The plan entails strengthening the financial structure and focusing on strategic business areas in infrastructure and environmental services. The international footprint for the group will be confined to more profitable areas and activities. Initiatives include divesting €2.2bn (£1.9bn) of non-core assets and restructuring construction activities with a reduced capacity in Spain and a more domestic focus for the central Europe business Alpine.
The aim is to achieve greater cash flow and lower leverage, enabling the company to capitalise on growth opportunities.
Five strategic initiatives have been announced, aimed at reducing debt and improving profitability. FCC will divest non-core assets amounting to €2.2bn. It will also restructure the construction business, including adjusting production capacity in Spain and rolling back Alpine to focus on domestic markets, as well as boosting its efficiency. The focus for other international activitiy will be on projects and areas with the greatest potential demand. The company also plans to adapt its cement capacity to the market situation. Initiatives are planned to strength the position of the services business in Spain and Central Europe and bring about a shift in the UK to waste management. The plan also includes increasing Aqualia's market share in the water business in Spain, and expanding internationally. Structural costs in all areas are to be reduced, both at the parent company and in the divisions.
The new strategic plan assumes a restrictive economic scenario in terms of both activity and funding but is designed to ensure that by 2015 FCC will attain €1.2bn in recurring EBITDA, an annual cash flow of €850m and debt of €5.2bn, which is €2.7bn less than at the end of 2012. The decline in debt will be achieved through the €2.2bn divestment programme and higher cash flow.
The objective in the construction division is to restructure the business by adjusting capacity in Spain, focusing Alpine on its home markets (Austria, Germany, Switzerland, the Czech Republic and Slovakia) and promoting international activity in areas and projects where FCC sees itself as having competitive advantages.
In Spain, the adjustment of capacity will mean downsizing the headcount to adapt to the current market. The bulk of this adjustment will take place in 2013.
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 the Middle East and North Africa, as well as expanding the industrial activity in some Latin American countries.
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 specialisation in growth niches such as hazardous waste, oil industry waste and chemical waste.
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