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| FCC announces plan to revamp business  The new Vice Chairman and CEO of FCC, the global infrastructure and environmental services group Juan Bejar announced a Strategic Plan for the Group. The philosophy behind FCC's Strategic Plan can be summed up in a single sentence: It's the dawn of a new era. This new phase will entail strengthening the Group's financial structure and focusing on strategic business areas: infrastructure and environmental services (waste and water management).The plan also includes objectives such as operating efficiency, with costs adapted to the current market situation, and a debt and capital structure in line with cash flow from businesses, with an international footprint that is confined to more profitable areas and activities. This will result in greater cash flow and lower leverage, enabling the company to capitalize on growth opportunities. Five strategic initiatives will help reduce debt and improve profitability: 1) Divesting non-core assets amounting to 2.2 billion euro. 2) Restructuring the Construction business, which includes adjusting production capacity in Spain and rolling back Alpine to focus on domestic markets, as well as boosting its efficiency. As regards other international activity, the focus will be on projects and areas with the greatest potential demand. 3) Adapting Cement capacity to the market situation. 4) Strengthening the leading position of Services in Spain and Central Europe (through subsidiary .A.S.A.) and a shift in the UK to waste management. The plan also includes increasing aqualia's market share in the end-to-end water business in Spain, and expanding internationally. 5) Reducing structural costs in all areas, both at the parent company and in the divisions. Operating and financial strength These initiatives will ensure the group's operating and financial sustainability. The Strategic Plan assumes a restrictive economic scenario in terms of both activity and funding. Nevertheless, by 2015 FCC will attain 1.2 billion euro in recurring EBITDA, an annual cash flow of 850 million euro, and debt of 5.2 billion euro (i.e. 2.7 billion euro less that at 2012 year-end). The decline in debt will be achieved through the divestment programme (2.2 billion euro) and higher cash flow. Another pillar of the financial strategy is "adjusted capex". Capital expenditure will amount to 1.4 billion euro (i.e. less than depreciation and amortisation, which will total around 1.6 billion euro). That figure includes 350 million euro in growth capex focused on the international water and environment businesses, mainly in the UK. Growth will be sustained by businesses that are not capital intensive. Infrastructure and Services — strategic businesses The objective in the Construction division is to restructure the business by adjusting capacity in Spain, focusing Alpine on its home markets (basically Austria, Germany, Switzerland, the Czech Republic and Slovakia) and promoting international activity in areas and projects where FCC has competitive advantages. In Spain, the adjustment of capacity will mean downsizing to adapt the headcount to the current market situation. The bulk of this adjustment will take place in 2013 in order that its impact is reflected in the P&L as soon as possible in the form of higher operating margins. Alpine is a separate item within the international Construction area. The future of FCC's central European subsidiary involves redeployment to its home markets and improving business efficiency by better project selection, downsizing and divestment of non-strategic assets. Elsewhere, the goal will be to increase profitability, focused on specific areas, primarily in Latin America, the US, and MENA (Middle East and North Africa), as well as expanding the industrial activity in some Latin American countries. In Services, the Strategic Plan calls for strengthening FCC's lead in Spain and repositioning itself in the UK, as well as promoting leadership and international expansion by water management subsidiary Aqualia. In the environmental area in Spain, efficiency improvements will be pursued through exhaustive cost controls and capital expenditure will be curtailed. Aqualia will work to increase its market share to 30% in Spain and expand abroad with its proprietary technology in end-to-end water management. The UK environmental services business will be repositioned by expanding waste management services while tailoring landfill capacity to current demand. The industrial waste area will seek to recover business volume and profitability by exporting proprietary technology to high-potential markets such as MENA, and increasing specialization in growth niches such as hazardous waste, oil industry waste and chemical waste. write your comments about the article :: © 2013 Construction News :: home page |