ACS earned € 523 million during 2019 first half, an increase of 17.1%

29.07.2019

Sales increased by 5.8%, up to € 18,817 million
Backlog stood at € 76,502 million, +9.6% more
EBITDA rose by 15.1%, reaching € 1,621 million

1. Consolidated Results

The ACS Group sales in 2019 first half accounted for € 18,817 million, representing an increase of 5.8%. The North American, Australian, and Spanish markets continue to demonstrate a solid growth.

The Sales geographical distribution showed the Group’s broad diversification, with North America accounting for 47% of sales, Europe 22%, Australia 19%, Asia 5%, South America 6%, and Africa the remaining 1%. Sales in Spain accounted for 16% of the total.

By countries: USA, Australia, Spain, Canada, and Germany contributed with 82% of the total sales. Backlog at 2019 June-end amounted to € 76,502 million, growing by 9.6 %. To mention, the good performance in the North American markets, both in United States and Canada, with a year-on-year growth rate of 15%.

Total EBITDA accounted for € 1,621 million, increasing by 15.1% placing its margin in 8.6%, 70 b.p. better, supported by Abertis’ contribution during the period while in the prior year it only contributed during the month of June.

Likewise, EBIT reached € 1,098 million after increasing by 9.7%. The sales margin rose to 5.8%.

The Group’s attributable net profit stood at € 523 million, meaning a 17.1 % increase. Net profit growth, not considering the acquisition of Abertis contributing since June 2018, would stand at 4%.

In the Infrastructures area, Net profit grew by 18.5% after the incorporation of Abertis in June 2018, whose net contribution during the first half of 2019 amounted to € 104 million, compared to last term’s € 26 million. Construction activity includes Dragados with a Net profit of € 76 million and HOCHTIEF which has reduced its contribution to the Group from 71.8% to 50.4%, after selling an important stake to Atlantia in the last quarter of 2018, related to the Abertis’ acquisition operation. Excluding this effect, the Construction Net profit growth stood at 4.6%.

Industrial Services Net profit grew by 3.5%, sustained by the boost of the renewable energies investment in the Spanish market.

Likewise, Net profit in Services reached € 19 million, growing by 12.3%.

2. Financial situation

The ACS Group reported a net debt balance of € 725 million in June-end, growing by € 667 million in the last twelve months due to Abertis’ acquisition (completed as of 2018 end) for a net amount of € 1,040 million and the investment growth in concessional projects, mainly in renewable energies, worth over € 600 million.

In fact, the Group’s total net investment during 2019 first half rose to € 1,008 million.

Net operating CAPEX amounting to € 279 million and mainly corresponded to the acquisition of machinery for mining, civil works, and industrial facilities projects.

Financial investment and projects amounting to € 800 million, highlighting the Industrial Services area with an investment of € 609 million, mainly in renewable energies concessional projects.

3. Results per Area of Activity

3.1. Infrastructures

The ACS Group Infrastructure area, which includes Construction (Dragados and Hochtief), and Concessions (Iridium and Abertis), generated a turnover during 2019 first-half worth € 14,235 million, growing by 6.6% compared to last year’s same term.

Likewise, Infrastructures Net profit increased by 18.5%, reaching € 294 million, boosted by Abertis’ contribution to the Group, which amounted to € 104 million.

a) Construction

Sales in Construction during 2019 first half accounted for € 14,199 million, showing an increase of 6.8%, 3.9% when adjusted by exchange rate variation impact.

ACS Group international sales in the Construction area amounted to € 13,639 million, which represented 96% of total sales in this area, being North America and Australia the most important markets. Domestic sales represented 4% of total.

Sales draw a shift towards a business mix with a more balanced risk profile; with a greater contribution from “Construction management” activities, mining and infrastructure services, Alliance-type contracts and P3 projects.

Construction EBITDA accounted for € 1,049 million, with a sales margin of 7.4%, after growing 10.6%, and improving by 30 b.p. compared to last year’s same term.

Net profit reached over € 183 million, 16.2% less due to HOCHTIEF minorities increase after selling 23.86% of the company. This result does not include Abertis’ net contribution through HOCHTIEF, reclassified under Concessions.

The Construction backlog, in June 2019, rose to € 63,981 million, growing by 10.5%. Backlog’s good performance was due to the award of large projects during this first half, order intake grew by 16.9% versus the prior period. International backlog represented 96% of total volume in the Construction area.

