Strabag reduces winter losses

Austrian-based contractor Strabag has said it has reduced its winter losses in the first three months of the year with earnings before interest, taxes, depreciation and amortisation (EBITDA) improved by 13%, and earnings before interest and taxes (EBIT) by 9%.

Adding that winter losses were typical in the construction industry, it said that its net income, excluding minority shareholders, stood at a loss of €116.99 million, which it said was about the same level as the first quarter last year.

Thomas Birtel, CEO, said that following an especially mild winter last year, which he said had resulted in an unusually high output volume at 31 March, 2015, the first quarter of this year had seen a weather-related decline in output in comparison.

“As always, the construction industry cannot see this as an indication for the full year,” he said.

“We currently expect to generate a more or less unchanged output volume over the course of this financial year. While Germany has announced a considerable increase of its infrastructure investments, the lack of procurement and planning capacities means that we still cannot expect any significant growth in 2016.”

He added, “On the earnings side, we see ourselves confirmed in our plans to reach an EBIT margin of 3% on revenue by the end of the year.”

Strabag reported output volume of €2.26 billion in the first quarter of the 2016 financial year – a decline of 9%.

It said that on the basis of the very high level in the same period of the previous year, output volume fell back in Germany, down 5%, and Poland, a fall of 29%, where the unfavourable weather conditions had a negative impact on the first quarter results.

Consolidated group revenue was also down, falling by 7% to €2.12 billion.

The company added that the order backlog had also decreased on the year, standing at €13.98 billion on 31 March, 2016 – an 8% decline versus the first quarter of 2015.

It said that while the north and west segment registered an improved order backlog – especially in Poland, thanks to several road construction contracts – this figure was on the decline in the company’s other two segments.

The management board said it expected the output volume for the 2016 financial year to remain unchanged at best. Organic growth at about the level of inflation was expected for the next few years.

The management board confirmed a target of achieving a lasting EBIT margin of 3% starting in 2016, as the efforts to improve risk management further and to lower costs had already had a positive impact on earnings.