Strabag earnings fall

Earnings for the first nine months of 2012 at Austrian-based Strabag were significantly down on the same period last year, although the company said it was still in “a very solid financial position”.

Hans Peter Haselsteiner, CEO of Strabag – which claimed to be Central and Eastern Europe’s largest construction company – said, “Conditions in the construction sector are becoming more difficult than we have been accustomed to in recent years – a fact we already made clear after our half-year results.”

He said that three months on from those results, the company was determined to remain committed to the target of a more or less unchanged output volume compared to the 2011 financial year.

“We believe,” he said, “the forecast goal of earnings before interest and taxes of about €200 million to be extraordinarily ambitious, though. The fourth quarter will be decisive – particularly as far as the transportation infrastructures sector, the construction materials business and the markets of Eastern Europe are concerned.”

The Strabag Group’s output volume in the first nine months of 2012 fell slightly by 2% to €10.11 billion.

The largest reduction was in Poland where Strabag said it was seeing the end of the construction boom in that country. Declines in the Czech Republic and in Switzerland were balanced by increases in Germany and in Romania.

The consolidated group revenue in the first nine months of the ongoing financial year amounted to €9.29 billion, down 4% over the previous year. In the third quarter, a 5% decline in revenue was registered, to €3.59 billion.

Strabag said its order backlog reached €14.57 billion at the end of the third quarter of 2012, a 4% increase over the end of September the year before.

It said that while the high order backlog of the previous year from the large infrastructure projects in Poland was continuously worked off and transformed into output, it had been awarded several new large projects at the beginning of 2012.

These included the Pedemontana Lombarda project to build a bypass around Milan, Italy, which added about €1 billion to the Strabag order books. It added that in Germany, Strabag subsidiaries were awarded several important building construction projects as well as a public-private partnership (PPP) contract.

However, earnings before interest, taxes, depreciation and amortization (EBITDA) were down significantly from €478.11 million to €277.32 million in the first nine months of 2012.

Strabag said there were several reasons for this. First, there were some non-recurring factors. Operating expenses included, among other things, damage compensation payments in the amount of €43 million relating to the ruling by an arbitral tribunal regarding the failed acquisition of the Cemex activities in Hungary and Austria – a ruling which Strabag has appealed – as well as noteworthy transfers of losses by consortia.

It said that also missing was revenue which should have covered the costs of work already performed in Central and Eastern European countries – above all in Poland – but whose processing by the local public-sector clients had been proceeding at a slow pace.

At €10.46 billion, the balance sheet total was only slightly higher than at the end of 2011.