previous years following the successful reduction of working capital in 2009.
Several large capital expenditures in property, plant and equipment pushed the cash-flow from investing activities from € -296.33 million to € -349.50 million. The cash-flow from financing activities was only slightly negative at € -21.26 million after € -228.04 million; unlike the same period last year, a corporate bond was issued and bank credits were taken out this year.
Employees
The average workforce levels in the first nine months of the ongoing financial year fell by 5 % to 71,913 persons in response to the structural workforce reductions in the Czech Republic, Hungary and the Balkan countries. At the same time, increased workforce levels in Poland compensated the output related declines in Germany and Austria.
Outlook
STRABAG SE announced its business guidance until 2012 at its Capital Markets Day on 10 November 2010. The company expects a slight decline in output volume for 2010 from € 13.0 billion to € 12.9 billion. The output volume is expected to rise by 5 % to € 13.5 billion in 2011 and by 1.5 % to € 13.7 billion in 2012.
STRABAG SE expects the adjusted earnings before interest and taxes (EBIT) for 2010 to reach € 280 million (2009: € 283 million; unadjusted, the EBIT would include a positive one-off effect from the Viamont acquisition in the amount of € 10.6 million). The EBIT margin of 2.2 % – calculated based on the output volume – is seen as stable in the years to come for an EBIT of € 295 million in 2011 and € 300 million in 2012.