Mitschrift_Strabag 20110831

STRABAG SE
“HY/2011 Results Conference Call”
August 31th 2011
14:00 p.m. C.E.S.T
MODERATOR: DR. THOMAS BIRTEL: TB
TB:
Thank you very much, good afternoon ladies and
gentlemen. This is, again, Thomas Birtel from Vienna
calling and have the pleasure to comment on the first
half year's figures of STRABAG SE for the year 2011.
I would like to start on page three of the presentation,
which should be in front of you. We are quite happy to
be able to report that we generated an output volume
in the first half of €6 billion 136 million, which
correspondence
to
a
considerable
increase
of
17 percent. In the previous year a significant decline
in the output volume had been registered owing to the
unfavourable weather conditions known to all of you.
We are happy to report that increases could be seen
in all segments of the company this year, especially
worth mentioning here is the growth in our home
market
in
Scandinavia.
Germany,
The
in
higher
Poland
output
and
also
volume
in
in
Switzerland, however, can be attributed to the
acquisitions of two construction companies of medium
size, Brunner Erben Holding A.G and Astrada A.G,
which took place in the first quarter of 2011. Our
consolidated Group revenue of the first six months of
2011 grew in line with the output volume which means
that we reached €5 billion 917 million after €5 billion
34 million in the same period the year before. This
means an increase of 18 percent. The figure is double
digit because of the same reasons as the output
volume.
1
Our order backlog reached relatively high level in a
multi-year comparison, at €14.9billion however, it was
still 6 percent lower than at the end of June of 2010.
This can be attributed for the most part to the
cancellation of our projects in Libya due to the political
unrest in that country. I may remind you that we
cancelled a contract amount of about €300 million in
the course of the first half of this year.
Poland is another factor that influenced the previous
year's high order backlog in that country in the form of
large infrastructure projects is being continuously
worked off and transformed into output. In Austria and
Romania, by comparison, the order backlog is on the
rise with projects including the Koralm Tunnel in
Syria, Austria and several new road construction
orders in Romania.
Let me now come to slide number four with regard to
EBITDA and EBIT. The EBITDA for the first six
months of the current financial year rose by 6 percent
and reached €197.18 million on good earnings
contribution especially from Germany and Poland.
This growth is that much more remarkable as an
extraordinary revaluation through profit and loss for
Czech railway construction company, Viamont DSP in
the amount of €24.6 million, reported in the results
from associates, led to a positive distortion of the
EBITDA last year. This has to be taken into
consideration once you compare this year's figure
with last year's figure. The facts, in any case, limited
2
the growth rate on a mathematical basis with regard
to our EBITDA and led to a pro-forma reduction of our
EBITDA
margin
from
3.7
to
3.3 percent.
The
depreciation and amortisation fell by 8 percent to
minus €180.52 million, in part again, related to one
time amortisation of goodwill in the amount of minus
€14 million performed in the first quarter of last year
and, again, related to the Viamont transaction.
Below the line this resulted in something very
exceptional for our Group. For the first time in the
history of
our Group, STRABAG reached the
breakeven point in EBIT in the second quarter of the
fiscal year already instead of the third quarter as
usual. EBIT does move from minus €10.36 million in
the same period the year before to a plus of €16.67
million while the margin rose to 0.3 percent from a
minus of 0.2 percent last year. Again, there you have
to take into consideration that we have the Viamont
effect with regard to EBIT it amounted to a plus of
€10.6 million last year.
When we have a look on the total group and the three
operational segments on slide number five, you will
easily discover that we see a strong recovery of EBIT
in the Special Divisions and Concession segment.
You can see the composition of the EBIT for the
Group. While it was only a little lower compared to
last
year
in
Building
Construction
and
Civil
Engineering and you were going to the extraordinary
evaluation of Viamont, especially in transportation
3
infrastructures, it nearly tripled in the Special Divisions
and Concession segment. The reasons for that
positive development are the notoriously volatile
business in tunnelling and the non-European markets,
those business segments are bundled in Special
Divisions and Concession, as you know.
