‘New era’ for FCC

By Sandy Guthrie21 March 2013

Juan Bejar of FCC

Juan Bejar of FCC

A major restructuring of Spain’s FCC Group will see the divesting of non-core assets worth €2.2 billion, as well as adjusting production capacity in Spain and refocusing its Alpine subsidiary on its home markets in central Europe.

Juan Bejar, the new vice chairman and CEO of the global infrastructure and environmental services group, has revealed a strategic plan for the group, describing it as “a dawn of a new era”.

This new phase aims to strengthen the group’s financial structure and to focus on strategic business areas – infrastructure and environmental services (waste and water management).

FCC said the plan also included objectives such as operating efficiency, with costs adapted to the current market situation, plus a debt and capital structure in line with cash flow from businesses, with an international footprint that would be confined to more profitable areas and activities.

It said this would result in greater cash flow and lower leverage, enabling the company to capitalise on growth opportunities.

Strategic initiatives

Mr Bejar introduced five strategic initiatives designed to help reduce debt and improve profitability.

The first is divesting non-core assets amounting to €2.2 billion. Then there is the restructuring of the construction business, adjusting production capacity in Spain and rolling back Alpine to focus on domestic markets, as well as boosting its efficiency.

As regards other international activity, the focus will be on projects and areas with the greatest potential demand, said FCC.

The third initiative will involve adapting cement capacity to the market situation, while FCC will also be looking to strengthen its leading position in services in Spain and Central Europe – through its ASA subsidiary – as well as seeing a shift in the UK to waste management.

The plan also includes increasing its water and waste water services subsidiary Aqualia’s market share in the end-to-end water business in Spain, and expanding internationally.

The final initiative is the reduction of structural costs in all areas, both at the parent company and in the divisions.

FCC said that these initiatives would ensure the group’s operating and financial sustainability.

The strategic plan assumes a restrictive economic scenario in terms of both activity and funding. Nevertheless, it claimed that by 2015, FCC would attain €1.2 billion in recurring EBITDA, an annual cash flow of €850 million, and debt of €5.2 billion – which is said would be €2.7 billion less that at the end of 2012. The decline in debt will be achieved through the €2.2 billion divestment programme and higher cash flow.

Capital expenditure

Another pillar of the financial strategy is described as “adjusted capex”. FCC said that capital expenditure would amount to €1.4 billion – less than depreciation and amortisation, which will total around €1.6 billion. “That figure includes €350 million in growth capex focused on the international water and environment businesses, mainly in the UK. Growth will be sustained by businesses that are not capital intensive,” said FCC.

The objective in the construction division was said to be to restructure the business by adjusting capacity in Spain, focusing Alpine on its home markets – basically Austria, Germany, Switzerland, the Czech Republic and Slovakia – and promoting international activity in areas and projects where FCC has competitive advantages.

Looking at Spain, FCC said the adjustment of capacity would mean downsizing to adapt the headcount to the current market situation. The bulk of this adjustment will take place in 2013 so that its impact is reflected as soon as possible in the form of higher operating margins.

It described Alpine as a separate item within the international construction area. The future of FCC’s central European subsidiary involves redeployment to its home markets and improving business efficiency through better project selection, downsizing and divestment of non-strategic assets.

Elsewhere, the goal will be to increase profitability, focused on specific areas. These are primarily in Latin America, the US, and MENA (Middle East and North Africa), as well as expanding the industrial activity in some Latin American countries.


In the services sector, the strategic plan calls for strengthening FCC’s lead in Spain and repositioning itself in the UK, as well as promoting leadership and international expansion from water management subsidiary Aqualia.

In the environmental area in Spain, efficiency improvements will be pursued through exhaustive cost controls and capital expenditure will be curtailed. Aqualia will work to increase its market share to 30% in Spain and expand abroad with its proprietary technology in end-to-end water management.

The UK environmental services business will be repositioned by expanding waste management services while tailoring landfill capacity to current demand. The industrial waste area will seek to recover business volume and profitability by exporting proprietary technology to high-potential markets such as MENA, and increasing specialisation in growth niches such as hazardous waste, oil industry waste and chemical waste.

Juan Bejar became CEO in February, at the same time as Esther Alcocer Koplowitz took over as chairwoman. Arnold Schiefer was recently appointed as the new CEO of Alpine, and he will take up the post at the start of April.

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