Hochtief ‘on track’

Contractor Hochtief is claiming to be continuing its positive development in the second quarter of 2017, with “significant advances” in its sales and profits during the first six months of the year.

It said there was an increase in cash generation and a consolidation of the group’s order book, leading CEO Marcelino Fernández Verdes to say, “Hochtief is well on track.”

The first half of 2017 saw profit growth advancing with nominal net profit rising 35% year-on-year to €189 million, said the company. Operational net profit, which excludes one-off impacts, was said to have increased by 25% year-on-year to €201 million.

Reported sales of €11.0 billion showed an 18% increase year-on-year during the first six months of 2017. Around half of this growth was said to be organic in nature, with the balance coming from a positive contribution from Australian-based services business UGL, acquired by Hochtief subsidiary CIMIC at the end of last year.

Hochtief’s level of cash generation during the first half of 2017 was described as “outstanding”. A net cash in-flow from operating activities of €231 million compared with the €57 million outflow recorded in the first half of 2016 – a year-on-year increase of €288 million. Hochtief said this was a consequence of the group’s focus on cash-backed profits and sustained improvements in working capital.

Capital expenditure was increased thanks to rising mining and tunnelling sales at CIMIC. In the last 12 months, the group achieved free cash flow from operations of €1.2 billion.

At the end of the first half, Hochtief’s €43 billion order book was 12% higher than a year earlier, helped by the positive impact of UGL as well as overall favourable market conditions, it said.

New projects

New orders also advanced further with a 4% year-on-year rise in the first half of 2017 period compared with the first half of 2016.

New projects won in the second quarter of this year include a metro railway crossing under Sydney harbour worth €1.9 billion, a cultural centre in Hong Kong worth €300 million, and a large-scale public-private partnership (PPP) building project for Germany’s Federal Ministry of Health.

Among other projects, the group has also been selected to reconstruct Prague’s historical Negrelli Viaduct in the Czech Republic, and to expand two highways in the US.

For the second half of 2017, the group has identified a pipeline worth €75 billion of relevant projects coming to the markets in North America, Asia-Pacific and Europe, with a further €380 billion in 2018 and beyond.

Marcelino Fernández Verdes said, “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.”

Hochtief expects an operational net profit in the range of € 410 to 450 million in 2017. This would represent an increase of 13 to 25% on 2016, with all divisions forecast to drive the improvement in group results.