Let's now come to the following slide, our earnings
per share, however, is again negative and this is due
to high minorities. While third-party shareholders still
help bear a loss of minus €1.33 million in the same
period of 2010, the earnings attributable to minority
shareholders this year amounted to a plus of
€19.75 million. This results in nearly unchanged
consolidated losses of minus €10.9 million over the
first half of 2011 whilst it a minus of €11.47 million in
the first half of 2010 and also an unchanged earnings
per share of about minus €0.10. Here, too, we should
again point out the positively distorted comparison
value from the Viamont revaluation in 2010.
When we have a look at our balance sheet on slide
seven, you will see that the balance sheet total
reached €10 billion 500 million and hence remained
nearly unchanged in comparison to the previous year
where
the
balance
sheet
total
amounted
to
€10.4 billion. Worth mentioning are the seasonally
higher account trade receivables with simultaneous
reduction of cash and cash equivalent as well as
growth of inventories in connection with project
development especially in Germany.
4
On the liabilities side, we can see a significant
increase of current financial liabilities mostly due to
the forthcoming repayment of and additions to
liabilities attributable to the public/private partnership
portfolio. The equity ratio also showed only little
change settling at 30.6 percent of the 31.1 percent on
the 31st December 2010. Our net cash position fell
significantly from €669 million to 25 million; 669 was
the status by the end of the year and the 25 million
and this responded to the build up of the working
capital which usually taking place in the first half of
the year. But the net debt situation was still registered
on the 30th of June of the previous year.
Let's now come to the cash situation and the working
capital development on slide number eight. The cash
flow from profit stood at a little more than €155 million
due in part to an improved net income 59 per cent of
the comparison period of the year before. Because of
the, as planned, lower growth of the working capital
the cash flow from operating activities came to rest
much less than deeply in negative territory at only
minus €292 million the comparison before was minus
407.85 million.
Enterprise acquisitions with a simultaneous lower
reduction of investments in Property Plan and
Equipment and the intangible assets led us to a cash
flow from investing activities of minus €301.64 million.
This figure grew by 25 percent compared to the same
5
period of the previous year.
The cash flow from
financing activities moved from minus €14 million to
almost €46 million, a development which can be
explained by the bond issue in the second quarter of
this year. The volume of the issue to remind you that
was €175 million for the first time while only
€100 million had been issued in the previous year.
I may now comment upon our three operational
segments. On slide number nine we give you a
glance
of
the
Building
Construction
and
Civil
Engineering segment. The output volume generated
in this segment increased by 25 percent to a little
more than €2.3 billion in the first half of 2011.
Disadvantageous weather conditions in the same
period the year before had led to an unusually
reduced output volume in 2010. Especially worth
noting is the growth in our home markets of Germany
and Poland and in the Russian and neighbouring
countries region. The higher output volume in
Switzerland, however, can be attributed to the
acquisitions of two companies I managed – I'm sorry
– I mentioned already before.
The revenue of the segment in the first half of this
financial year grew in tandem with the output volume
to €2 billion 142 million. EBIT in contrast fell slightly
from 43 million to €41 million due to an aperiodic
effect. The order backlog grew by 7 percent to
€6.4 billion. Here, too, the markets of Germany,
Poland, Russia and neighbouring countries and
6
Switzerland were responsible for the vast majority of
the growth. In contrast, a significant decline can be
seen in Hungary. The segment contribution to the
consolidated order backlog climbed upward from
38 percent last year to year to 43 percent now. A sign
of the general trend reversal toward privately funded
projects.
Following a series of large orders in the first quarter in
Germany,
STRABAG,
again,
registered
strong
demand in the second quarter for buildings in this
core
market.
Projects
include
inter
alia
the
revitalisation and partial new construction of the
famous Poseidonhaus office building in Frankfurt with
a value of €96 million. In another core market that of
Austria, STRABAG concluded a contract for the
construction of the Oberlaa Ost housing complex
worth €82 million. In view of the high order backlog
the workforce in Building Construction and Civil
Engineering grew as well rising by more than 2,200
persons or 13 percent to a little more than 20,000
employees. The number, however, includes the
growth resulting from the Swiss acquisition which
contributed slightly over 1100 employees to the
overall personal figures.
