OHL increases sales by 7.4 %, totaling 956.7 million euros, in the first quarter of 2016
May 12, 2016
The OHL Group closed the first quarter 2016 with good performance on the operating level, although the main parameters were burdened by strong devaluation of the exchange rate of the main currencies with respect to the euro during said period.
Sales grew 7.4%, totaling 956.7 million euros. The EBITDA increased 3.9%, totaling 264.1 million euros, while the attributable net profit decreased by 49.5%, totaling 24.8 million euros. If the exchange rate would have remained fixed with respect to the same period of 2015, growth of sales, EBITDA and attributable net profit, in the first quarter of 2016, would have been 11.8%, 18.3%, and 31.6%, respectively.
The two main factors negatively affecting the net profit are as follows:
- The exchange rate differences in the period total -28.2 million euros, with respect to the 18.0 million euros of the first quarter of 2015, and are principally generated by the devaluation of the Qatari riyal and the Algerian dinar
- The result attributed to minority interests decreased by 8.7 million euros, due principally to the sale of 25% of Concesionaria Mexiquense (ConMex) to the IFM fund in April 2015
Furthermore, the importance of the international activity of the Group stands out once again, as same represents, at the first quarter of 2016, 80.4% of the sales and 97.4% of the EBITDA.
Business line development
The first quarter of 2016 was marked by growth, at a fixed exchange rate, of the Sales and the EBITDA of the concession division, which showed strong growth with figures of 11.6% and 23.6% respectively, despite the strong devaluation of the Mexican peso reduced those levels to -2.0% and 7.0%, respectively.
In terms of cash generation, the Sales and the EBITDA from tolls (at a fixed exchange rate) grew 13.8% and 22.3%, respectively, thanks to the excellent performance of the concessions in Mexico (which grew 15.5% and 15.3%, respectively in Mexican pesos).
In terms of allotments, approval from the Metropolitan Council of Lima of the private La Molina-Angamos initiative was significant. The investment that will be executed totals 500 million dollars.
Engineering & Construction achieved growth figures in Sales of 12.5% at a constant exchange rate and obtained 32.1 million euros in EBITDA. This growth in sales is due principally to increased activity in North America from commencing new projects and from the increase in production rate in existing projects, where this area represented 40% of total production in the first quarter of 2016.
An important development is the significant work in this division to try to reach a negotiated settlement of the litigation affecting some projects, as has been the case with the Oran Convention Centre, where the payment of the project was completed in the amount of 100 million euros, subsequent to 2015 year-end closing, thereby granting an amicable final solution to the dispute, and without effecting the profit and loss account.
The typical negative seasonality of the first quarter of the year is increased this year due to the adverse macroeconomic context, marked by the historically-low prices of crude oil and commodities, which lead to increased working capital financing needs, which in turn translate into an increase in debt.
The short-term construction order book totaled 6.4 billion euros at 31 March, which represents approximately 23.3 months of sales. The order book is comprised by contracts involving a high degree of technical quality connected in most cases to niches of specialization, such as roads, railways and hospitals. In accordance with the principles of the Strategic Plan, it has a balanced profile in terms of geographical distribution and project size, with 83.4% being from Home Markets and only 20.5% of projects being more than 300 million euros.
Financial sphere
Total debt remains virtually stable, totaling 4.2 billion euros in the first quarter of the year. The net recourse borrowings stood at 751.6 million euros, which was affected by the seasonality and the aforementioned amplifying effect.
Important developments in the financial sphere are, among others, the comfortable maturity profile of the Eurobonds, both in terms of amounts and duration, with the next maturity being in March 2020; the broad and flexible recourse borrowing platform; the strong position of the available recourse financing, amounting to 1.3 million euros at 31 March; and a comfortable and sustainable financial structure in concessions, with listed stakes that will provide a total estimated annual flow of dividends of 115 million euros in 2016.
In terms of the capital increase for the gross amount of 999.1 million euros, a significant point is that the net funds were used to reduce net recourse debt in the approximate amount of 632 million euros, with the commitment to maintain the Net Recourse Borrowing / Recourse EBITDA ratio under twice a year, with respect to the previous level of three times, and transferred to OHL Concesiones an approximate amount of 340 million euros for capital commitments of the newly awarded concessions in Peru, Chile, and Colombia. At 31 March 2016, a total of 261 million euros of said amount had been transferred to OHL Concessions.
A final significant point is the significant value that lies in the listed stakes (OHL México and Abertis), held at the close of March at a market value, net of associated debt, of 1.7 billion euros, which was 2.3x the amount of all the net recourse borrowings at said date.
