By Sandy Guthrie02 December 2013
Austrian contractor Strabag has reported EBIT (earnings before interest and taxes) up to €40 million for the first nine months of 2013 – a huge rise on the same period 12 months ago when a figure of €2 million was the result of a hit by non-recurring items for that year.
A 70% drop in net income for 2012 was said to have been a result of missing payments for services already rendered in Central and Eastern Europe, and damage compensation payments for a failed acquisition, as well as considerable losses on construction sites and from joint ventures.
Strabag said last week that its output volume for the first nine months of 2013 was 5% lower than last year at €9.6 billion.
Claiming to be Central and Eastern Europe’s largest construction company, Strabag said that figures for the first nine months of the 2013 financial year had shown that it managed to increase its earnings significantly, despite a slightly lower output volume.
CEO Thomas Birtel said, “We were able nearly to make up for the weather-related decline in output volume from the first two quarters of 2013.
“We are confident. In our home markets of Germany and Austria, there is plenty of building construction work to be done at this time. Our books are also well padded for the future, with an order backlog of €14.0 billion. Especially satisfying were the awards of several new large building construction orders in Germany.”
He said that in Poland, which recorded the greatest decline in output volume, the company could see the first signs of a slight improvement in the climate of the construction sector there.
Output volume in the first nine months of 2013 fell by 5% versus the same period the previous year, to €9.6 billion. It said more than half of the decrease was accounted for by the expected, market-related decline in Poland following the end of the construction boom there.
Consolidated group revenue amounted to €8.9 billion, which was 4% below the level of the same period in the previous year. In the third quarter of 2013, output volume fell by 3% on the same quarter of the previous year to nearly €4 billion, while revenue grew by 4% to €3.7 billion.
Strabag said the limited capacity for construction in winter meant significant seasonal effects on the development of earnings and other financial figures.
It said that despite the somewhat lower revenue, earnings before interest, taxes, depreciation and amortisation (EBITDA) increased in the first nine months of 2013 by 19% to €328.85 million.
For international business, the company said it had invested in speciality equipment that was now being depreciated over just a few years of construction. Depreciation and amortisation therefore increased by 5% in the nine-month period.
Following the 70% fall last year, earnings before interest and taxes (EBIT) improved from €1.71 million to €39.63 million. At €260.38 million, the EBITDA remained nearly unchanged in the third quarter. EBIT was down by 4%.
Strabag said that it expected to come close to reaching the previous year’s output volume of about €14.0 billion in the 2013 financial year. The reduction in Poland was expected to be countered by increases in building construction in Austria and Hungary, for example.
While Strabag said it saw another slight worsening of the business environment in the European construction sector in 2013, with intensified competition on the price as a result, it said it continued to believe that larger negative nonrecurring items would not burden the result to the same degree as in 2012.
It still expected, therefore, the group’s EBIT would grow to at least €260 million in the 2013 financial year.