We reiterate our output volume forecast for the
segment
which
had
been
and
will
stay
with
€5.1 billion. In Germany the target output and result
are largely covered already. The competitive situation
on the sub-contractor side has stabilised the prices as
7
a result. The situation in Poland, however, is quite
different. Price dumping and the lack of incoming
orders are causing a deteriorating situation in the
otherwise still booming market.
Let’s now come to slide number ten which gives a
survey of our Transportation, infrastructure segment.
This segment registered growth of the output volume
of 17 percent, where the output reached a little more
than €26 billion in the first half of 2011. This can be
attributed to the one hand to a milder and shorter
winter compared to the same period of the year
before resulting in significant increases in the home
market
of
Germany.
On
the
other
hand
the
construction boom in Poland and the expansion in
Scandinavia also had a beneficial effect. The revenue
of this segment gained a little more than output that
was a plus by about 19 percent to settle at
€2.5 billion.
In contract, the EBIT fell to minus €99.5 million which
is 34 percent deeper in negative territory than in the
previous year. This development can be blamed,
among other things, on the continued weak public
sector investments and infrastructure in the Czech
Republic forcing STRABAG to respond with structural
adaptations. The order backlog stood at €5.3 billion,
8 percent below the level at the end of June 2011.
The reason for this is the above average volume of
new orders in Poland in the previous year which has
now fallen back to a usual level. Additionally, weather
8
conditions have allowed a part of the order backlog in
Germany to be already worked off in the first quarter
of this year. In contrast growth of the order backlog
was registered in Scandinavia, the result of several
large projects such as (unclear 15:22) project in
Stockholm as well as several new infrastructure
projects in various northern European countries.
STRABAG also in this segment is staying with it’s
estimate
and
states
again
Transportation
Infrastructures will generate an output volume of
about €6.3 billion in the 2011 financial year. At the
same time, the economic conditions in the individual
markets vary strongly from country to country. The
situation in Germany can be described as stable in
comparison to the low public sector expenditures in
road construction, orders from private and institutional
clients are picking up noticeably. The positive
influence can be seen from STRABAG’s involvement
in the fields of hydraulic engineering. We acquired
Cuxhaven-based civil hydraulic engineering firm
Ludwig Voss and increased our stake in Josef Möbius
Bau-AG, Hamburg from 70 percent to 100 percent
and in off shore wind.
On the Austrian home market and contrast public
sector budget cuts will probably lead to significant
decline in the output volume in the Transportation
Infrastructure segment. The price pressure here can
only partially be countered through the diversification
and
niche
business
fields
such
as
railway
9
construction, noise abatement construction or the
construction of sport facilities. The construction boom
in Poland will likely be over towards the end of the
year as we have stated before already.
On page eleven we come to the first and last
operational segment of the STRABAG Group. Special
Divisions and Concessions. The output volume in the
segment increased by 6 percent and reached €1.135
billion. This development can be attributed to the
naturally quite volatile business tunneling and in direct
export jobs. Growth in the Middle East and Italy was
countered by declines in Africa and also in Hungary.
The revenue grew by 8 percent
and
reached
€1.230 billion. At the same EBIT nearly tripled from
18 million last year to €69.5 million this year. This
development can be explained by the extremely
volatile business in the non-European market which,
above all in Africa and Middle East, developed much
better in the first six months of 2011 than in the
comparison period. Last year we were, however, as
you know not satisfied with the situation at all.
