Salini Impregilo beats targets
By Sandy Guthrie11 November 2016
New orders worth €6.9 billion, exceeding its target for 2016, have been reported by Italian-based construction firm Salini Impregilo.
The company said that like some other Italian companies, it was producing a statement of latest market trends, rather than publishing full results for the first nine months of the year.
It added that it expected strong infrastructure investment from the new US administration.
The group said its total new orders for the first nine months of 2016, including changes at the end of September, amounted to €6.9 billion, and of the total amount, €5.6 billion were related to Salini Impregilo and €1.3 billion to US subsidiary Lane Industries.
In the US, the group said it had increased its presence with the acquisition at the beginning of the year of Lane Industries. Following the acquisition, the US has become its biggest single market, representing 23% of revenues.
It said Lane’s integration into the group was proceeding as planned and was expected to be completed by the end of next year. Growth prospects for the current year were said to be good, with revenues expected to be higher than the previous year.
It said the plants and pavings division had recently been strengthened with the acquisition of a production plant in West Virginia in the expectation of higher demand.
Salini Impregilo said the growth prospects for the US infrastructure market in the coming years appeared to be “more than promising”.
It said, “The need to rebuild the country’s infrastructure is seen by experts as a matter that cannot be postponed for much longer. The prospect of substantial investments in renewing existing structures and launching new projects was raised by the president-elect in his campaign as well as his victory speech in New York just after the election.
“Describing these investments as a priority, he has referred to an ambitious programme involving roads, bridges, tunnels, airports, ports and railways. This could prove to be an excellent opportunity for the group to grow through its US subsidiaries Lane Industries Inc and SA Healy.”
Turning to Europe, Salini Impregilo said that 2016 would probably turn out to be the worst year for the construction industry since 2009, but the cycle that was to begin next year was expected to reverse the trend.
It said that in Europe, the sector was seen growing by an average of 2.2% per year until 2020, which it described as a moderate rate but more encouraging than the trend observed in recent years.
The growth dynamics vary from country to country, it added. In Western Europe, it said, growth had been slow in countries like France and Spain.
In Eastern Europe, however, it had shown to be more robust, especially in Poland, the largest and most dynamic market. It is in this country that the Salini Impregilo group was awarded several major highway projects near Warsaw in 2015 and 2016. In Denmark, the group is part of the construction of Copenhagen’s Cityringen metro line.
In Italy, the group is involved in two major projects – the Milan-Genoa high-speed, high-capacity railway line that is known as Terzo Valico, and the Verona-Padua high-speed, high-capacity railway line.
Salini Impregilo said that Italy’s CIPE (Interministerial Economic Planning Committee) recently approved €1.15 billion of financing for Lot IV of Terzo Valico, ensuring the continuity of the project.
For the project that involves the Verona-Padua line, the Ministry of Infrastructure announced the completion of authorisation procedures by the year end, which Salini Impregilo felt raised the prospect that work would start in the first half of 2017.
It added that major projects in the Middle East were progressing normally – the Riyadh metro in Saudi Arabia and the Red Line of the Doha metro in Qatar.
In Qatar, the group is also building the Al Bayt stadium in Doha for the FIFA World Cup scheduled for 2022. The stadium will have 70,000 seats and it is 17% complete.
Salini Impregilo said the region was expected to have moderate economic growth. The most important markets in the Middle East – which it said were Saudi Arabia, United Arab Emirates and Qatar – were showing “slightly more positive expectations” compared with the previous year that could herald a recovery in investment in infrastructure in the region.
It added, however, that geopolitical instability such as the conflicts in Yemen, Syria and Iraq could affect the economic development expected in the countries of the Middle East.
Looking at Africa, construction of the Koysha dam in Ethiopia – a project announced last May – has begun. Work is also progressing regularly on the GERD (Grand Ethiopian Renaissance Dam), which is said to be one of the largest infrastructure projects in Africa that, once completed, will become the third largest dam in the world.
Salini Impregilo said Africa showed the strongest growth expectations among the various geographic regions, with a rise of 4.4% annual average between 2016 and 2020, thanks to the recovery of investments in infrastructure and the economic growth prospects for this region.
Salini Impregilo has been present in Australia since 2013 when it won a contract to help build the Sydney Metro Northwest Project valued at approximately €220 million. The project is in its final phase, with its completion scheduled for the first months of 2017.
The group has begun work on a new project won early this year called the Forrestfield-Airport Link in Perth, which will establish a link to the airport. The group recently made the short list for a new project worth €3.6 billion in Melbourne, which includes the expansion of the West Gate Freeway, a tunnel under Yarraville, a second river crossing and connections to the port. It said the outcome of the tender was expected in the second half of 2017.
It added that Australia was one of the most interesting markets for the group thanks to the substantial investments in infrastructure that the government was undertaking.
In Latin America, all of the civil and electromechanical work for the new Panama Canal has been completed. Work on projects in Venezuela, particularly the Tocoma dam and the Puerto Cabello railway project, was described as irregular and marked by slow payments by the client as a result of the country’s poor economic conditions, mainly related to the drop in the price of oil.
Salini Impregilo said that overall, South America appeared to be slowly recovering, which could lead to a return to infrastructure investment. In Argentina, in particular, prospects were said finally to have become positive as the reformist government of President Macri prepared a model for economic development that encouraged open markets and investment.