Amongst the most important awards achieved during 2019 first half, these are the most significant:

P3 project for the financing, design, construction and operation of the Cross River Rail project, new 10-kilometer metro line in Brisbane, (Australia)
Expansion of six lanes in the I-64 tunnel between I-664 in Hampton and I-564 in Norfolk, Virginia (United States).
Building of Old Oak Common Station and upgrading Euston Station (London), as required, for the new High Speed railway (London, United Kingdom)
Mining contract at Debswana Diamond Company’s Jwaneng Mine Cut 9 project in Botswana
Construction of a plant and tunnel for the treatment of water (Los Angeles, United States)
Project (PPP) for delivery and maintenance of a new regional rail fleet and construction of a new maintenance facility in Dubbo, New South Wales (Australia)
A 5 year contract for the maintenance and logistics services of the metropolitan trains of Sydney (Australia)
Extension of the Centerm terminal of the Port of Vancouver (Canada)
Construction of the Redlands rail project that will extend this service from San Bernardino to the University of Redlands (California, United States)
Constuction of Christchurch Metro Sports Facility, the largest aquatic and indoor recreation and community venue in New Zealand.
Reconstruction and improvement of the Newark Bay Bridge in New Jersey (United States)
New contract for services in the Karratha Gas Plant (KGP) operated by the Woodside Energy Limited (Australia)
Building of warehouse and offices for Amazon in Seville (Spain)
Extension of I-5 in Orange County (California)
Construction of the CDC East car parking, as well as the associated infrastructures in Atlanta (Georgia, United States)
Expansion of the Triangle Expressway Southeast in North Carolina (United States)
Construction of the new institute and facilities of Bellaire in Texas (United States)
Project for Northern Road upgrade between Eaton Road and Littlefields Road (New South Wales, Australia)
Project for the construction of the section of the high-speed rail line between Atxondo-Abadiño in Vizcaya (Spain)

b) Concessions

The Concessions activity in the ACS Group contributed € 110 million to Net profit from which € 104 million came from the stake that the Group holds in Abertis.

Out of this € 104, € 78 million corresponded to the ACS direct stake, while the remaining € 26 million corresponded to its indirect stake via HOCHTIEF, after minority interests were deducted.

During 2019 first half, Abertis’ highways performance was positive due to the solid growth of traffic rates registered in Spain (+2.5%), France (+0.3%), Chile (+2.2%), Brazil (+5.0%), and Italy (-0.3%).

On a like for like basis: revenues during the period increased 5%, EBITDA grew 9%, while net profit rose 10%.

3.2. Industrial Services

Sales in Industrial Services reached € 3,804 million, increasing by 3.4%. The solid recovery of the domestic market and Industrial Maintenance activities’ growth were the main reasons for this positive change.

EBITDA accounted for € 413 million, 3.4% more than in the same term of 2018, with a sales margin of 10.8%

Equally, Net profit reached € 221 million, 3.5% higher compared to last year.

Industrial Services increased its Backlog by 3.5% up to € 9,794 million in 2019 first-half, with 76% being international contracts. Amongst the most important awards achieved during 2019 first half, are:

Contract for the delivery of the Communication Systems for the Finch West Light Rail Transit Project in Toronto (Canada)
Delivery of the OMCS system for the M4-M5 Link Tunnels (Stage 3A) for the entire WestConnex project (Australia)
Works for basic engineering, detailed engineering, equipment and material supply, construction and implementation of two 5,000 tons-per-day sulphuric acid plants in Jorf Lasfar industrial site (Morocco)
Project for Azito´s combined cycle power plant extension to 280 MW in Ivory Coast.

3.3. Services

Sales in Service to Citizens (CLECE) accounted for € 786 million, rising by 4.2%.

EBITDA accounted for € 47 million, growing by 7.1%. Margin over sales stood at 5.9 %, 10 b.p. better than in 2018.

Net profit reached € 19 million.

Services Backlog accounted for € 2,727 million, equivalent to 21 months of activity.

Amongst the most important awards achieved during 2019 first half, these are the most significant:

Renovation of the cleaning service at the University Hospital of Bellvitge, Hospital de Viladecans and Instituto Diagnóstico de la Imagen ( (Barcelona, Spain)
Extension for the contract of the Home Help Service in Madrid City (Spain)
Contract for Home Help service in Durham County Council (United Kingdom)
New awards of the cleaning service of the Cadiz hospital for the Andalusian Health Service (Spain)
Contract for different security services in the Generalitat Valenciana (Valencia, Spain)