OHL Group sales grew 20.2 % to 4.4 billion euros in 2015

The OHL Group ended 2015 with outstanding results on the operating level. Sales were placed at 4.4 billon euros, up 20.2 %, with double-digit growth in Concessions, Engineering & Construction (E&C) and Developments.  EBITDA declined 7 % to 967 million euros, due to the narrower profit margins obtained in the E&C division. On the other hand, the net operating profit (EBIT) grew 11.5 % to 684.8 million euros, while the attributable net profit increased 139.7 % to 55.6 million euros. 

The 2015 financial year has been marked by two highly relevant milestones: the presentation, in March, of the new Strategic Plan 2020 and the capital increase in the amount of 999.1 million euros concluded on October 30, 2015, , which together open a new stage for the Group, focussing it on sustainable cash generation in each of its divisions through the reinforcement of the mechanisms of risk control, the re-focussing of their international presence and the strengthening of the capital structure for addressing future growth.

Performance by business line

On the operating level, 2015 has been characterized by an increase in the activity of all three divisions of the OHL Group. OHL Concesiones showed strong progress with sales and EBITDA from tolls increasing 20.7 % and 33.6 %, respectively, thanks to the excellent performance of the concessions in Mexico, which grew 26.2 % and 42.3 %, respectively, in local currency. Despite the more than satisfactory operating outcomes, the sharp drop in the inflation rate in Mexico during 2015 in comparison to 2014 (+2.1 % compared to +4.1 %) has significantly reduced the contribution by OHL México from guaranteed IRR to EBITDA and to the attributable net profit of the Group, by 80.2 and 75.6 million euros, respectively. Nevertheless, the sales obtained by OHL Concesiones grew 20.5 % and generated an EBITDA figure of 819.8 million euros.

OHL Concesiones achieved strong growth in traffic flows in all of the geographical areas where it has a presence: Mexico, between 10 % and 14 %, and Spain and Peru, 4 % and 5 %, respectively. 

In 2015, within the framework of its asset rotation strategy, OHL México successfully concluded the sale of 24.99 % of the share capital of Conmex to IFM Global Infrastructure Fund at the price of 546 million euros, approximately. These funds will be used by OHL México for completing its investment in the new projects already awarded. 

In the new-project context, in January 2016 the Metropolitan Council of Lima (Peru) approved the award of the private initiative (IP) promoted by the division, the La Molina-Angamos Connection. This IP will call for an investment of 460 million euros.  

In the case of E&C, the division’s sales grew 20 %, while its EBITDA declined 29.5 %. Construction, the main business of this division, saw its sales grow thanks to the good performance of its international activity, particularly in the USA, in addition to the stepped-up activity in Mexico and in the Middle East, with the Mecca–Medina project, which is moving ahead at a more rapid pace. With respect to the decline in EBITDA, this development is the result of a triple effect: the increase in the relevance of the contracting in developed economies with narrower margins but with a lengthier conversion-into-cash cycle, a more conservative estimate of final construction targets and the delay in the performance of projects for its own concessions. 

The division’s short-term backlog totaled 6.6 billion euros, representing approximately two years of sales. This backlog presents a balanced profile, both in geographical terms as well as in project size, with 82.3 % originating in the home markets and only 21 % of projects in excess of 300 million euros. 

With respect to OHL Desarrollos, the division’s sales increased by 27.2 % in the 2015 financial year. The performance of the hotels in Mayakoba stands out in this regard, confirming the recovery of the tourism sector in Mexico.

Financial sphere

The following milestones stand out in the financial sphere:

• The Group succeeded in reducing its total net borrowings by 28.8 % to 4 billion euros, taking the total net leveraging from 5.4x to 4.1x. The net recourse borrowings are placed at a record low of 379.4 million euros, signifying a net recourse debt/recourse EBITDA ratio of 1.3x. This figure has been temporarily improved by part of the funds of the capital increase intended for OHL Concesiones, specifically 214.8 million euros, which for reasons of financial efficiency have not yet been transferred to that Division. If this effect is adjusted, the ratio would be placed at 2x, in line with the objective set following the increase. In addition, if we consider as pro-forma the amounts collected for the Oran Convention Centre and the divestiture plan -transactions concluded between October and November 2015 but materialized in 2016-, the ratio would be placed at 1.2x
• Net organic cash generation in the construction business in the amount of 46.3 million euros
• Improvement in both the average cost as well as in the maturity profile of the Eurobonds. A straight bond issue was completed in March 2015 in the amount of 325 million euros, maturing in 2023 and with an issue coupon accruing fixed interest of 5.5%. The funds obtained were applied in April to the full early redemption of the 425-million-euro issue (maturing in 2018) with an issue coupon accruing 8.75% fixed interest
• The Group set in motion the sale of a number of non-strategic assets, which are expected to contribute overall a net cash amount of around 250 million euros. To date, approximately 75 % of that target amount has already been transacted. A total of 141.9 million euros has been collected subsequent to the close of accounts for the 2015 financial year

In addition, the Group has recently announced two outstanding transactions in the framework of its financial policy. That is, it has presented a repurchase offer in cash for the bonds maturing in 2020 at a price equal to 98 % of the face value. This transaction is framed within its recourse debt reduction policy and signifies a second window of liquidity for the bondholders of this issue following the repurchase offer made on the 7th of October, coinciding with the launch of the capital increase.

The Group has also carried out an early partial repayment –in the amount of 187.4 million euros– of the margin loan backed by shares representing 11.4 % of the capital of Abertis, whereby the new principal pending is now 687.7 million euros. This transaction delivers significant savings in finance costs by reducing both the principal as well as the cost of the loan, extending its maturing to February 2019 and substantially reducing the risk of triggers. 

THE OHL GROUP IN 2015

Key figures	2015	2014	Var. (%)
Sales	4,368.9	3,634.1	20.2%
EBITDA % / sales	967.0 22.1%	1.040.2 28.6%	-7.0%
EBIT% / sales	684.8 15.7%	614.1 16.9%	11.5 %
Attributable Net Profit % / sales	55.6 1.3%	23.2 0.6%	139.7 %