HOCHTIEF AG Financial Highlights
- Operational net profit up 16% to EUR 142 million on a comparable basis
- Strong operating cash flow of EUR 1.2 billion last twelve months driven by sustained high cash conversion
- Seasonal net debt position improved by EUR 71 million year on year
- Record Q1 new orders of EUR 10.5 billion, up 25% year on year f/x-adjusted
- FY 2024 guidance reiterated: operational net profit of EUR 560-610 million
INTERIM FINANCIAL STATEMENTS | FURTHER INFORMATION |
HOCHTIEF Group
Q1 2024 Financial Highlights
HOCHTIEF Quarterly Report | January to March 2024
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INTERIM FINANCIAL STATEMENTS | FURTHER INFORMATION |
Juan Santamaría Cases
Chairman of the Executive Board
Dear Shareholders,
HOCHTIEF has achieved a positive start to 2024 with strong growth in sales, new orders and in the Group order book, as well as higher profits.
During the first quarter of the year, Group sales increased by 9% to EUR 6.8 billion. HOCHTIEF's operational net profit rose by 3% to EUR 142 million or 16% if one adjusts for the profit contribution from the stake in Ventia which was divested in 2023.
The cash flow performance for the period reflects the characteristic seasonal movement seen during the first quarter of the year. Looking at the last twelve months, net operating cash flow stands at a strong level of EUR 1.2 billion, reflecting a high level of cash conversion, and representing an increase of more than EUR 450 million year on year.
HOCHTIEF ended the period with a solid balance sheet showing net debt of EUR 319 million, a EUR 71 million improvement year on year. This is after EUR 301 million in dividend payments to shareholders. Adjusting for the Q1 2024 EUR 260 million investment in the capital increase at Abertis, where HOCHTIEF holds a 20% stake, Group net cash would show an increase of EUR 331 million year on year.
New orders during the first quarter of 2024 rose strongly to EUR 10.5 billion up 25% f/x-adjusted year on year and include several important high-tech, energy transition and sustainable infrastructure projects. At the end of March 2024, the Group's order book stands at EUR 58.7 billion and is up by EUR 6.9 billion year on year, or 13%.
HOCHTIEF's objective is to deliver an attractive level of shareholder remuneration and create long-term value by generating cash-backed profits and investing equity in greenfield infrastructure projects.
Following HOCHTIEF's strong operating and financial performance in 2023, our recent AGM approved a 10% increase in the dividend for FY 2023 of EUR 4.40 per share, compared with EUR 4.00 per share for 2022. This represents an approximately 65% payout on the nominal net profit for the year or over EUR 330 million in absolute terms.
We continue to deliver on the Group's strategy which has three key pillars:
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INTERIM FINANCIAL STATEMENTS | FURTHER INFORMATION |
Firstly, reducing the Group's risk profile so that we can generate increased cash-backed profits and a more robust balance sheet. We are delivering on this with a greater use of collaborative-style contracts. Currently, around 85% of our order book is comprised of lower-risk projects.
Secondly, diversifying into high-growth areas which require a more sophisticated value proposition and which will drive margin expansion. We are achieving this by harnessing our strong existing infrastructure skill-set and local presence in key developed markets. To support this, we are working on extracting untapped synergies in the Group.
The third element of our strategy is to selectively access more opportunities to invest equity. During 2023, we invested equity not only in our core infrastructure markets but also in the rapidly expanding areas of high-tech, energy transition and sustainable infrastructure markets, through a very disciplined capital-allocation approach which will generate long-term value.
Our derisking drive is illustrated, for example, by Flatiron, which during the first quarter was awarded several collaborative-type contracts for Southern California infrastructure projects designed to enhance mobility and safety while creating greater transportation options in the region. The projects include the North Coast Corridor Segment 4C project and the LA Metro Eastbound State Route 91 project in Los Angeles County. Valued at around
USD 200 million, these projects reinforce the Group's strategy to build on successful relationships by securing contracts offering balanced risk profiles and opportunities for greater collaboration with clients.
Our North American civil engineering subsidiary has also won two major contracts worth a total of around
USD 350 million for projects that are to help combat storm surges, sea level rises and other environmental threats caused by climate change, in Virginia Beach and Texas.
