Strabag’s solid expectations for 2014

Contractor Strabag has reported a slight decline in output volume in its preliminary full-year 2013 results, but forecast that business would hold steady this year.

Output volume for 2013 was down 3% year-on-year at €13.6 billion. The company said poor weather at the start of the year had taken its toll, while its core markets had produced mixed results.

It said it had seen a market-related decline in Poland following the end of the country’s construction boom, together with project-related reductions in Canada, Benelux and Romania. It said these factors had been almost balanced out by increases in countries including Hungary, Austria and Africa.

The contractor’s order backlog grew 2% to €13.5 billion at the end of 2013, covering around one year’s worth of output volume, according to the company. Strabag said a number of new building construction orders in Germany had bolstered the order backlog by more than €500 million.

CEO Thomas Birtel said, “We started the current year on a solid foundation with a great number of new building construction projects in Germany, and as a result we expect the values for the output volume and earnings in 2014 to be comparable to those from 2013.”

Indeed, the company forecast that output volume in 2014 would remain more or less unchanged versus 2013, at €13.6 billion. Earnings before interest and taxes are expected to total at least €260 million this year, the same to the forecast value for 2013, according to Strabag.

It forecast solid demand in building construction in its home markets of Germany and Austria, albeit amid competitive conditions. Meanwhile in Poland – its third largest country in terms of output volume – the company said it expected to see some recovery in infrastructure construction towards the end of 2014, thanks to new EU budgets.

Strabag added that a lack of financing in the Czech Republic, Romania and the Adriatic region meant that very few large public-sector projects were being awarded – also resulting in tougher competition on the price.

A more positive outlook was offered by transportation infrastructures in Slovakia, where it said several large motorway and expressway projects were being tendered. The building construction sector in Slovakia and the Czech Republic was also looking healthy, according to Strabag.