Last year’s order backlog was strongly driven by the
developments in the non-European market. As a
result the order backlog in the first half of 2011 was
down by 25 percent to €3.2 billion. Unlike the year
before the latter region no longer includes any
projects in Libya as STRABAG’s activities in this
country were suspended at the beginning of the year
due to the political unrest. Although STRABAG will
10
continue to pursue projects in other continents, above
all in the form of public/private partnerships, the
company was especially successful in Northern
Europe during these past few months. While the price
level at Central Europe is falling and the region has, in
part, already (unclear 18:55) competition expertise
and experience are in demand in the North. For this
reason
the
Infrastructure
Project
Development
Division is currently bidding increasingly for projects in
Germany, Belgium, Finland and the Netherlands. In
April, for instance, this STRABAG unit was awarded
the contract in consortium to plant, finance and
operate the AH Motorway in the south of Germany.
Also
for
this
segment,
Special
Divisions
and
Concession we confirm the forecast of €2.5 billion for
the output volume made already in May 2011 for the
whole financial year 2011.
I may sum up my description of the situation of the
STRABAG Group as follows. We confirm, again, our
rates forecast given at the presentation of our Q1
figures. We expect an output volume and total of
about €14 billion in 2011 previous that had been
13.5 billion and of €14.3 billion in 2012. EBIT should
be at least at €300 million this year which means an
EBIT margin of 2.3 percent and €330 million next year
which, again, would be an EBIT margin of 2.3 percent
for the Group. This is my short comment on the
figures of STRABAG for the first half of the current
financial year and now I am happy to answer your
eventual questions. Thank you very much.
11
Operator:
Excuse me. This is the Chorus Call Conference
Operator. We will now begin the question and answer
session. Anyone who wishes to ask a question may
press star and one on their touch tone telephone. If
you wish to remove yourself from the question queue,
you may press star and two. Anyone who has a
question may press star and one at this time. The first
question is from Mr Will Morgan of Goldman Sachs.
Please go ahead, Mr Morgan.
Will Morgan:
I have a few questions please. The first one is with
the Special Divisions and Concessions, you ran
through some of the impacts and the results. I just
wondered if you could give a bit more clarity. Certainly
the second quarter EBIT that you reported is very
high relative to anything we’ve really seen in the last
number of quarters. I just wondered to what extend
this is kind of one of factors. You do mention the
volatility of the business, but I just wondered if you
could give a bit more clarity on what really, a sort of
more underlying run-rate perhaps is for that business.
The second question is, obviously, with Poland you’re
seeing the backlog wind down, which is sort of as
expected and you’re seeing quite big drops now. I just
wondered whether or not you can give us a sort of
sense of where that level of backlog might stabilize
eventually going forward. The third question, which is
a very quick one, you mentioned there’s an aperiodic
effect in the Construction and Civil Engineering
business, I just wondered what that was and whether
12
or not that was significant and, finally, I just wondered
if you could up date us with where you are in terms of
your share buyback. Whether or not you’ve been
more opportunistic as a result of recent general
market weakness. Thanks
TB:
Thank you very much, Mr Morgan. Well it is true with
regard to the EBIT in Special
Divisions
and
Concessions, the development is somehow striking
although we should not forget about the very low level
last year, which to a large extent explains the level or
let’s say the percentage of increase we have reached
today. Basically, we believe that we are now more or
less back to normal in this division. As you know, we
don’t publish segmental EBIT forecast, but I think I
can say that we believe that with regard to the
segments we believe in the first half we are more or
less back to normal again and we don’t expect fall
back to the level of 2010 this year. So this, in our
eyes, is not a one-off effect but or less a normalization
could be somehow the percentage could, for the total
year, be a little lower than it is by the first half but it
will closer to the first half of this year than of last year.
With regard to Poland we have always stated that we
see a historical five minute development in this
country in 2010 and 2011, which means that Poland
climbed to the number two position in order backlog in
the Group and it was the number four or number five
before. We believe that with the extraordinary big
infrastructure projects running out by the end of this
13
year probably the beginning next year, we will also for
Poland to be back to normal again in this country,
which means that it will be definitely one of the more
important countries for STRABAG, but it is no surprise
to us that it will, again lose its number two position in
order backlog. It will be, probably again, back to
number four or five, which could mean that the order
backlog could be only 50 percent of what it was at the
peak time at the beginning of this year or at the end of
last year.
