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| Hochtief right on track: Significantly improved profits and cash flow German construction company Hochtief has completed a successful year that saw important changes in the business portfolio. "We have substantially strengthened the balance sheet and enhanced earnings quality, thus creating the basis for a sustained improvement of returns, " said Chairman of the Executive Board Marcelino Fernández Verdes. "The figures illustrate that Hochtief has improved significantly in its core business." Adjusted for one-off items (such as disposals of activities and restructuring expenses), operational net profit thus went up by 46% to EUR 252 million (2013: EUR 173 million). This is above the top end of our guidance range of between EUR 225 million and EUR 250 million. All divisions contributed to this increase. Operational earnings before taxes grew by 16% to EUR 644 million (2013: EUR 557 million). The Group also significantly improved Free operational Cash Flow by more than EUR 500 million to EUR 322 million. Including the disposal proceeds from Australia, Hochtief shows a net cash position - of EUR 421 Million - for the first time since 2010. Orders and work done likewise developed well in 2014. Post divestments new orders, at EUR 21.5 billion (2013: EUR 21.9 billion), stayed at a solid level. New orders in the Hochtief Americas and Hochtief Europe divisions showed strong increases on a like-for-like basis, by 36% and 18% respectively. Work done, at EUR 24.3 billion, stayed on a constantly high level (2013: EUR 24.6 billion). Order backlog remains stable at EUR 35.7 billion and corresponds to 19 months work. The Group generated sales of EUR 22.1 billion (2013: EUR 22.5 billion). Hochtief continued to successfully deliver on strategy. Alongside strengthening the balance sheet, its strategy is focused on the core businesses of construction, contract mining, public-private partnership (PPP), and engineering. Hochtief's objective is to become a market and technology leader in its target markets in order to develop the Group into the most relevant infrastructure construction group driven by sustainable, profitable growth. The company has made key progress in this direction: In Australia, Leighton sold its subsidiary John Holland and 50% of the services business. Furthermore Hochtief sold not only its 50% stake in aurelis Real Estate, but also the property management business, the offshore business, residential developer formart, and the project services business unit at STREIF Baulogistik. Hochtief raised its shareholding in Leighton to almost 70% (from just under 58%) for EUR 615 million. The Group is convinced of Leighton's short- and long-term potential and views the increased stake as a strategic step and an investment in the core business. The investment was funded from excess cash. Leighton initiated an extensive reorganisation and restructuring in the year under review. The new structure was already implemented by the end of 2014, meaning that Leighton comprises of four operating companies for the construction, mining, public-private partnership, and engineering segments. The Division secured a large number of new PPP contracts. In Australia, PPP is a growing market, due to to the government's announcement of major spending on infrastructure projects. The divestment proceeds, totaling EUR 1.1 billion will be used to pay down debt, strengthen the balance sheet and invest in new PPP projects. Hochtief Europe established three new operating subsidiaries for Building, Infrastructure, and Engineering alongside the existing Hochtief PPP Solutions. These four companies now operate independently, complementing each other in the market. The aim is to be more competitive in Europe as well as to enhance profitability by creating leaner structures and more efficient processes. The Hochtief Americas division had a highly successful year, achieving a substantial increase in earnings. The division had great success in acquiring projects and new orders were at record level. On October 1, 2014, the Group announced a further share buyback program. It plans to repurchase up to 10% of the capital stock of Hochtief Aktiengesellschaft. At the upcoming Annual General Meeting, the Executive Board and Supervisory Board of Hochtief plan to propose to shareholders the distribution of a dividend for 2014 of EUR 1.90 per share (2013: EUR 1.50). This includes a special dividend of 20 ct per share allowing shareholders to participate in the successful sale of activities at Leighton. Group Outlook "HOCHTIEF made crucial decisions with an eye to long-term success in 2014 and achieved significant progress, " said Chairman of the Executive Board Marcelino Fernández Verdes. For 2015, Hochtief expects operational net profit of between EUR 220 million and EUR 260 million, representing an increase of 15% to 35% (2014: comparable net operational profit EUR 190 million post divestments). write your comments about the article :: © 2015 Construction News :: home page |