In line with the second pillar of our strategy, the Group continues to pursue selective growth opportunities in
the rapidly expanding advanced-technology areas such as digital infrastructure and energy transition as well as in long-term growth sustainable infrastructure markets.
Turner continues to grow its strong position in the North American data center market. During Q1 2024, the company secured EUR 2.0 billion of work in this area (compared with EUR 2.6 billion in FY 2023) including a contract to build
a data center for Meta in Indiana worth more than USD 800 million. The 65,000-square-meter campus will include several data-center buildings and Turner will use prefabricated modular assemblies to construct them, with Meta making high investments in new renewable-energy projects. The data center will be fully powered by green energy once operational and thus be LEED Gold certified.
Leighton Asia has been selected to fit out a data center in Jakarta, Indonesia. The project is for an existing hyperscaler client and is located within a data center campus Leighton Asia successfully delivered in 2023. This project adds to several data centers the company has completed or is delivering across the region in Hong Kong, Malaysia, Indonesia, Macau and the Philippines.
In social infrastructure, a Turner JV celebrated the groundbreaking ceremony of the University Health Palo Alto Hospital campus in San Antonio, Texas. The USD 550 million hospital will improve healthcare services for the people in the area and be a state-of-the-art,five-story complex. Turner was again ranked as the number one U.S. construction management firm in the hospital-facility sector during 2023.
A CIMIC Group subsidiary secured the contract to deliver the new Notre Dame College in Queensland on behalf
of Brisbane Catholic Education. It will deliver five state-of-the-art buildings, among them an administration building, various learning spaces, sports courts, a workshop, and landscaping.
In defense, CPB was awarded a AUD 370 million Royal Australian Air Force Base project in Queensland.
Works will include the upgrade or rebuild of infrastructure and facilities. The design stage will commence in 2024, and construction should start in mid-2025, taking three years to complete.
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INTERIM FINANCIAL STATEMENTS | FURTHER INFORMATION |
In the natural resources sector, our JV company Thiess secured a AUD 1.9 billion six-year contract extension in April with BHP in New South Wales, Australia. The contract sees Thiess continuing to provide mining services at the Mount Arthur South mine, operating and maintaining mining equipment to support the client's production requirements, and working with them and the local community towards the planned mine closure. This contract extension recognizes Thiess' strong safety record and ongoing operational performance, and builds on the long-standing relationship between Thiess and the client that started more than 30 years ago.
Thiess also continues to deliver on its strategy to diversify by commodity and geography and was awarded a contract at the Esperanza Sur copper mine in Chile. The contract commenced in February 2024, with Thiess delivering services including mining operations, maintenance and asset management at the copper project.
Capital allocation plays an increasingly important role in the strategic development of our company in terms of the deployment of equity capital in core and next-generation greenfield infrastructure projects as well as bolt-on acquisitions, and M&A.
In Germany, HOCHTIEF recently held the groundbreaking ceremony for the first Yexio data center to be built in the Heiligenhaus Innovation Park close to Essen. The ceremony marked a milestone for the partnership between HOCHTIEF and its infrastructure investor partner which aims to create a network of decentralized data centers all over Germany. The builders will ensure state-of-the art energy efficiency and sustainability of the data center.
We also continue to invest equity in our PPPs activity where we are a global leader. During the period CIMIC's PPP company, Pacific Partnerships invested AUD 49 million equity in the Pulse consortium which is delivering the Tunnel, Stations and Development PPP package of Brisbane's Cross River Rail project.
Regarding bolt-on acquisitions, CIMIC Group company Sedgman acquired engineering company Prudentia Engineering in March, expanding its presence in the growing chemical and energy industries which support the energy transition globally. The acquisition enhances Sedgman's existing critical minerals and mineral processing expertise in copper, high-purity alumina, vanadium, lithium, cobalt, rare earths, uranium and nickel. Sedgman will apply Prudentia Engineering's expertise in hydrometallurgy to its global operations, increasing its capability for clients.
Sedgman also announced the acquisition in April of engineering company MinSol Engineering Pty Ltd. MinSol has experience that has been integral to the development of the global lithium industry for more than 15 years. Its expertise in hard rock lithium processing, rare earths and mineral sands complements Sedgman's brine lithium processing capabilities acquired with Novopro in 2023 and will enable Sedgman to provide its clients with complete solutions in mineral processing for the global energy transition.