With regard to the aperiodic effect in Building
Construction and Civil Engineering, we are talking
about an insurance claim in Russia we have already
incurred the cost and did not yet reach an agreement
with the insurance company and according to our
strict profit realization rules, we have, of course, taken
all the cost but not yet shown the income of the
eventual insurance claim. But we believe that we will
settle this matter in the course of the year 2011.
Regarding the share buyback program, I think we had
announced in the course of our team annual report
that
we
have
already
purchased
back
about
4.14 percent of the total share capital. I can report to
you that by today we have bought back about
4.19 percent. We make use of the rather favorable
price situation. If you have a look at our stock price,
you see that the price is more or less stable hence we
feel we are in quite favorable situation to buy back
shares. Currently, we had probably expected that we
had to pay slightly higher price for that, but I may
14
remind you that our power to buy-back shares is
limited to a total of 10 percent of the nominal capital.
Will Morgan:
Okay, thank you very much for that. Just to quickly
clarify, I mean in terms of the size of the costs where
the, of the aperiodic effect, would it be fair to say that
if you adjusted for that your margins year on year
would
have
been
broadly
stable
in
Building
Construction and Civil Engineering?
TB:
Yes, that is…that is. The margin is definitely we are
talking about a medium-size single digit million
amount.
Will Morgan:
Okay.
TB:
So it will be a little less than last year 2.5 percent was
a good figure the total year was even better but it
would not have been away. Yes, that’s right.
Will Morgan:
Okay. Okay.
Operator:
The next question is from Mr Timo Schmidt from
Petrus Advisors. Please go ahead sir.
Tim Schmidt:
Hello, good afternoon. Thank you very much for the
update and congratulations on the strong and
impressive results for the first half-year. If I may I
would like to raise two questions which to a certain
extent go in the direction and Mr Morgan has already
touched up on. I mean first of all if I look at your
15
performance Germany and Poland seem to be going
growing at fantastic rates. The first half-year EBIT
figure looks very impressive, why, and then given the
positive news flow from the Toronto project, why are
your not increasing your EBIT guidance and then,
secondly which to a certain extent goes to in the
same direction, again. Libya has been written down
completely and my understanding is that you will test
the market again by sending in a couple of specialists
so potentially you may enter Libya quite soon and, if
so, what upside for the order book do you see? I
mean isn’t that some kind of tremendous opportunity
for STRABAG to go back into Libya.
TB:
Thank you very much Mr Schmidt. You’re right that
we
have
seen,
still
today,
a
very
favorable
development of the company especially in Poland but
we may not forget that there are also market which
turned out to be much more difficult than we had
initially
foreseen.
For
instance,
for
building
construction, we have been given the example of
Hungary for Transportation Infrastructures we have
given the example of the Czech Republic where we
had to structurally change our set up and to slim-line
it. That means that, again the millipede principle
works out also in the first half of this year. We have
that favorable development in Poland, but we have of
course on
the
other
side
in
certain
markets
unforeseen negative development. All in all we
believe that we are on the safe side in staying with the
16
guidance which we have given in the first quarter of
this year.
When it comes to Libya, this is again another example
of our being rather cautious with on predictions on the
eventual chances of the future. We may not forget
that all contracts which we have cancelled in our
order backlog are by no means being cancelled
legally. The contracts are still enforce but we wonder
whether we have a counter part to work on them
again. So there might be a chance, depending on the
further development in Libya, that we are back in the
market quite fast especially when administration
structures are in place, again, and if financing means
are available again. That would by no means pose a
legal problem because the contracts are there as well,
but it all depends on the further development in this
market and until today we feel that we are much too
uncertain to predict whether, by the end of the year,
we will be in a position to let’s put it that way, to
reactivate what we had in our order backlog till the
first quarter of 2011. There are chances, but we can’t
really make a statement on them today
Timo Schmidt:
Right and then how exactly will you proceed to test
the market opportunity in Libya. I mean, what is the
timeline for sending in specialists? 31:13
TB:
Yes, we have planned in our (draws? 31:17) to reestablish a presence most probably in Benghazi to
start with. In the third or fourth quarter of this year and
17
then, of course, we will try to find counterparts
regarding the existing contracts. This will be a factfinding mission in the first place, we will definitely not
start again to import material and installations in the
first place, but the first place, the first action to be
taken will be fact finding missions and I expect that to
take place most probably in the fourth quarter of
2011.
