EBITDA totalled 723 million euros, up 26.6%

On the operating level, the OHL Group’s Profit and Loss Account for the first nine months of 2017 presents an EBITDA figure of 723.0 million euros, growing 26.6% with respect to the same period in the previous year. Sales totalled 2.7 billion euros, 12.1% less with 78.3% originating from international operations, due to the downturn in the construction business.  

Attributable Net Profit of the company for the first nine months reached -15.3 million euros, reducing the losses of the company in more than half compared to the first six months of the year, when Attributable Net Profit reached -32.1 million euros.

Both EBITDA as well as the Attributable Net Profit have been affected by the 34.2 million euro disbursement required by the Collective Redundancy Procedures in OHL, S.A. and in OHL Industrial, S.L. If this extraordinary effect is excluded, EBITDA would be placed at 757.2 million euros and the Attributable Net Profit would reach 18.9 million.

Business activity

The EBITDA figure for the Concessions Division was placed at 698.5 million euros, up 35.8%, thanks to the positive trend in tolls and guaranteed returns, supported on the performance of the Mexican concession companies. This outcome was achieved despite the trend in the Mexican peso (2.9% devaluation against the euro) and other exceptional events such as the effects of the earthquake in Mexico D.F. and the exclusion from the scope of consolidation of Metro Ligero Oeste and Autovía de Aragón following their sale.

The Engineering & Construction Division, which accounts for 86.9% of the Group’s sales, has performed well in terms of EBITDA, which grew 11.3% to 42.5 million euros.

In the context of the activity specific to Construction, EBITDA was placed at 66.1 million euros and reflects gradual recovery with respect to the second quarter expressed in terms of margin on sales (3.3% compared to 2.6%), with a rate of return similar to the figure obtained in September 2016. Sales declined 11.9% to 2.0 billion euros in comparison to the same period in the previous year, due to the projects that have progressively concluded between the two periods, as well as to the circumstance that other projects were only just starting and will contribute a higher volume of activity in the near future (the I-405 in California) and as a result of the delay in the commencement of the work planned for concessions.

The Construction short-term order book to 30 September 2017 totalled 6.1 billion euros, equivalent to 29 months of sales. The order book presents a balanced profile both in terms of geographical location as well as project size, with 91.2% originating from the Home Markets (where the U.S. and Canada stand out with 35.8%, and the Pacific Alliance with 36.3%) and with 27.8% of projects of a size in excess of 300 million euros.

The diversification of the order book by type of project is significant, with 48% referring to roads, 21.8% to railways, 16.8% to building construction and 13.4% to the rest of the activities of the segment.

Contracting in the first nine months of 2017 totalled 2.2 billion euros, compared to the 2.3 billion euros contracted for the entire 2016 financial year, with 61% of the projects located in the United States.

Corporate transactions

The Takeover Bid launched through Magenta Infraestructura on 14 June 2017 on the entire free float of OHL México was successfully concluded during the third quarter of 2017 at the price of 27 Mexican pesos per share, after having reached 85.85% acceptance of the capital.

As a result of the transaction, OHL Concesiones maintains its position as the controlling shareholder in Magenta with a 58.73% stake, while IFM’s stake stands at 41.27%. The shareholder structure of OHL México following the transaction is as follows: Magenta Infraestructura 67.87%, OHL Investments S.A. 16.99%, treasury shares 1.15% and free float 13.99%. OHL Group, directly or indirectly still maintains a stake of 56.86% in OHL Mexico.

In addition, and as part of the agreements reached, IFM has granted OHL Concesiones a loan in the amount of 400 million euros, which has been used for the full repayment of the issue of bonds exchangeable for OHL México shares in the amount of 400 million euros maturing in April 2018. The redemption of such bonds was completed on 25 September at a price equivalent to 100% of the principal plus interest accrued and outstanding (accrued coupon) up to that date.

Likewise, a Binding Offer Agreement was signed between OHL and IFM Investors for the purchase by the latter of 100% of the capital of OHL Concesiones, S.A.U. at the price of 2.8 billion euros (Enterprise Value, after deducting project finance debt), which will be paid upon conclusion of the transaction, subject to the usual price adjustments in transactions of this kind.

The Group estimates that, following such adjustments, the net price will be approximately 2.2 billion euros. It is expected that the signature of the share purchase agreement and the General Shareholders’ Meeting of OHL called to approve the transaction could both take place before the end of this financial year.

Asset rotation

In terms of the progress in the asset rotation process, in the first nine months of 2017 divestitures have taken place in the amount of 359.0 million euros, originating from the sale of the 2.5% stake in Abertis, the sale of between 80 and 51% of the Mayakoba assets, the sale of 17.5% of Canalejas and of 75% of Autovía de Aragón. The process for the sale of ZPSV continues to advance and may possibly conclude within this financial year.