Sales down, earnings up at OHL

13 May 2011

Sales fell in the first quarter of 2011 for Spanish concessions and construction group OHL (Obrascón Huarte Lain) compared to a year ago, which it is blaming on a -15,3% drop in construction sales.

It said that construction in Spain was down -17,8% as a result of the weakness of the economy and the sector, while international construction dropped -13,3%. This, it said, was a temporary situation that was caused by the conclusion of major contracts, particularly in Mexico, during the 2010 financial year, coupled with other major contracts awarded over the past few months not having started yet.

The group's sales figures fell -6,5% over the first quarter of 2010. OHL pointed out that when sales, without margin, from construction activity by third parties for concession companies were excluded, the decline in sales was -1,9%.

OHL claimed, however, that it was continuing the trend over recent financial years of "significant growth in earnings", with EBITDA (earnings before interest, taxes, depreciation and amortization) up 29%, and net profit for the group up 11,3%.

It said the growth was largely down to the concessions division. Construction activities achieved an increase of 6,3% in EBITDA, which OHL said was driven by the improvement in the margins of the international operations.

Brazil was responsible for 40,7% of the group's EBITDA in the first quarter, with Mexico taking care of 39,2%. The US was 4,1% and Chile 3,6% with Qatar accounting for 2,5%, Spain 2,4% and Peru 1,4%.

OHL said it was important to highlight the positive trend in the quarter of the short-term order book. It said these, which are basically construction contracts, totalled € 7,18 billion ($ 10,3 billion), which was 35,4% more than at March 2010. It added that international orders stood out at € 4,38 billion ($ 6,26 billion).

Among the contracts awarded in the last few months of 2010 and early 2011 are construction of a hospital in Montreal, Canada; construction of a viaduct in Kuwait; the modernisation of several sections of the E30 railway in Poland; and the extension of the Toronto, Canada, subway. Others include the enlargement of a subway station in New York, US; and the construction of the principal civil works for the El Quimbo hydrological project in Colombia.

The long-term order book, primarily concessions, has also grown 18,6% over March 2010, and is now worth € 77,39 billion ($ 110,54 billion).

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