OHL increased its net income attributable by 30.3 % to 52.4 million euros in the first half of 2015
July 30, 2015
The OHL Group ended the first half of 2015 with positive results on the operating level, thanks to the good performance of all of its divisions. The net income attributable has increased in 30.3 % to 52.4 million euros, compared to the same period in the previous year. At the same time, sales grew 20.8 %, totaling 1,975.6 million euros.
EBITDA for the first six months of the 2015 financial year was placed at 450.3 million euros, declining 7.8 % with respect to the figure obtained during the same period in 2014, due to the effect of the lower inflation rate in Mexico which has generated a smaller amount of guaranteed returns (IRR). Nevertheless, given that the inflation forecast for 2015 in Mexico is 3 %, compared to 4.1 % in 2014, this effect will tend to decline substantially in the course of the current financial year.
The results highlight the international projection of the OHL Group, which has generated 79.5 % of its turnover and 99.8 % of its EBITDA abroad.
Performance by business line
In the context of the main business lines, the concession business stands out with a strong increase in its key figures, with sales and EBITDA from tolls up 19.2 % and 26.5 %, respectively, thanks to the performance of the concessions in Mexico, which grew 24.8 % and 44.2 %, respectively, in local currency. Despite the excellent operating performance, the sharp drop in the Mexican inflation rate has significantly reduced the contribution by OHL México in terms of guaranteed IRR to the Group’s EBITDA and net income attributable.
In the case of Engineering & Construction, sales and EBITDA grew at the rate of 20.7 % and 6.6 %, respectively, driven by the good performance of Construction and Services.
The growth in sales is due to the positive performance of the international operations, particularly in the United States and Canada, and to the more intensive activity in the Middle East with the Mecca-Medina project, where the pace of the work has been stepped up.
The short-term backlog of the Construction division is placed at 7,454.2 million euros, representing 31 months of sales and with a clear international component, 82.7 % of the total.
During the first half of 2015, awards were obtained worth a total amount of 1,241.4 million euros. The following rank among the most significant new projects: the rehabilitation of the Queens Midtown tunnel in New York, in the amount of 213.1 million euros, the Puebla Elevated Viaduct (171.8 million euros) or the second phase of the Cortland Street subway station, worth 91.1 million euros, also in New York.
Moreover, during this month, OHL entered into the Norwegian market after winning the EPC (Engineering, Procurement and Construction) Ski contract, promoted by the Norwegian National Rail Administration, totaling approximately 290 million euros. This contract is set in the framework of the Follo Line, the country’s most important transportation project, consisting of the reconstruction of the Ski railway station, expanding it for the high-speed line, together with the work for the redevelopment of the areas adjacent to the station and all of the railway installations associated with the reconstruction of the existing line and with the new line.
Financial sphere
In the financial sphere, mention should be made of the positive trend in the net recourse debt during the first half of 2015 which, in homogeneous terms, that is, excluding financial transactions, increased by 304 million euros, in comparison to 625 million euros during the same period in 2014, improving 51 %.
This improvement, which marks a change in trend, is the result of the application of the principles of the Strategic Plan 2020 to the engineering and construction business.
In addition, the signature on July 28 of a new long-term syndicated loan in the amount of 250 million euros with a 3-year maturity date (extendable to five at the choice of the lenders), expands the long-term financial flexibility of OHL’s recourse borrowing platform at a very competitive cost.
In the Eurobond context, significant developments in the first six months of the year included both the improvement in the average cost as well as the maturity profile of these bonds. Following the 325-million-euro transaction carried out this past March, the weighted average cost of the Eurobonds dropped 120 basis points (from 7.03 % to 5.83 %), and the debt maturities in the capital market have been eliminated for the next five years, up to 2020.
Likewise, and as part of its mature asset rotation and recourse debt control policy, the Group has set in motion the sale of a number of non-strategic assets, belonging to the Engineering and Construction division for the most part and currently in an advanced stage of negotiation, with the expectation that, taken together, these assets will contribute a net cash amount of around 250 million euros in the fourth quarter of 2015.
Capital increase
The company has announced a capital increase today in the amount of 1 billion euros, increasing its equity for the purpose of implementing the Strategic Plan made public on the 2nd March.
The funds will be used for the reduction of recourse debt by approximately 650 million and, with respect to the remaining 350 million euros, for providing the OHL Concesiones division with funds for the development of the concessions already awarded outside of Mexico.
This operation will be submitted to the approval of the Extraordinary General Shareholders’ Meeting this coming September 7th.
The main shareholder, the Villar Mir Group, has committed itself to maintaining its stake above 50 %, subsequent to the increase.
Strategic Plan 2015-2020
The presentation of the Group’s new strategic vision for the 2015-2020 horizon in the framework of the Strategy Update 2020, took place on March 2nd, the main lines of which are to:
- Ensure cash generation in each division
- Guarantee the financial self-sufficiency and sustainability of each of the divisions
- Have as the center of gravity and driving force of the Group’s future growth the 8 home markets in which it operates: USA, Canada, the four Pacific Alliance countries (Mexico, Chile, Peru and Colombia), the Czech Republic and Spain
- Strengthen the mechanisms of risk management and control
- Maintain a balanced and well diversified backlog in terms of project size, geographical location and type/specialization
- Maintain financial discipline and improve the ratio of conversion of EBITDA into cash
- Wager on the Group’s human capital and on Corporate Social Responsibility as generators of value
| Main figures (MM Euros) | 1H15 | 1H14 | Var. (%) |
|---|---|---|---|
| Sales | 1,975.6 | 1,625.6 | 20.8 |
| EBITDA % / Sales |
450.3 22.8 % |
488.6 29.9 % |
-7,8 |
| EBIT % / Sales |
277,2 14,0 % |
406,2 24,8 % |
-31,8 |
| Net income attributable % / Sales |
52.4 2.7 % |
40.2 2.5 % |
30.3 |
| Main figures (MM Euros) | 1H15 | 1H14 | Var. (%) |
|---|---|---|---|
| Sales | 1,975.6 | 1,625.6 | 20.8 |