HOCHTIEF Q1 2020: Operational net profit of EUR 124 million // +10% before Abertis contribution // Outlook remains positive across core markets

• Operational net profit of EUR 124 million, -7% year on year (yoy), +10% before Abertis contribution 
  • Sales of EUR 6.2 billion, up 7% yoy (fx-adjusted +8%), with robust contribution from operating divisions 
  • Nominal net profit of EUR 115 million, +7% yoy before Abertis 
  • Abertis profit contribution of EUR 1 million, (Q1 2019 EUR 21 million), due to Corona-related traffic impacts 
• Net cash from operating activities pre-factoring of EUR 1.7 billion last twelve months (LTM) 
  • Net Cash from operating activities pre-factoring improved by EUR 160 million in Q1 2020, EUR +1.2 billion LTM 
• Group net cash of EUR 715 million in Q1 2020, pre BICC net cash effect 
  • Strong liquidity position of EUR 6.0 billion per end-Q1 2020 
• Order backlog solid at EUR 47.6 billion and new orders (EUR 27.9 billion LTM) at high level 
• Outlook across core markets remains positive 
  • Strong position in the Group’s core markets and robust tender pipeline: North America, Asia Pacific and Europe of approx. EUR 600 billion for 2020 and beyond; PPP project pipeline of approx. EUR 220 billion 
  • Once we have better visibility of the consequences of the Corona crisis on the business, we will provide an update to 2020 guidance, if required 

Notwithstanding the impact of the Corona crisis, HOCHTIEF delivered a Q1 2020 operational net profit of EUR 124 million compared with EUR 133 million in the corresponding period of 2019. The operational net profit before the Abertis contribution was 10% higher year on year, with all three operating divisions achieving solid results.  

CEO Marcelino Fernández Verdes: “Our focus on our core markets of Australia, North America and Europe gives the Group a unique and well balanced business profile. During the first quarter, operations at the vast majority of our construction, mining and services sites have continued despite the corona crisis. Overall, the Group’s activities continue to progress within the framework of the restrictions which have been put in place.” 

Sales rose by over EUR 400 million, or 7%, to EUR 6.2 billion with an 8% rise on an f/x-adjusted basis. Net cash from operating activities improved by EUR 160 million year on year, on an underlying basis. The Group remains focused on cash-backed profits. Due to sustained activity in mining and job-costed tunneling work, HOCHTIEF invested EUR 100 million in net operating capital expenditure compared with EUR 113 million in Q1 2019. Post this capex level, the Group achieved a strong year on year improvement in free cash flow from operations of over EUR 170 million pre-factoring. 

HOCHTIEF ended the first quarter of 2020 with a slight net debt position of EUR 134 million after investing EUR 122 million to acquire 2.8% of CIMIC as well as share buy backs at both HOCHTIEF and CIMIC. Excluding the EUR 849 million net cash effect during the quarter of exiting the Middle East, the net cash position would stand at EUR 715 million at the end of March 2020. The rating agency Moody’s highlighted the exit from the Middle East as “credit positive” for CIMIC while S&P described it as “consistent with group strategy”. Furthermore, S&P’s “BBB” investment grade rating for HOCHTIEF is unchanged with a stable outlook.  

HOCHTIEF ended the quarter with a strong liquidity position of EUR 6.0 billion further supported by committed, undrawn credit facilities.  

The Group’s order book reached EUR 47.6 billion at the end of March 2020, an increase year on year of 1%, on an fx-adjusted basis. The quality of the order book is enhanced by the high level of visibility which the construction management, mining, alliance-style contracts and services activities provide and which account for about two-thirds of HOCHTIEF’s order book. Despite the Q1 impact of the corona crisis a solid level of new orders of EUR 27.9 billion has been secured during the last twelve months. A disciplined bidding approach remains a priority across the Group. 

Looking forward, the divisions have identified a project tender pipeline worth around EUR 600 billion of relevant projects coming to the Group`s markets in North America, Asia-Pacific and Europe for 2020 and beyond, with EUR 220 billion of PPP projects in developed markets. 

The impact of the corona crisis has had severe consequences for share prices around the world. HOCHTIEF has taken the opportunity to invest around EUR 100 million in increasing its holding in CIMIC by about 2.8 percentage points, at an average price of AUD 19.2 per share. Following further share buy backs at CIMIC, HOCHTIEF‘s stake now stands at 76.7%. Overall, HOCHTIEF and CIMIC have spent EUR 22 million in buying back their own shares in Q1 2020. HOCHTIEF expects these investments will create significant value for shareholders. 

Group Outlook 

Once we have better visibility of the consequences of the Corona crisis on the business, we will provide an update to 2020 guidance, if required. 

HOCHTIEF Group: Key Figures 

^{Note: Operational profits are adjusted for non-operational effects}