Timo Schmidt:
Okay, thank you very much and then, if I may, can I
ask one further question please?
TB:
Please go ahead.
Timo Schmidt:
It's again regarding the share buyback. I mean the
speed of which you have conducted the share
buyback so far is quite impressive according to your
webpage you have reacquired 4.2 percent of the
company. Are you planning on keep up the same
pace for the further acquisitions I mean of course
given
market
opportunity
and
share
price
development?
TB:
Yes, we have the power to buyback a maximum of
10 percent and we will do that if the market permits as
it does today.
Timo Schmidt:
Alright, okay, thank you very much.
TB:
Thank you very much Mr Schmidt.
18
Operator:
The next question is from Mr Marcin Wojtal of Merrill
Lynch. Please go ahead, Mr Wojtal.
Marcin Wojtal:
Good afternoon. I had a few questions. Firstly, I was
just wondering if you could provide us with some
guidance for working capital for full-year 2011 and
then please correct me if I'm wrong, but I think very
good very working capital performance in 2010 was
helped by large prepayments for contracts in Central
Eastern Europe, so I just wanted to check if your
current order intake basically gives you enough
prepayments related to new contracts to keep that
level of working capital. Secondly I just wanted to get
a bit of clarity on net income attributable to minorities
which was about 19 million in the first half.
Your
guidance that was published after Q1 release is for
the 20 to 25 in the full-year. So I was just wondering if
it you could further comment on this or do you expect
that net income attributable to minorities to be lower in
the in the second half or we should analyse it. These
are my two questions.
TB:
Thank you very much Mr Wojtal. Well with regard to
the working capital, you're right that we had reported
that prepayments, especially stemming from Poland,
had helped with the working capital and this was a
one-time effect, which we will not be seeing again
because this related to the big contract which we are
now working on and it was a prepayment to be more
precise, of about €400 million, which we had in cash
by the end of the last year. This means that we,
19
today, expect a further increase in working capital and
we don't count on a further decline in that figure and
this might amount to several hundred million Euros
which is by no means an extraordinary development,
but which is in line with our expectations and has to
do with the one-time which we have seen by the end
of last year and which you quoted so rightly.
With regard to the net income and the minorities, it is
true that the level of minority income in the first half of
this year seems to be astonishingly high as compared
as to the figure of previous years or previous year, but
we, it is true that in the previous year we have also
seen some negative effects in minorities which have
dampened, which decreased the minority figures in
total. For instance we may not forget that the
company which was representing us in Libya was a
60 percent stake and we had a 40 percent minority
stake and of course this minority stake last year bore
a large negative figure due to the fact that we
withdrew from Libya. We don't see that effect again
this year. We have only, let's say, the normal
minorities being accounted for in this figure and I
agree that given the figure of more than €19 million by
the end of the first part of this year we expect a
slightly higher figure for the minorities by the end of
this year. The estimate of 20 million is a little too low
in light of this development. It might be easily, again,
the same figure as we have seen for the first half so it
will be considerably higher than 20 million.
20
Marcin Wojtal:
Thank you very much.
TB:
Thank you.
Operator:
As a reminder, if you wish to register for questions
please press star and one on your telephone. This
next question is from Mr Christian Baader of
Deutsche Bank. Please go ahead sir.
Christian Bader:
Yes good afternoon Mr (Unclear 37:03) two questions
please. First of all your interest cost just in the second
quarter went up significantly to €17.3 million after
€10 million in the comparison period, can you please
tell us why? And secondly, your results from
associates and participations seems relatively poor in
comparison to the second quarter of last year, can
you also tell us why please.