These acquisitions complete Sedgman's strategy to become a full service, global provider in the extraction and refining of minerals essential to the rapidly growing clean energy technologies.
Thiess has signed a share purchase agreement to acquire underground metals business PYBAR Holdings, one of the largest underground hard rock mining contractors in Australia. Once the customary sale conditions are satisfied, this will place Thiess in a strong position to enhance its value proposition to its clients.
In early 2024, the shareholders of Abertis contributed EUR 1.3 billion in equity to support the financing of the transactions announced in 2023 and the company's growth strategy. Abertis will thereby maintain an optimal capital structure in accordance with its commitment to maintain its investment grade credit rating.
ESG remains a priority for the Group. In 2023 HOCHTIEF was again listed in the Dow Jones Sustainability Index for the 18th year in a row. HOCHTIEF achieved top positions in the ranking compiled by S&P Global. HOCHTIEF also improved the ratings regarding important environmental and social issues such as biodiversity and water management as well as occupational safety and human rights.
In addition, MSCI upgraded last year its ESG rating for the Group to AAA from AA making it the highest rated amongst its peers with an improved safety performance cited as one of the drivers of the upgrade.
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INTERIM FINANCIAL STATEMENTS | FURTHER INFORMATION |
The future presents enormous opportunities for the Group for which we are very well positioned and we will continue to leverage our know-how and skills for the benefit of all our stakeholders.
To simplify HOCHTIEF's operating structure and increase operational integration we have reorganized the Group along three business lines: Integrated Solutions (Turner and CIMIC), Engineering and Construction (HOCHTIEF Europe and Flatiron) and Infrastructure (Abertis, HOCHTIEF PPP Solutions and Pacific Partnerships). This will allow us to extend our leadership in core infrastructure assets to innovative projects in areas including high-tech and digital, energy
and transition, sustainability and critical minerals. It will also enable us to enhance our cross-selling and operational synergies within the Group and strengthen our supply chain, global engineering network and systems, helping us achieve economies of scale. These business lines span the entire infrastructure value chain.
From a financial reporting perspective, starting from this set of results for the first quarter of 2024, we will communicate the Group's activities based on the four reporting segments of Turner, CIMIC, Engineering and Construction, as well as Abertis which will enhance the market's visibility of our operating companies.
Group Outlook
HOCHTIEF is well positioned for the future based on its solid, long-standing local positions in its key developed markets, its geographical and currency diversification and a significantly derisked and expanding order book.
Our guidance for 2024 is to achieve an operational net profit of between EUR 560 and 610 million which represents an increase of up to 10% compared with last year subject to market conditions.
Yours,
Juan Santamaría Cases
Chairman of the Executive Board
HOCHTIEF Quarterly Report | January to March 2024
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INTERIM FINANCIAL STATEMENTS | FURTHER INFORMATION |
Interim Management Report
Financial review
Summary assessment of business performance and business situation
After HOCHTIEF consolidated and strengthened its core market positions in the preceding years, the Group at the start of 2024 worked on further expanding its presence in the structural growth areas of high-tech, energy transition, and sustainable infrastructure.
To enable better assessment of the HOCHTIEF Group's operational performance in growth markets, HOCHTIEF has adopted a new organizational structure based on the management model. From 2024 onward, segment reporting draws on the new internal reporting structure and comprises the following segments:
- Turner is a leading U.S. general building company providing a full range of services for projects of all shapes and sizes in North America and around the globe, while successfully leveraging the opportunities in high-tech growth markets such as data centers and electric vehicle battery facilities.
- CIMIC is an Australian company combining construction, services, and PPP activities in the Asia-Pacific region and includes, among others, the investment in Thiess, which is equity-accounted in HOCHTIEF's consolidated financial statements.
- Engineering and Construction encompasses the construction and PPP activities in Europe together with the civil engineering company Flatiron in North America.
- Abertis consists of the investment in the Spanish toll road operator Abertis Infraestructuras, S.A., and is equity-accounted in HOCHTIEF's consolidated financial statements.
- Corporate comprises Corporate Headquarters, other activities not assignable to the separately presented seg- ments, including management of financial resources and insurance activities, plus consolidation effects.
Prior-year comparative figures are reported in accordance with this new segmentation.
