Hochtief claims improvement

By Sandy Guthrie08 November 2012

Hochtief is claiming its nine-month results are showing improvement in all key performance areas, with a pre-tax profit again in all divisions.

It said new orders, work done, and the order backlog picked up substantially compared to the same period a year earlier, and that sales had shown a marked increase.

German-based Hochtief said its Australian subsidiary Leighton had made major progress in finishing out its problem projects. Two large-scale contracts that had impacted earnings in recent periods were said to be complete or close to completion.

Hochtief has also sold interests in a concession project in Chile and, as part of focusing on core activities, divested a company in Australia. It said both disposals served to reduce the group’s capital intensity.

Dr Frank Stieler, chairman of Hochtief’s executive board, said, “We have improved on all key performance indicators, and on some of them very significantly. All divisions are contributing positively to consolidated net profit. Hochtief is back to profitable growth.”

Work done in the January to September 2012 period, at €21.65 billion, exceeded the figure for the same period last year (€17.65 billion) by 22.7%. The group said the increase mainly reflected Leighton continuously working through its large order backlog.

Hochtief Americas also outperformed the previous year – including on an exchange rate adjusted basis – through additional work done in building construction. The Europe division came in slightly below last year’s figure. Hochtief said a large part of the work done in 2011 was accounted for by a large-scale contract in Qatar that has since been completed.

At €22.25 billion at the end of September, new orders were 38.0% up on the same period of 2011 (€16.12 billion). The group said that excluding exchange rate effects, new orders beat the previous year’s figure by 27.0%. It explained this was mainly driven by Leighton, with major contracts in the resources and infrastructure markets, plus the Hochtief Americas division winning various large-scale orders relating to the shaping of major cities and transportation infrastructure.

The Europe division was down on the period a year ago. This was mainly said to be a result of project delays in real estate development and in the international market.

Hochtief said its order backlog reached an absolute figure of €50.36 billion at September 2012, compared to €44.52 billion at the same point in 2011.

It said sales had grown strongly, totalling €18.51 billion, up 17.5% on the comparative figure a year earlier.

The group claimed to have secured numerous new contracts in energy infrastructure. Leighton Asia is building a 300MW coal-fired power station in the Mindanao region of the Philippines. Subsidiary Thiess is to construct a 4.3km tunnel as the conduit for the Santos liquid natural gas project in Gladstone, Australia.

Hochtief’s US subsidiary Turner was described as reinforcing its leading position in the strategic area of major cities. Together with the Canadian building construction company Clark Builders – acquired at the beginning of 2012 – Turner is to provide all construction services on the PPP (public-private partnership) schools project recently secured in the Canadian province of Alberta.

For fiscal year 2012, Hochtief has confirmed its forecast that new orders will be higher than last year. The order backlog and sales are also expected to be on a par with 2011. The Group continues to predict a pretax profit from operating activities of just under €550 million, and consolidated net profit of just under €180 million.

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