Press release

H1 2017: HOCHTIEF increased net profit by 35% with a strong improvement in cash generation

Essen
25.07.2017

  • EUR 189 million nominal net profit (+35% year on year) EUR 201 million operational net profit (+25%)
    • Sales growth momentum continuing, H1 2017 +18% yoy to EUR 11.0 billion
  • EUR 288 million year-on-year improved net cash flow from op. activities
    • EUR 231 million op. cash in-flow compares with EUR 57 million out-flow in H1 2016
    • Free cash flow from operations of EUR 1.2 billion last twelve months
  • EUR 601 million net cash up EUR 260 million quarter on quarter
  • EUR 42.6 billion order backlog, +12% year on year
    • Order backlog equivalent to 22 months of work
    • New orders EUR 13.7 billion (+4% yoy)
  • Guidance confirmed: Operational net profit for 2017 of EUR 410-450 million (+13% to 25% yoy)
    • Healthy tender pipeline in all our markets, about EUR 75 billion remaining for 2017 in core markets; currently EUR 380 billion for 2018 and beyond

HOCHTIEF has continued to develop in a very positive manner during the second quarter of 2017 resulting in significant advances in the Group’s sales and profits during the first six months of the year. This has been accompanied by a substantial increase in cash generation and a consolidation of the Group’s sound order book level. “HOCHTIEF is well on track,” said CEO Marcelino Fernández Verdes.

First half of 2017 has seen profit growth advancing further with nominal net profit rising 35% year on year to EUR 189 million. Operational net profit, which excludes one-off impacts, increased by 25% year on year to EUR 201 million.

Sales of EUR 11.0 billion showed an 18% increase year on year during H1 2017. Around half of this growth is organic in nature with the balance coming from the positive contribution of services business UGL, acquired by CIMIC at the end of last year. In addition, the Group operational PBT margin increased by 10 basis points.

HOCHTIEF’s level of cash generation during the first half of 2017 has been outstanding. A net cash in-flow from operating activities of EUR 231 million compares with the EUR 57 million outflow recorded in H1 2016, a year on year increase of EUR 288 million. This is a consequence of the Group’s focus on cash-backed profits and sustained improvements in working capital.

Capital expenditure was increased due to rising mining and tunneling sales at CIMIC. If we consider the last twelve months, the Group has achieved free cash flow from operations of EUR 1.2 billion.

As a consequence of HOCHTIEF’s strong cash flow performance, the Group’s balance sheet shows a solid improvement during the second quarter. HOCHTIEF ended June 2017 with over EUR 600 million of net cash, EUR 260 million higher than at the end of March 2017.

HOCHTIEF’s period-end EUR 43 billion order book is 12% higher than a year ago, helped by the positive impact of UGL as well as overall favourable market conditions. New orders also advanced further with a 4% year on year rise in the H1 2017 period compared with the first half of 2016. The significant new projects won in Q2 2017 include a metro railway crossing under Sydney harbor (EUR 1.9 billion), a cultural center in Hong Kong (EUR 300 million), and a large-scale PPP building project for Germany’s Federal Ministry of Health. Amongst others, the Group has also been selected to reconstruct Prague’s historical Negrelli Viaduct and to expand two highways in the U.S.

The outlook for HOCHTIEF’s core businesses of Construction, Mining, PPPs and Services is full of opportunities. For the second half of 2017 the Group has identified a pipeline worth EUR 75 billion of relevant projects coming to the markets in North America, Asia-Pacific and Europe, with a further EUR 380 billion in 2018 and beyond. “Our global presence combined with our strengthened balance sheet puts HOCHTIEF in a sound position to take advantage of the growth opportunities, both organic and strategic, in our different regional markets and to remunerate our shareholders”, said CEO Marcelino Fernández Verdes.

HOCHTIEF further confirms the 2017 Group guidance. We expect an operational net profit in the range of EUR 410-450 million. This represents an increase of 13-25% on 2016, with all our divisions driving this further improvement in the Group results.