As the earnings performance at the start of 2024 shows, HOCHTIEF continues to be successful with its established strategy of focusing on opportunities in growth markets. Both nominal and operational consolidated net profit improved in the first quarter of 2024 compared to the prior-year period. In addition, new orders and the order backlog were significantly higher than the prior-year comparative figures. New orders set a new Q1 record at EUR 10.5 billion in the first quarter of 2024, 25% higher on an exchange rate adjusted basis than in the prior year.
Group sales and earnings
HOCHTIEF generated sales of EUR 6.8 billion in the first quarter of 2024. This exceeded the comparable prior-year figure (EUR 6.2 billion) by 9%. On an exchange rate adjusted basis, the sales growth was 11%. All segments contributed to this sales growth.
Sales
Q1 | Q1 | Change | Change | |||||
(EUR million) | 2024 | 2023 | f/x-adjusted | |||||
Turner | 4,020.1 | 3,659.0 | 9.9% | 10.4% | ||||
CIMIC | 1,886.9 | 1,793.4 | 5.2% | 10.2% | ||||
Engineering and Construction | 810.8 | 695.6 | 16.6% | 16.8% | ||||
Corporate | 39.1 | 41.1 | -4.9% | -4.4% | ||||
HOCHTIEF Group | 6,756.9 | 6,189.1 | 9.2% | 10.9% | ||||
Sales at Turner amounted to EUR 4.0 billion in the first quarter of 2024, up 10% on the prior-year figure of
EUR 3.7 billion. The main drivers of this year-on-year sales increase were advanced technologies, social infrastructure, and transportation. Adjusted for exchange rates, the sales increase was likewise 10%.
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INTERIM FINANCIAL STATEMENTS | FURTHER INFORMATION |
CIMIC generated sales of EUR 1.9 billion in the first quarter of 2024. This was 5% higher than the prior-year comparative figure (EUR 1.8 billion). CIMIC's sales in local currency rose by 10% to AUD 3.1 billion, driven by a continued high order backlog as well as the ongoing growth momentum in the construction and services business driven by the surge in activities in the high-tech and energy transition markets.
The Engineering and Construction segment generated sales of around EUR 811 million in the first quarter of 2024. This marked sales growth of EUR 115 million or, on an exchange rate adjusted basis, just under 17% relative to the prior-year period (EUR 696 million).
Sales generated in markets outside Germany in the first quarter of 2024 amounted to EUR 6.5 billion (Q1 2023:
EUR 6.0 billion). At 97%, the proportion of HOCHTIEF Group sales generated internationally was on the same level as in the prior year.
Profit before tax (PBT)
Q1 | Q1 | Change | Change f/x-adjusted | |||||
(EUR million) | 2024 | 2023 | ||||||
Turner | 108.4 | 85.4 | 26.9% | 27.5 % | ||||
CIMIC | 77.8 | 91.6 | -15.1% | -11.0 % | ||||
Engineering and Construction | 15.9 | 13.2 | 20.5% | 19.7 % | ||||
Abertis | 18.1 | 18.5 | -2.2% | -2.2 % | ||||
Corporate | (24.8) | (17.4) | -42.5% | -45.4 % | ||||
Group nominal PBT | 195.4 | 191.3 | 2.1% | 4.0 % | ||||
Non-operational effects | 10.2 | 11.7 | -12.8% | |||||
Restructuring | 5.7 | 4.4 | 29.5% | |||||
Investments/Divestments | 3.5 | 2.3 | 52.2% | |||||
Impairments | 0.0 | 0.0 | - | |||||
Others | 1.0 | 5.0 | -80.0% | |||||
Group operational PBT | 205.6 | 203.0 | 1.3% | |||||
Net income from equity-method associates, joint ventures, and other participating interests came to EUR 72 million in the first quarter of 2024 and was thus, in total, on a par with the prior year (EUR 73 million). The EUR 18 million earnings contribution from Abertis included in this figure was stable relative to the prior year.
Net investment and interest expense amounted to EUR 26 million in the first quarter of 2024 (Q1 2023: EUR 32 million). The change compared to the prior year mainly relates to higher interest income.
HOCHTIEF generated nominal profit before tax (PBT) of EUR 195 million in the first quarter of 2024, marking a slight improvement on the prior year (EUR 191 million). Operational PBT (nominal PBT adjusted for non-operational effects) stood at EUR 206 million in the reporting period (Q1 2023: EUR 203 million).
