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Record-breaking orders for Strabag

Anna Pakulniewicz 03 October 2017

Anna Pakulniewicz

Journalist

+48 22 356 25 07
anna@eurobuildcee.com

Ania covers the Baltic states’ real estate markets, architecture and urban planning in Warsaw as well as interior design. She is also the co-founder of Eurobuild TV. Among others, she has been employed by TVN CNBC, PAP Insider, WBJ (The Observer), Poland Monthly and IMM. She graduated from the Warsaw School of Economics, majoring in international relations. She has also completed postgraduate studies in macroeconomic analysis. In addition to this, she studied Lithuanian philology

EUROPE The output volume of Strabag rose up by 10 pct in the first half of 2017. The company has an order pipeline at a record level of EUR 16.5 bln – and it is 7 pct more than in the same period of last year. Strabag has also confirmed its outlook for 2017 – it is aiming for higher output volume, while its EBIT margin has been targeted at over 3 pct.

“The positive trend for Strabag set at the beginning of the year continues to this day. The order backlog is at a record high, the output volume growth was in the double digits in the first half of the year and operating earnings have increased. This positive development, however, is not immediately clear at first glance due to a one-off effect from the previous year – which we disclosed at that time. The figures for the second quarter of 2016 included a non-operating, non-recurring profit from the sale of a shareholding related to the EUR 27.81 mln acquisition of a minority interest in subsidiary Ed. Züblin. We have been reporting both figures – adjusted and unadjusted – ever since. This makes it possible to clearly show that, following an adjustment for this distortion effect on the comparison figures, the result is a considerable earnings improvement. I am therefore very pleased to again be able to confirm our expectations for the whole of 2017. The output volume should rise to at least EUR 14 mln with an EBIT margin of at least 3 pct,” explained Thomas Birtel, the CEO of Strabag.

Strabag generated an output volume of EUR 6.3 bln in the first half of the 2017 financial year – an increase of 10 pct. This upwards trend was driven especially by the German transportation infrastructure business and by a number of mid-sized building construction and civil engineering projects in Austria. The consolidated group revenue grew slightly less strongly than the output, gaining 6 pct to EUR 5.6 bln.

The order pipeline reached another record high of EUR 16.5 bln, a 7 pct increase on the end of June 2016. Contributing to this development once again were several new large orders from the public sector and from industry in the group’s largest markets, namely Germany, Austria, Poland, Slovakia and Hungary. In the 2016 financial year, the group generated about 75 pct of its output volume in these countries.

“The limited capacity for construction in the winter results has had s significant seasonal impact on the development of earnings and other financial figures for Strabag. The first half of the year typically has a negative effect on results, which is then overcompensated by results in the second half of the year. As a result of the seasonal effects, a quarterly comparison makes little sense,” stated the company.

In the second quarter of the previous year, the results had included EUR 27.81 mln of earnings from the sale of a minority shareholding related to the acquisition of the minority interest in subsidiary Ed. Züblin that cannot be assigned to the operating business. Adjusted for this effect, the earnings before interest, taxes, depreciation and amortisation (EBITDA) in the six-month period increased by 17 pct from EUR 128.9 mln to EUR 151.23 mln due to a number of effects from several different projects. Without adjusting the previous year’s earnings, the EBITDA fell slightly by 4 pct.

The current record order pipeline has led the company to expect a substantial increase in output volume for the 2017 financial year of at least EUR 14 mln – a growth of 4 pct. Strabag claims that it is working towards once again achieving an EBIT margin of at least 3 pct.


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