The company said that it set new records on many financial performance indicators in the past fiscal year, but that earnings fell short of the group’s own expectations. In the years ahead, it aims to increase profitability sustainably by reducing net debt, focusing on infrastructure projects and implementing a comprehensive action package.
“When it came down to it, our self-perception has been better than our performance in many areas. I want to restore Hochtief to its former strength,” said Marcelino Fernández Verdes, chairman of the Hochtief executive board. “We will expand in the right businesses, work more efficiently and, with professional risk management, put an end to the nasty surprises.”
The group also intends to optimise its financial power by selling non-core assets.
New orders reached a new record with a total of €31.49bn (£27.23bn) and growth of 24.1% (2011: €25.37bn). The total work done by the year end was €29.69bn (2011: €25.79bn). That represents an increase of 15.1% and is also a new record figure. The order backlog grew by 2.3% to a new all-time high of €49.79bn (2011: €48.67bn). That is equivalent to a good 20 months’ work for the group. Profit before taxes came to €546.4m (2011: loss before taxes of €127m). The consolidated net profit amounted to €158.1m (2011: consolidated net loss of €160.3 million).
For a lasting increase in profitability and to reduce net debt, Hochtief said that it will focus in the future on its core competency and grow to become one of the world’s largest infrastructure contractors. The Group is adopting a strategic and structural realignment for the purpose. This will be achieved through an organisational focus on the core business, optimising financial firepower, improving risk management, and selling non core assets.
It will serve four segments going forward: energy infrastructure, transportation infrastructure, social and urban infrastructure and contract mining.
In Asia, the sale of the telecommunications businesses by Hochtief subsidiary Leighton is already under way. In the European business, the Group is considering the sale of its facility and energy management activities. These generate stable returns but no longer fit the group’s strategic focus. Hochtief is also weighing alternative strategic options for its subsidiaries HTP and formart, which come under the real estate solutions segment at Hochtief Solutions. These businesses currently tie up considerable amounts of capital. Strategic alliances are a possibility here. The group continues to advance its existing plans to sell the airports business and its subsidiary Aurelis, which is also part of real estate solutions. The released capital will be used to repay debt, to strengthen the infrastructure business, and to look for new strategic core business opportunities in the market.
Additionally, Hochtief plans to improve cost efficiency group-wide and optimise its financial firepower. To this end, the Group will streamline complex structures, release tied-up capital more quickly and look for further diversity its sources of finance. Finally, the group-wide risk management system is to be improved.
"I am firmly convinced that with these measures we can return Hochtief to a sustainable growth trajectory, become more profitable and deliver on our guidance," said Fernández.
For 2013, Hochtief expects new orders, work done and the order backlog to normalise below the 2012 record levels. Profit before taxes and consolidated net profit will be 10% to 20% better than in 201, before items such as restructuring charges and effects from disposals.
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