Nominal PBT at Turner amounted to EUR 108 million in the first quarter of 2024. The 27% improvement on the
EUR 85 million prior-year figure is largely attributable to the continued robust sales performance with higher margins in connection with Turner's focus on opportunities in high-tech infrastructure markets.
CIMIC generated nominal PBT of EUR 78 million (AUD 129 million) in the first quarter of 2024, compared to
EUR 92 million (AUD 145 million) in the first quarter of 2023. The decrease by 15% (exchange rate adjusted: 11%) was mainly due to the fact that the prior-year figure still included the earnings contribution from the investment in Ventia, which was sold in its entirety at the end of 2023. Adjusted for the Ventia effect (EUR 15 million), CIMIC's PBT in the first quarter was at a similar level to prior year.
The Engineering and Construction segment generated nominal PBT of EUR 16 million in the first quarter of 2024, an increase on the prior-year figure (EUR 13 million).
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INTERIM FINANCIAL STATEMENTS | FURTHER INFORMATION |
Earnings contributions to the HOCHTIEF Group from Abertis reflect the Group's 20% interest in Abertis HoldCo S.A., the operating performance of Abertis, non-cash purchase price allocation (PPA) effects, and HoldCo costs. Due to continued good traffic volumes (with average daily traffic up 1%), the earnings contribution of EUR 18 million in the first quarter of 2024 was almost unchanged from the prior-year period (EUR 19 million).
Income tax expense amounted to EUR 58 million in the first quarter of 2024 (Q1 2023: EUR 61 million). This results in
an effective tax rate of 29% (Q1 2023: 32%).
The HOCHTIEF Group's nominal consolidated net profit improved by 4% year on year to EUR 133 million in the first quarter of 2024 (Q1 2023: EUR 128 million). Operational consolidated net profit likewise increased in the reporting period to EUR 142 million, 3% higher than the comparable prior-year figure (EUR 138 million), up 16% before Ventia.
Consolidated net profit
Q1 | Q1 | Change | Change f/x-adjusted | |||||
(EUR million) | 2024 | 2023 | ||||||
Turner | 73.7 | 61.4 | 20.0% | 20.7 % | ||||
CIMIC | 61.3 | 69.2 | -11.4% | -7.2 % | ||||
Engineering and Construction | 9.3 | 8.6 | 8.1% | 7.0 % | ||||
Abertis | 18.1 | 18.5 | -2.2% | -2.2 % | ||||
Corporate | (29.6) | (30.2) | 2.0% | 0.3 % | ||||
Group nominal net profit | 132.8 | 127.5 | 4.2% | 6.2 % | ||||
Non-operational effects | 9.4 | 10.0 | -6.0% | |||||
Restructuring | 5.0 | 3.7 | 35.1% | |||||
Investments/Divestments | 3.5 | 2.3 | 52.2% | |||||
Impairments | 0.0 | 0.0 | - | |||||
Others | 0.9 | 4.0 | -77.5% | |||||
Group operational net profit | 142.2 | 137.5 | 3.4% | |||||
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INTERIM FINANCIAL STATEMENTS | FURTHER INFORMATION |
HumeLink West project, EUR 851 million, New South Wales, Australia | Fast-charging networks for electric cars, Germany |
Hopeland Solar Farm, Queensland, Australia | Royal Prince Alfred Hospital, Sydney, Australia |
CopperString 2032, Queensland, Australia | Clemson College of Veterinary Medicine, EUR 194 million, South Carolina, USA |
EV battery production, Kansas, USA | Spectrum Center Renovation, EUR 124 million, North Carolina, USA |
Meta hyperscale data center, more than USD 800 million, Indiana, USA | Frankfurt judiciary center, Germany |
Further data centers, USD 4.2 billion, USA | Major climate resiliency contracts, USA |
Data center project, Quezon City, Philippines | Burnett River replacement dam wall project, Queensland, Australia |
Data center, Warsaw, Poland | Mount Arthur South, EUR 1.2 billion, New South Wales, Australia |
Canberra Light Rail Stage 2A, EUR 350 million, Australia | Eastbound State Route 91, California, USA |
Suburban Rail Loop East project, EUR 2.2 billion, Victoria, Australia | Royal Australian Air Force (RAAF) Base, EUR 224 million, Queensland, Australia |
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Hochtief AG published this content on 13 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 May 2024 12:12:33 UTC.