TB:
Okay. Yes, we have again in one of the results we
may not forget that last year we have the Viamont
effect which you have to, again, to deduct if you make
a comparison with the present year's figures so it was
last year's figure which was influenced by an
extraordinary effect when it comes to the result. And
when it comes to the interest figure this year it is
foreign exchange effects which had a stronger effect
than last year.
Christian Bader:
Okay and in terms of interest cost, you say the high
number is due to additional FX charges. Is it possible
21
to quantify them please. So that we can work out, let's
say, the underlying interest expenses?
TB:
Yes, I don't have that in front of me to be...(off
microphone) Yes, I would if you agree on that Mr
Bader, we will work a little bit upon that because we
don’t have the details just in front of us but we could
probably give you a little more colour on that
separately.
Christian Bader:
Okay and coming back to the associates and
participation income. If I remember correctly this
Viamont effect was in the first quarter so I was just
wondering I mean participation and associate income
was 11 million in total in the second quarter last year,
this time only 6 million.
TB:
No, I think there you are not right. Viamont was taking
place in the second quarter of last year. No sorry,
you're right. That has taken place in the first quarter of
2010 and you are referring to the second quarter
of...?
Christian Bader:
Second quarter, yes.
TB:
But we don't have that development in the second- if
you have a look at the second quarter only and we
have the… No, we're talking about the result of the
associates. We have in the second quarter 2011 we
have 0.79 and in the second quarter of last year we
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have 1.85 which is, of course, relatively less but in
absolute figures almost nil.
Christian Bader:
Okay.
TB:
Or you may have a different figure in front of me.
Christian Bader:
No, no, no that's fine.
TB:
I think this is next to nil, the percentage is high but the
absolute figure is next to nil. You're right but sorry
for...with regard to the second part of your rights gain,
Viamont transaction took place in the first quarter last
year, this is right.
Christian Bader:
Alright, thank you.
TB:
Thank you.
Operator:
The next question is from Mr Will Morgan of Goldman
Sachs. Please go ahead sir.
Will Morgan:
Hi, I just wanted to follow-up again on this Special
Divisions and Concessions margin. I mean it seems
to me that you are now looking for a margin that's
maybe more in the region of perhaps around 5
percent to the full year by the sounds of it. You know
if that is the case, I mean that is, I mean you did
mention that obviously the margin being depressed in
the last year or in recent years. I just wondered if you
could elaborate a little bit about exactly what are the
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areas here that are seeing the margin improvement
how we could sort of expect this to be sustained by
the mix of the business and what you're doing here
just to add a little bit of granularity so that I can get a
bit more comfortable.
TB:
Thank you very much, Mr Morgan. It is true that this
business typically is very volatile as you pointed out
before and hence it is so difficult to define a normal
margin for the segment. One thing is for sure we
expect a normally higher margin than in our other
core businesses which represent more or less stable
operations in certain regions. Whilst we here rely to a
large extent on so-called direct export business and it
is true that last year the figure was extraordinary low
because for the first time in the company's history we
had to report a segmental loss in 2010 of minus €(60?
42:25) million EBIT which was equal to minus
0.6 percent
in
margin.
This
was
definitely
an
extraordinary event and we have explained why this
was taking place, this was due to Libya but this was
also due to other non-expected effects in nonEuropean markets. The first half was, of last year, a
margin of 1.6 percent was definitely below our, let's
say, expectations and our ambition but was not yet
taking into consideration the development in Libya.
This year we have seen a margin which is, I would
say on the right side but probably a little bit on the low
end for the first half and this has to do with the
favourable development in some tunnelling contracts
where we managed to reach agreement with the
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employer on contracts agenda which led to the
remuneration of cost which we had to incur before. So
this is why I'm saying I'm not too sure whether we will
be seeing the 5.6 percent in margin till the end of the
year, but I definitely expect a far better margin than in
the first half of 2010 and definitely no negative result
by the end of the 2011.
Will Morgan:
That's very clear. Thank you.
TB:
Thank you.
Operator:
Mr. Birtel there are no more questions at this time.
TB:
Thank you very much for your interest and I'm looking
forward to the next time. Thank you very much.
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