Interim Report January–September 2012
STRABAG SE: EBIT passes break-even point after nine months 2012- Output volume 9M/2012 down slightly (-2 %) to € 10.1 billion
- But order backlog up 4 % – large orders in Italy and Germany, among other places
- EBITDA down from € 478.11 million to € 277.32 million: results burdened by damage compensation payment, construction materials business, situation with claims in Poland and losses from consortia
- EBIT slightly positive at € 1.71 million after nine months
- Continued high equity ratio of 29.3 %
- Outlook: “€ 200 million EBIT extraordinarily ambitious; fourth quarter decisive”
Vienna, 30 November 2012
Today, Friday, STRABAG SE, Central and Eastern Europe’s largest construction company, announced its figures for the first nine months of 2012. As expected, earnings were significantly down compared to the same period the previous year. At the same time, the company presents a very solid financial position with an equity ratio of 29.3 %.
“Conditions in the construction sector are becoming more difficult than we have been accustomed to in recent years – a fact we already made clear after our half-year results. Three months later, we are determined to remain committed to the target of a more or less unchanged output volume compared to that of the 2011 financial year. We believe the forecasted goal of earnings before interest and taxes of about € 200 million to be extraordinarily ambitious, though. The fourth quarter will be decisive – particularly as far as the transportation infrastructures sector, the construction materials business and the markets of Eastern Europe are concerned”, said Hans Peter Haselsteiner, CEO of STRABAG SE.
Output volume and revenue
The STRABAG Group’s output volume in the first nine months of 2012 fell slightly by 2 % to € 10,111.10 million. The largest reduction was registered in Poland due to the end of the construction boom in that country. Declines in the Czech Republic and in Switzerland were accompanied by increases in Germany and in Romania. The consolidated group revenue in the first nine months of the ongoing financial year amounted to € 9,289.84 million, down 4 % relative to the previous year. In the third quarter, a decline of the revenue was registered by 5 % to € 3,588.73 million.
Order backlog
The order backlog reached € 14,572.83 million at the end of the third quarter 2012, a 4 % plus over the end of September 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; in Germany, STRABAG subsidiaries were awarded several important building construction projects as well as a public-private partnership contract.
Financial performance
The earnings before interest, taxes, depreciation and amortisation (EBITDA) was down significantly from € 478.11 million to € 277.32 million in the first nine months of 2012. This is due to several factors. First of all, there were some non-recurring factors: The other operating expenses include, among other things, damage compensation payments 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. Also missing was that revenue which should have covered the costs of work already performed in Central and Eastern European countries – above all in Poland –, but whose processing by the local public-sector clients has been proceeding at only a slow pace.
The depreciation and amortisation rose slightly by just 2 % to € 275.61 million. The earnings before interest and taxes (EBIT) reached € 1.71 million, thus passing the break-even point after nine months. The EBIT at the end of nine months last year had stood at € 207.62 million. At € -45.32 million, the interest income was significantly more negative than in the same period the previous year (€ -5.25 million) as this figure contained currency exchange rate losses in the amount of € -28.04 million compared to exchange rate gains of € 23.71 million in the first nine months of 2011. This led to a pre-tax result of € -43.62 million, after € 202.38 million the year before. Accordingly, the income tax was in positive territory with € 1.40 million and thus provided some relief so that the earnings after taxes stood at € -42.22 million versus € 145.11 million the previous year. The third-party shareholders enjoyed earnings of € 26.70 million, following a share of € 32.89 million during the previous year, resulting in a net income after minorities of € -68.92 million.
Due to the ongoing share buyback programme, the number of weighted outstanding shares was down in the first nine months of 2012 from 113,105,289 to 104,365,968. The result per share thus amounted to € -0.66 compared to € 0.99 after the first three quarters of the previous year.
Financial position and cash-flows
At € 10,455.45 million, the balance sheet total was only slightly higher in comparison to the end of 2011. Worth mentioning are the seasonally higher current trade receivables, with simultaneous reduction of cash and cash equivalents, as well as the growth of inventories in connection with project developments in Germany and in the field of offshore wind. The current receivables from concession arrangements fell significantly following completion of a motorway project in Denmark.
The equity ratio fell from 30.3 % at the end of 2011 to 29.3 %, which can be explained in part by the loss after nine months and in part by the progress of the buyback of own shares. Instead of a net cash position, as was the case at year’s end and after the first quarter, the seasonal working capital increase and the capital expenditures led to net debt in the amount of € 538.37 million.
The cash-flow from earnings was down by more than one half to € 155.43 million. This earnings reduction was reflected in a negative cash-flow from operating activities of € -310.12 million, even though lower growth of current trade receivables was registered, particularly thanks to the aforementioned completion of the large Danish project. In the previous year, the investment in a cement company had still marked the cash-flow from investing activities. The absence of such an investment in this year’s period and the caution with enterprise acquisitions resulted in a decline in the cash-flow from investing activities by around one third from € -474.76 million to € -321.38 million. The cash-flow from financing activities was shaped by a significant repayment of bank borrowings, which, however, was nearly 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 € 28.47 million to € -128.12 million.
Employees
The somewhat lower output volume resulted in a reduction of the workforce by 4 % to 73,847 employees. Most of this reduction can be explained by the completion of large-scale projects, for example in Poland or in the Middle East. In many other markets, workforce reductions were necessary due to cyclical factors in the construction economy.