Interim Report January–September 2011
STRABAG SE increased revenue and earnings after nine months- Output volume with double-digit growth after nine months – increase above all in Building Construction & Civil Engineering
- EBIT 8 % higher than previous year despite positive one-off effect in 2010, earnings after taxes +25 %
- Nine-month earnings per share up from € 0.95 to € 0.99
- Outlook: Net income after minorities 2011 expected at € 185 million, no net debt
Vienna, 30 November 2011
Today, Wednesday, STRABAG SE, Central and Eastern Europe’s largest construction company, announced its figures for the first nine months 2011. The increase in revenue and earnings supports the statements regarding the outlook made by Hans Peter Haselsteiner, CEO of STRABAG SE: “The turbulence in Europe caused by the euro debt crisis has so far not affected the output or the expected results of STRABAG. While state investment programmes in markets such as Germany had supported the construction industry through the middle of the year, the sector already has several difficult years behind it in countries with lower public-sector spending – such as Hungary – or in the Adriatic region. Thanks to our successful strategy of regional and segmental diversification and the related diversification of risk, however, we confirm our existing forecast for the further general course of business. For the full-year 2011 we therefore expect an EBIT of € 340 million and a net income after minorities of € 185 million.”
Output Volume and Revenue
STRABAG generated an output volume of € 10,305.65 million in the first nine months of the 2011 financial year, which corresponds to an increase of 13 %. Unfavourable weather conditions had resulted in an extraordinarily reduced output volume in the spring of the previous year. Increases could be seen in all segments this year, especially in the Building Construction & Civil Engineering segment. Worth mentioning here is the growth in the home market of Germany, in Poland and in Scandinavia. The higher output volume in Switzerland can be attributed to the acquisitions of two construction SMEs, Brunner Erben Holding AG and Astrada AG, in the first quarter of 2011. The consolidated group revenue of the first nine months of the 2011 financial year grew in line with the output volume, reaching € 9,709.46 million after € 8,889.24 million in the same period the year before (+9 %).
Order Backlog
The order backlog, at € 14,060.65 million, was 5 % lower than at the end of September of the previous year. This can be attributed for the most part to the cancellation of the projects in Libya due to the political unrest in that country. Poland is another factor of influence: the previous year’s high order backlog in that country, in the form of large infrastructure projects, is being continuously worked off and transformed into output. In Austria and Romania, by comparison, the order backlog is on the rise with projects including the Koralm Tunnel in Styria and several new road construction orders in Romania.
Financial Performance
The EBITDA (earnings before interest, taxes, depreciation and amortisation) for the first nine months of the 2011 financial year remained nearly stable with only minor growth of 1 % to € 478.11 million. This growth is remarkable, however, as an extraordinary revaluation through profit or loss for Czech railway construction company Viamont DSP a.s. in the amount of € 24.60 million, reported in the result from associates, led to a positive distortion of the EBITDA last year.
The depreciation and amortisation fell by 4 % to € -270.49 million – in part related to a one-time amortisation of goodwill in the amount of € -14.0 million performed in the first quarter of the previous year related to the Viamont transaction. The revaluation and amortisation of goodwill last year had an extraordinary positive effect of € 10.60 million in the earnings before interest and taxes (EBIT). Nevertheless, the EBIT in the first nine months of the 2011 financial year stood at € 207.62 million – 8 % higher than the positively distorted result from the previous year’s period.
At € -5.25 million, the interest income was far less deeply in negative territory (9M previous year: € -27.51 million). This can be attributed to the exchange rate results in the amount of € 23.71 million and the weak Polish złoty in particular. In the end, this results in a 22 % increase in the pre-tax result to € 202.38 million. The tax rate fell slightly from 29.6 % to 28.3 %, resulting in earnings after taxes of € 145.11 million. This corresponds to a plus of 25 %. However, as the earnings attributable to minority shareholders more than quadrupled to € 32.89 million, the net income after minorities was left with a mere 4 % boost to € 112.22 million and an unchanged net margin on the revenue of 1.2 %. Here, too, it is important to mention the positively distorted comparison value from the Viamont revaluation.
The earnings per share were influenced by the stock buyback programme that has been running since July 2011: in the past nine months, the number of outstanding STRABAG SE shares was down from 114,000,000 to a weighted 113,105,289. This results in earnings per share of € 0.99 in comparison to € 0.95 in the same period last year.
Financial Position and Cash-Flows
The balance sheet total grew by a few percent from € 10,382.16 million at the end of 2010 to € 10,685.54 million. The equity ratio fell from 31.1 % to 29.3 %. This is attributed to the buyback of own shares. The necessary expenditures directly reduced the equity at a simultaneous decline of cash and cash equivalents. The net cash position at the end of 2010 turned into a net financial liability in the amount of € 187.78 million in response to the build-up of the working capital and the share buyback. STRABAG expects a net debt of around zero for the end of 2011.
The cash-flow from earnings increased by 12 % to € 374.84 million thanks to the higher earnings after taxes. The cash-flow from operating activities stood at € -160.64 million, 22 % less negative than in the comparison period of the previous year, in part because of an improved cash-flow from earnings and the as-planned lower growth of the working capital.
A series of medium-sized enterprise acquisitions as well as the investment in the cement plant and in the cement holding, with simultaneous reduction of the investments in property, plant and equipment and intangible assets, resulted in a cash-flow from investing activities of € -474,76 million. This corresponds to a plus of 36 % relative to the previous year. The cash-flow from financing activities moved into positive territory from € -21.26 million to € 28.47 million. This can be explained on the one hand by the bond issue in the second quarter. The volume of the issue amounted to € 175 million, compared to an issue of just € 100 million the year before. On the other hand, this is offset by the payment of € 137.27 million for the buyback of own shares in the third quarter 2011.
Employees
The number of employees grew by 7 % to 76,662. Nearly half of the more than 4,000 new employees were previously employed by Rimex, a German company acquired by STRABAG. The significant increase in Switzerland can be explained by the first-time inclusion of the employees of the two acquired companies Brunner Erben Holding AG and Astrada AG. The decline in the number of employees in Africa can be attributed to STRABAG’s withdrawal from the Libyan market, those in Hungary and the Czech Republic have market-dependent reasons.