Astaldi has set out its plans for the period between 2017 and 2021 to develop its business and capital structure based on three key pillars – sustainable growth, drivers for de-risking and financial strength.
The company said it had upgraded its financial targets for 2017 to 2021 based on the strong progress it made in 2016.
With regard to sustainable growth, Astaldi said that EPC (engineering, procurement, construction) contracts offered a higher quality of earning than traditional tenders, which in turn supported sustainable margin development and cash flow. Therefore, the company said it would continue to work towards a target revenue split of over 60% EPC with a view to leveraging its areas of competitive strength better.
The group also planned to continue pursuing concessions opportunities, but with a “capital light” approach. Having introduced the Operation & Management (O&M) business line, it said it would convert a portion of its concession backlog into revenue opportunity, with the aim of generating about 10% of revenues from the O&M business line.
According to the group, in order to reduce risk it will have to shift its geographical focus, putting greater emphasis on lower risk markets such as North America, Europe and Chile. Also, reiterating what was outlined in its 2016 plan, Astaldi said it was still set on achieving a more efficient working capital cycle in line with its target to reduce the percentage of net working capital over sales.
In terms of improved financial strength, Astaldi’s strategy involved a reduction in capital expenditures through its geographic repositioning and new “capital light” concessions business model. In addition, debt reduction would be supported by a swifter delivery on the company’s asset disposal plan, improved working capital discipline and higher cash conversion of its EBIDTA (earnings before interest, taxes, depreciation and amortisation).