HOCHTIEF reports strong net profit increase in 2016 and expects further growth

  • Nominal net profit rose to EUR 321 million (+54%)
    Operational net profit increased to EUR 361 million, +37% yoy

  • Operational PBT margin at 3.4%, +60bps yoy

  • Earnings per share +60% yoy

  • Net cash flow from op. activities at EUR 1.2 billion

  • Significant positive cash flow contribution from all divisions

  • Outstanding EBITDA cash conversion of 106%

  • Net cash at EUR 704 million

  • Adjusted for net investments, dividends and share buybacks, net cash would be EUR 1.7 billion

  • Order backlog increased by +20% yoy to EUR 43.1 billion

  • Order backlog at highest level in 4 years

  • New orders at EUR 24.8 billion, +15% yoy

  • Positive sales trend continues: Q4 sales +9% yoy

  • Proposed dividend increase of 30% to EUR 2.60 per share

  • Guidance for 2017: Operational net profit of EUR 410–450 million
    (+13% to 25% yoy)

In 2016, HOCHTIEF has made very important progress, both operationally and strategically, in further improving its ability to achieve sustainable, cash-backed profits. The company has also enhanced its growth prospects via the acquisitions by CIMIC of diversified services company UGL and mineral processing business Sedgman.

HOCHTIEF’s profits have increased significantly during 2016. Nominal net profit rose by 54% to EUR 321 million. Operational net profit, which excludes one-off impacts, increased by almost EUR 100 million, or 37%, year on year to EUR 361 million, at the top end of the guidance range HOCHTIEF provided a year ago (EUR 300-360 million). In addition, including the benefit of the share buybacks carried out in 2015 and 2016, earnings per share were up by 60%.

“The increased level of profits has been driven by improved project performance and reduced financial costs and is reflected in the higher level of profit margins”, said CEO Marcelino Fernández Verdes. This resulted in the Group’s operational PBT margin rising from 2.8% last year to 3.4% in 2016. All three divisions—Americas, Asia Pacific, and Europe—contributed toward the increase.

Revenues of nearly EUR 20 billion were at a slightly lower level (-5.6%) in 2016 compared with the previous year, but the trend has been positive. In the final three months of 2016, sales increased by almost 10% compared with the fourth quarter of 2015.

New orders were 15% higher year on year at nearly EUR 25 billion and we maintained our disciplined approach to risk management. Our year-end EUR 43.1 billion order book is at its highest level since 2012 and stands 20% above the December 2015 figure.

HOCHTIEF increased the cash-generating performance of its operating businesses to a very high level in the past year. Net cash flow from operating activities rose to EUR 1.2 billion. With its strong balance sheet, the Group was also able to take advantage of growth opportunities through the takeover of UGL and Sedgman, two companies in Australia acquired by CIMIC. UGL is a leading provider of end‐to‐end engineering and maintenance services in core sectors of rail, transport and communication systems, oil and gas, power, resources, water and defence. Sedgman is a specialist in mineral processing.

Even after these acquisitions, HOCHTIEF still had a strong net cash position with EUR 704 million at year-end. If adjusted for the almost EUR 1 billion of net investments, share buybacks and dividend payments made during the year, net cash would stand at EUR 1.7 billion.

In total HOCHTIEF has identified a pipeline worth EUR 150 billion of relevant projects coming to its markets in North America, Asia-Pacific and Europe in 2017, with a further EUR 350 billion in 2018 and beyond. Furthermore, with services accounting for about 10% of the order book, HOCHTIEF has a more balanced risk profile.

As a consequence of the positive Group outlook, HOCHTIEF expects sales growth of over 10% in 2017 and aims to achieve an operational net profit in the range of EUR 410-450 million. This represents an increase of 13-25% on 2016, with all divisions driving this further improvement of the Group performance.