ACS profit hit by Hochtief stake

By Helen Wright12 May 2011

Spanish contractor Actividades de Construccion y Servicios (ACS) has reported a -31,3% year-on-year drop in first quarter net profit to € 204 million.

The result compared unfavourably to the first three months of 2010, when profits were boosted by a large dividend, but this year's figure was dragged down further as a result of the company's hostile takeover of Hochtief.

ACS spent € 736 million during the first quarter purchasing Hochtief shares in a bid to breach the 50% ownership threshold in the reluctant German contractor. The company said its current stake stood at over 43%.

But Hochtief's contribution to ACS's first quarter profits was reduced as a result of troubles at its Australian subsidiary, Leighton, which announced in April that it expected extraordinary losses of AU$ 427 million (€ 312 million) for the 2011 financial year, rather than the net profit of AU$ 480 million (€ 350 million ) it had previously predicted.

Hochtief issued a profit warning for 2011 as a result, claiming it expected profit before taxes to be about half 2010's figure of € 756,6 million.

Meanwhile, ACS reported that its first quarter revenues remained the same year-on-year at € 3,7 billion, while the company's order backlog stood at € 27,7 billion at the end of the first three months of the year.

Hochtief, on the other hand, said its order backlog reached an all-time high of € 47,5 billion at the end of 2010, a +34,2 % increase on 31 December, 2009.

For full-year 2011, the company said it expected its new orders and order backlog to be "below the record figures of 2010", while sales are forecast to be on a par with 2010's figure of € 208,5 million.

ACS, meanwhile, described its full-year 2011 targets as "fully achievable". It did not disclose projected figures.

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