OHL reduced its recourse leverage in 2014 to 2.5x, the lowest level in the last 5 years
February 26, 2015
The OHL Group ended the 2014 financial year with positive outcomes on the operating level. The net profit before extraordinary provisions increased 20 % to 324.3 million euros, sales grew 6 % and were placed at 3.7 billion euros, while the recurring operating result (EBIT) advanced 1.8 % moving up to 915.2 million euros. At the same time, the total construction backlog grew 26.3 % and reached 7.6 billion euros, equivalent to 2.7 years of sales, while the backlog of the concessions business increased 14.6 % to 58.4 billion euros.
In this context, the OHL Group, within the framework of stability and financial discipline that has characterized it for more than ten years, has undertaken extraordinary financial reorganization measures and has reduced its debt, establishing a firm foundation for driving its future growth.
With respect to the extraordinary financial reorganization, in an environment of increased litigation connected with major international contracts, OHL has made provisions, in line with a highly conservative interpretation of accounting regulations, totaling 301.1 million euros, despite the fact that the Group will continue to take all of the measures necessary, included legal action, for the full recovery of these amounts.
In terms of net recourse debt, these borrowing have been reduced to 827.9 million euros, 15.1 % less than in 2013, with the result that the recourse leverage ratio (net recourse debt/recourse EBITDA) is placed at 2.5x, the lowest level in the last 5 years. Insofar as the total leverage (net debt/recurring EBITDA), this remains stable at 5.2x despite the investment made in new concessions. With this figure, OHL has become consolidated as one of the lowest-leveraged companies in the construction sector in Spain.
International operations
El peso de la actividad internacional en el Grupo OHL es, como en ejercicios precedentes, muy relevante y representa el 77,3 % de las ventas y el 98,0 % del EBITDA.
El detalle por áreas geográficas de las ventas del Grupo en 2014 es el siguiente:
- Central and South America 27.9 %
- Spain 22.7 %
- Middle East and North Africa 17.4 %
- USA and Canada 16.5 %
- Central and Eastern Europe 15.3 %
- Others 0.2 %
Performance by activity
The OHL Concesiones division ended 2014 with an increase of 15.5 % in toll revenues moving up to 422.5 million euros thanks to the higher levels of traffic and toll rates. In terms of EBITDA, this figure has grown 5.5 % to 866.6 million euros.
The division has ended a very positive year in terms of new concessions. Specifically, it has added two in Chile: the Eastern Américo Vespucio toll expressway and the Industrial Bridge over the Biobío River; two in Mexico: the Atizapán-Atlacomulco toll road and the Puebla Elevated Viaduct, together with its first concession in Colombia, the Magdalena River toll road. The number of direct toll road concessions is now 13, managing a total of 949.9 kilometers.
With respect to the performance of OHL Construcción, total sales have undergone 11.6 % growth, driven by the division’s international operations (particularly in the United States, Europe and the Middle East), accounting for 82.3 % of the total. The new contracts totaled 3.9 billion euros overall. The following stand out among these projects: the SR-826 and SR-93 Express Lanes and I-75 in Florida (United States), worth 286 million euros taken together, and three railway projects in Mexico, that is, the México-Toluca interurban train (242 million euros), the Zapopán-Guadalajara-Tlaquepaque light rail (118 million euros) and the Guadalajara light rail (97 million euros).
Sales by the rest of the divisions, grouped under Other Activities, totalled 471.3 million euros, down 5.8 % with respect to 2013. This reduction is due mainly to the fact that the OHL lndustrial division finalized major projects in 2013 and the replacement of its backlog did not become strong until the end of the first half of the year, accruing 105.2 % growth during the financial year.
Optimization of the financial structure
In the financial context and in the framework of the policy of ongoing optimisation of the Group’s financial structure, in March 2014 OHL successfully completed an issue of Eurobonds in the amount of 400 million euros maturing in 2022. The bonds were issued at par and the issue coupon accrues 4.75% fixed interest, the lowest in the Group’s entire history in the Euromarket, where OHL commenced its issuing activity in 2007, being Investment Grade.
In December, the Group redeemed in advance the 524 million euros of the bond issue maturing in March 2015.
In regard to the transactions carried out during the financial year, in October 2014, the OHL Group sold 5 % of its Abertis stake to Inmobiliaria Espacio, S.A., subsequent to which the two parties signed a syndicate agreement. Following this transaction, the OHL Group’s percentage stake in the share capital of Abertis is now 13.925%, while the direct or indirect stake of the Villar Mir Group in Abertis is maintained at 18.925%. Also, in November 2014, an additional 7.5 % of OHL México S.A. de C.V. was sold. Following this transaction, the OHL Group continues to maintain control with 56.14 %.
THE OHL GROUP IN 2014
| Consolidated figures | Millions of euros(M€) | Var. 2014/2013* | Margin on sales (%) (%) | |
|---|---|---|---|---|
| 2014 | 2013 | |||
| Turnover | 3,730.5 | 6.0 % | 100.0 | 100.0 |
| EBITDA | 1,078.4 | -11.1 % | 28.9 | 34.5 |
| Recurring EBITDA | 1,078.4 | -0.4 % | ||
| EBIT | 614.1 | -40.3 % | 16.5 | 29.3 |
| Recurring EBIT | 915.2 | 1.8 % | ||
| Attributable net profit | 23.2 | -91.4 % | 0.6 | 7.7 |
| Recurring attributable net profit | 140.2 | -48.2 % | 3.8 | 7.7 |
| Total backlog | 66,766.0 | 16.1 % | ||
Performance by activity
| Activity | Sales(M€) | Var. 2014/2013* | EBITDA | Var. 2014/2013* |
|---|---|---|---|---|
| Concessions | 465.8 | -9.3 % | 866.5 | -8,9 % |
| Construction | 2,793.4 | 11.6 % | 206.2 | -17.2 % |
| Other activities | 471.3 | -5.8 % | 5.7 | -53.3 % |
| TOTAL | 3,730.5 | 6.0 % | 1,078.4 | -11.1 % |
*Figures for 2013 re-stated
OHL is a large international concessions and construction group. With over 100 years’ history and present in more than 30 countries all over the world, it combines its global presence with leading positions in each sector. It is the strategic promoter of public-private ventures in all forms of transport infrastructure, the thirty-first largest international contractor and the sixth largest in Latin America, according to the 2014 Engineering News Record (ENR) ranking.
With headoffice in Madrid (Spain), it carries out its activity through five divisions: OHL Concessions, OHL Construction, OHL Industrial, OHL Services and OHL Development. It is listed on the selective Ibex 35 index in the Madrid Stock Exchange and ended 2014 with a turnover figure of 3,730.5 million euros and close to 25,000 employees.