OHL places its sales at 3 billion euros, increasing 2% up to September

OHL ended the first nine months of 2016 with sales worth 3 billion euros, representing 2% growth with respect to the same period in the previous year. EBITDA declined 17.2% to 571.2 million euros, while the attributable net profit was placed at 3.9 million euros, down 94.4% under the impact of the sharp devaluation of the exchange rate of the main currencies against the euro. At a constant exchange rate, the Group’s sales, EBITDA and net profit would have undergone a change of +5.8%, -5.0% and -57.9%, respectively.

In terms of net profit, performance has been affected by the following circumstances:

• The losses in the amount of 105.3 million euros occurring in the Centre Hospitalier de L´Université de Montreal (CHUM) project in Canada.
• The positive impact of the capital gains generated with the sale of 7% of Abertis and of 28% of Metro Ligero Oeste (and the ensuing value enhancement of the remaining 23.3%), representing 114.7 and 41 million euros, respectively.
• The entry against results, in line with the principle of  prudence, of the 34.1-million-euro penalty applied by the Community of Madrid to Cercanías Móstoles Navalcarnero, despite having been duly appealed on solid grounds.

Finally, it should be noted that, if the sale of the 4.425% package of Abertis shares in the month of October is taken into account, OHL’s pro forma net profits would be placed at 176 million euros.

Outstanding developments in the period

OHL concluded the following significant transactions in the course of the first nine months of the year:

Rotation of sales 

• Sale of 28% of Metro Ligero Oeste. This transaction was concluded in September in the amount of 101.7 million euros. The final result totaled 41 million, including the value enhancement of the rest of the shareholding. OHL continues to hold 23.3% of the company’s capital.
• Sale of 11.425% of Abertis in two stages. The first, involving 7%, took place on June 29th, while the second, for the remaining 4.425%, was concluded on October 3rd, obtaining a total of 1.3 billion euros in net funds. This has generated a total of 326.8 million euros in capital gains, having obtained a joint IRR of 26.7%. The net funds obtained have been used as follows: 856.6 million euros for completely eliminating the debt with risk  triggers in OHL Concesiones, 199.5 million to provide this division with funds for meeting equity commitments and, the rest, 272.7 million euros for reducing gross recourse borrowings.
• On October 4, OHL México reached an agreement with IFM Global Infrastructure Fund for the sale of 24.01% of Organización de Proyectos de Infraestructuras (“OPI”) at a price of approximately 400 million euros. The resources from this transaction will improve the capital structure of OHL México with the objective of being in a position to continue investing in new concession projects.

Reinforcement of the financial structure of OHL Concesiones

• The commitments of OHL Concesiones to contributing equity for the new         concessions -awarded to the extent of 62% in Peru, Chile and Colombia- are pre-financed, which means that its financing requirements are met up to 2018 with a comfortable disbursement timetable.
• In the course of the 2016 financial year, OHL Concesiones has reduced its corporate debt by 50.3%, placing it, at the pro-forma close of accounts for the third quarter, at 831.5 million euros in comparison to 1.7 billion euros at the 2015 annual closing.

Complete elimination of risk triggers

With the sale of the 4.425% interest in Abertis and the early repayment of the 266.3-million-euro margin loan, the process for eliminating all of the borrowings with risk triggers has been completed. These borrowings, which totaled 1.5 billion euros at the start of 2015, have now been fully repaid.

Trend in net recourse borrowings

The net recourse borrowings at September 30, 2016 were placed at 973 million euros. In this context, it must be noted that, following the sale of the 4.425% stake in Abertis during the month of October, the Group reduced its pro forma net recourse borrowings to 700 million euros.

Positive news in OHL Construcción

The Construction area has accumulated significant positive news over the last few months. A highlight is that the proposal for the design and construction of the I-405 upgrade project has been declared best-value proposer by the local California authorities. The award, in which the technical component stands out, is expected to be finalized before the end of 2016. The project budget would reach the amount of 1.1 billion euros (1.2 billion dollars), and it would be led by OHL with a 60% stake in the joint venture. The pro forma inclusion of the project in the backlog would raise the book-to-bill ratio to 1.1 in comparison to the current 0.8.

Performance of the business lines

In the first nine months of the year, 81% of the sales and practically all of the EBITDA of the OHL Group were generated abroad.

A highlight in the period was the excellent performance of the Concessions division, where Sales and EBITDA from tolls in comparable terms, that is, at a constant exchange rate and without the effect of the change in the consolidation method of Metro Ligero Oeste, grew +10.8% and +10.7% respectively, due particularly to the outstanding performance of the concessions in Mexico, with growth figures in local currency of +13.9% and +15.1%, respectively.

OHL Concesiones, a developer of greenfield assets, manages a direct backlog of 18 concessions including: 14 toll road concessions (with a total of 1,070 kilometers), one airport and three commercial ports. These figures have been achieved following a number of awards, such as the award in Chile of the Camino Nogales-Puchuncavi concession, adding 43 km of road to the total. Other significant awards include the private initiative in Peru, Conexión La Molina-Angamos, with 12 km in length and an investment of 445 million euros, and the addendum for the performance of the Chimbote Bypass, set in the framework of the Northern Toll Road project.

In Mexico, and in the context of the rebalancing of the concession agreements, concession periods were extended and toll rates were increased in June for Amozoc Perote, together with the new tariff schedule for the Northern Urban Toll Road, an aspect that confirms the full normalization of the business in this country following the defamatory campaign launched against OHL. A final highlight was the opening to traffic of the Northern Puebla Bypass toll road in Mexico.

With respect to Construction, this division presents +2.2% growth in Sales (+4.5% at a constant exchange rate). This growth is due primarily to the increased activity in the U.S.

New construction contracts were obtained up to the month of September worth a total of 1.8 billion euros, 34% of which are located in the U.S. Along general lines, the short-term backlog in the period was placed at 5.9 billion euros, representing 21.4 months of sales. 89.3% of the projects are focused on the Home Markets, where the Pacific Alliance stands out with 41% and the U.S. and Canada with 26.4%, while only 21.1% are projects of a size in excess of 300 million euros, 76.3% of which are for our own concessions.