- Group Sales: EUR14.6 billion, up 7% year on year.
- Operational Net Profit: EUR301 million, up 11% (18% on a comparable basis).
- Nominal Net Profit: EUR436 million, includes a one-off non-cash gain at CIMIC of EUR146 million.
- Operating Cash Flow (Last 12 Months): EUR1.7 billion.
- Net Debt: EUR1.1 billion.
- Order Backlog: Close to EUR66 billion, up 23% year on year (14% on a comparable basis).
- Turner Sales: Over EUR8.6 billion, up 14%.
- Turner Operational PBT: Almost EUR247 million, up 40% year on year.
- Turner Operational PBT Margin: Increased from 2.3% to 2.9%.
- CIMIC Operational PBT: EUR193 million, up 6% on a comparable basis.
- CIMIC Operational Net Profit: EUR126 million, up 13%.
- CIMIC Nominal Net Profit: EUR272 million.
- CIMIC New Orders: EUR6.1 billion, up 4% year on year.
- CIMIC Order Backlog: EUR24.6 billion, up 6%.
- Engineering and Construction Sales: EUR1.8 billion, up 13% year on year.
- Engineering and Construction Operational PBT: EUR39 million, stable year on year.
- Engineering and Construction Order Backlog: EUR11.3 billion, up 10% year on year.
- Abertis Average Daily Traffic: Up almost 1% in 2024.
- Abertis Net Profit Pre-PPA: EUR402 million, up 1% year on year.
- Turner New Orders: USD3.9 billion in North American data center market.
- Turner Data Center Backlog: EUR6.1 billion, up over 70% since the beginning of the year.
- 2024 Guidance: Operationalized profit of EUR560 million to EUR610 million, up to 10% increase comparable with last year.
Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hochtief AG (HOCFF, Financial) reported a 7% year-on-year increase in group sales, reaching EUR14.6 billion.
- Operational net profit rose by 11% to EUR301 million, or 18% on a comparable basis.
- The company's order backlog reached a record level of close to EUR66 billion, up 23% year-on-year.
- Hochtief AG (HOCFF) announced the acquisition of Dornan Engineering, which is expected to significantly boost its European market presence.
- Strong cash flow performance with operating cash flow standing at EUR1.7 billion over the last 12 months.
Negative Points
- Net debt increased to EUR1.1 billion, driven by seasonality and strategic capital allocation decisions.
- Factoring volume increased by EUR205 million year-on-year, indicating reliance on external financing.
- Despite strong first-half performance, the company chose not to update its full-year guidance, indicating potential caution or uncertainty.
- The integration of recent acquisitions, such as Dornan Engineering, may pose operational and cultural challenges.
- The company faces competitive pressures in the advanced technology and data center markets, which could impact future margins.
Q & A Highlights
Q: You're tracking above the top end of your full-year guidance in the first half. Is there a specific headwind you're considering for a slowdown in the second? Or is it just a conservative approach you're taking?
A: We had a very good first half of the year. But at this stage, we prefer not to change the guidance. We prefer to wait for the second half and be cautious. — Juan Cases, CEO
Q: Specifically on Turner, did you consider updating the margin target for this year and then 2026, given the performance and also potential accretion from the consolidation of Dornan?
A: Turner is improving with a very good first half of the year. The acquisition of Dornan, which has an EBITDA margin of 8%, will help. However, we prefer not to change the guidance at this stage. — Juan Cases, CEO
Q: On the net profits and dividends, will the 65% payout ratio be applied again on the current net profit, considering the one-off positive in CIMIC?
A: The net positive effect of the EUR146 million this year will not be taken into account for dividend payout due to its non-cash nature. — Juan Cases, CEO
Q: What is the net cash position of Dornan, and what are the expectations about its margins once integrated?
A: Dornan has a positive net cash position of around EUR80 million. We believe that integrating Dornan with Turner will generate growth synergies and improve margins. — Juan Cases, CEO
Q: How much did Thiess contribute to operating cash flow in Q2? And can you comment on factoring in H1 and what we should expect going forward?
A: We had an increase in factoring volume of EUR205 million year on year, mainly due to the increase in volume of the North American business and some volume up in CIMIC. — Juan Cases, CEO
Q: How do you see the firepower of HOCHTIEF right now for further acquisitions, and what sort of leverage metrics are you monitoring?
A: We have strong cash flow and additional debt capacity. Our priority is to keep a solid investment grade. We will focus on investing in the right projects, bolt-on acquisitions, and equity in assets. — Juan Cases, CEO
Q: Is there any reason why you now are more positive on the free cash flow conversion ratio and think you can exceed 100%?
A: Our objective is always meeting the 100% conversion ratio. We are working on reducing volatility by having more stable cash flows through collaborative contracts. — Juan Cases, CEO
Q: When do you expect to close the Dornan deal and consolidate it into your business?
A: The closing will proceed as soon as we get the European Union merger-controlled regulations and approval. — Juan Cases, CEO
Q: Why is there a margin difference between Dornan and Turner, given that you say they have the same risk profile and approach?
A: Turner has a mix of advanced technology and general building projects, while Dornan focuses solely on advanced technology, which has higher margins. — Juan Cases, CEO
Q: On Turner and the data center, are you on track to achieve the EUR5 billion run rate of revenues in data centers?
A: Yes, we are on track. The backlog revenue in the first half of 2024 was EUR6.1 billion, with new orders of EUR4 billion, indicating a significant increase year-on-year. — Juan Cases, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
