International growth for Mota-Engil
By Sandy Guthrie05 September 2012
Portuguese engineering and construction group Mota-Engil has reported that its turnover rose approximately 4% in the first half of 2012, at more than €1.01 billion.
However, the downturn in Portugal's construction sector has meant that the group's international activity reached about 60% of its total turnover for that period.
A reorganisation of its business model has led the group to change its structure so that it is now split by geography rather than business areas. As a result, from January 2012 onwards, the group has been divided into four main business areas - Portugal, Africa, Latin America and Central Europe.
The Mota-Engil Group reached a net consolidated income of €34.8 million in the first half of 2012, compared to a 2011 figure of €29.9 million.
Group turnover rose 3.9% to €1.012 billion in the first half of 2012 compared to €974 million in 2011. This performance was said to have been mainly achieved on the back of foreign markets, up around 21%.
The group said that the growing importance of foreign markets showed how successful its internationalisation strategy of the past few years had been - particularly since 2008, the year its five-year strategic plan, Ambition 2013, was produced.
Growth in EBITDA (earnings before interest, taxes, depreciation and amortization) recorded in the first half of 2012, at €10.6 million above the same period of the previous year, came mainly from Africa. However, Mota-Engil said it was also worth mentioning that Portugal had seen "an excellent operating performance", and had proved resilient to the difficult market conditions.
The groups said its order book at the end of June was of approximately €3.5 billion, €2.5 billion of which was in foreign markets - more than 70% of the total figure. Mota-Engil said that its order book, besides construction contracts, included only contracts in urban solid waste and maintenance segments. The group does not include expected revenues from concession contracts in water and sewage, nor seaports.
Turnover in Portugal reached €445 million in the first half of 2012, down 8.4% on the same period of 2011.
The group said, "This evolution was mainly due to the unfavourable evolution of the construction segment where revenues dropped by approximately €45 million, year on year."
Despite the fact that turnover of the environment and services segments rose slightly, it did not offset the negative performance of the construction segment.
Africa is a core market for Mota-Engil Group. It has been present in the continent for several decades, particularly in Angola, where the group has operated for more than 65 years. It also has operations in Mozambique, Malawi, São Tomé and Príncipe off the west coast of Central Africa, and Cape Verde. These countries plus Angola weighed in with 32% of Mota-Engil Group's activity.
The order book in Africa, the group's largest, reached €1.6 billion in June 2012, up from €1.687 billion in December 2011, which it said allowed for high expectations for future growth in this market.
In Central Europe, Mota-Engil Group has been increasingly concentrating its activity in Poland.
The group said it enjoyed a strong order book in this market, comprising large road construction contracts and several mid-sized contracts in different business segments and in different regions in the country, worth €430 million.
In the first half of 2012, turnover in Central Europe was €148 million, up 13.2% compared to the same period of the previous year.
The group said that EBITDA margin had been eroded because of extremely difficult conditions prevailing in the Polish market.
"It is, however, relevant to stress that the group kept the same quality level and complied with timings in all the works it is performing in that country," it pointed out.
The group said its activity in Latin America was currently concentrated on Peru and Mexico.
In the first half of 2012, turnover reached €128 million there, a 21.7% increase compared to the same period of the previous year.