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ACS gains 388 million euros of net profit in the first half of 2016

Sales reached 16,387 million euros, 5.3% lower in a like for like basis adjusted by currency impacts and the sale of renewable assets in 2015

Backlog increases by 6.1%, in a like for like basis, up to 69,561 million euros.

Net debt increases by 233 million euros in the last twelve months despite the 766 million euro investment devoted to increase stake in HOCHTIEF and CIMIC during the same period.

Consolidated Results

Sales in the first half of 2016 accounted for 16,387 million euro, representing a decrease of 8.2% due to the negative impact of exchange rate variations against the euro, in particular the Australian dollar (-6%) and the Mexican peso (-18%), as well as the sale of renewable assets in the first quarter of 2015.

Excluding the effect of exchange rates and the sale of renewable assets, sales of ACS Group in the first half of 2016 decreased by 5.3%, mainly in the area of Construction due to the completion of major LNG projects in Australia during the first half of 2015.

However, production in Australia during the 2nd quarter of 2016 has increased by 6% with respect to the 1st quarter, showing a trend reversal which is expected to consolidate in the coming quarters.

The geographical distribution of sales shows the broad diversification of the Group, in which North America accounts for 44% of sales, Europe 25%, Australia 13%, Asia 10%, South America 7% and Africa the remaining 1%. International sales account for 83% of the total.

Backlog at the end of the first half of 2016 amounted to 69,561 million euros, 3.3% higher than in June 2015 with an equivalent sales geographical breakdown. However, adjusted for exchange rate variations, backlog grew by 6.1%, showing good evolution of contracting activities in these last twelve months.

Total EBITDA accounted for 1,225 million euro, decreasing by 6.9%. However, in a like for like basis, adjusted by forex impact and sale of renewable assets in Spain, EBITDA is barely reduced by 0.3% and margin improves in 30 bp up to 7.5% .

Likewise, EBIT stood at 897 million euro and increased by 7.8%, in a like for like basis, thanks to the good operating performance of the activities.

The operational improvements and the significant reduction in financial expenses contributed to an increase of 8.6% of the attributable net profit of the activities, before corporate costs. It is worth noting Construction activity which grew by 26.1% as a result of the transformation processes implemented in HOCHTIEF and its subsidiaries, and the increase in the stake thereof.

Net profit in Industrial Services decreased by 1.0%, not considering the sale of renewable assets in the first quarter of 2015, as a result of the slowdown in the oil & gas projects in the Mexican market. For its part, Net profit from Environment area increased by 3.2%.

Net Profit of Grupo ACS in the first half of 2016 reached 388 million euros, 4.7% lower than the same period of 2015 which included extraordinary results from fair value adjustments of financial instruments at Corporation level.

Financial Situation

Net debt of Grupo ACS accounted for 3,741 million euro, 233 million euros higher to that held in june 2015, representing an increase of 6.6%, despite investments carried out during this period amounting to 766 million devoted to increase the stake in HOCHTIEF and CIMIC.

Out of this amount, 540 million euros correspond to non recourse project finance debt and represents 14% of the total net debt of the Group.

However, the Group has managed to reduce its net debt thanks to the favourable evolution of debt linked to the assets held for sale, which has decreased by 416 million euros down to 193 million euros in the last twelve months. The total indebtedness of the group, including assets held for sale, has decreased by 4.4% from June 2015 and 67% in the last five years.

The substantial increase in funds from operations (FFO) in the last twelve months, which have increased by 21% up to 1,291 million euros has contributed to this evolution.

Results per Area of Activity


Sales in Construction accounted for 11,344 million euro, showing a decrease of 11.1% due to the termination of major LNG projects in Australia as well as the impact of forex. However, it is important to note that in the second quarter production in Australia is showing signs of recovery and grew by 6% over the previous quarter, marking the beginning of the recovery that will occur in the coming quarters.

International sales of the Construction area amounted to 10.781 million euros which represents 95.0% of total sales in this area, being North America and Australia the most important markets.
Construction EBITDA accounted for 712 million euro, with a margin over sales of 6.3%, unchanged from the previous year.

Net profit reached over 157 million euro, showing a solid growth as a result of the profitability increase from HOCHTIEF and its subsidiaries after the transformation process carried out in the last years.

Construction Backlog, at the end of first half of 2016, accounted for 51,252 million euro, 4.6% more than 12 months ago. This growth increases up to 6.3% if adjusted by forex impact particularly due to the depreciation of the Australian dollar against the euro. International backlog represents 94.1% of the total in Construction.

Amongst the most important awards during this period, these are the most significant:

Rehabilitation and improvement works in the Corpus Christi Harbor Bridge in the highway US-181 (Texas, United States).
­ Echowater project development that consists in an addition to the Sacramento Regional Wastewater Treatment Plant (California, United States).
­ Construction of the Christchurch Hospital Acute Services Building (ASB) in New Zealand.
­ Renovation and rehabilitation works for the Museum Center in Union Terminal in Cincinnati (Ohio, United States)
­ Renovation and rehabilitation works for the Museum Center in Union Terminal in Cincinnati (Ohio, United States)
­ Development of Mercedes-Platz event building in Berlin (Germany)
­ Design and construction of Naval Academy's Center for Cyber Security Studies in Annapolis (Maryland, United States)
­ Works for the renovation and enlargement of the Prince George´s Community College in Largo (Maryland, United States)
­ Works for the widening of two stretches of the SH-288 in Harris County (Houston, Texas, United States)
­ Project for the construction of the segment 1 of the C-407 tolled highway (Denver, United States)
­ Construction of Tunnel Stellingen in the A7 motorway enlargement project (Hamburg, Germany)
­ Upgrade works in a section of Bruce Highway in Queensland (Australia)
­ Project for the construction of a new building, Tollman Hall, in the University of Berkeley (California, United States)
­ Construction of Amazon´s new logistic center in Barcelona (Spain)
­ Construction of sections of both the N25 and N30 routes (Ireland).
­ Modernisation works for the E-30 railway line (Poland)
­ Construction of the I-10 and the SR303L system traffic interchange project in Maricopa County within the City of Goodyear (Arizona, United States)
­ Development of works for the Belesar hydro-electric power plant enlargement (Lugo, Spain)
Industrial Services
Sales in Industrial Services reached 3,455 million euro, out of which 2,508 million euros (72,2%) correspond to international sales which have grown by 18.8%.
Total sales declined by 2.5% due to the sale of renewable assets during the first quarter of 2015. Not taking into consideration this effect, sales would have grown by 1.0%, in a like for like basis as a result of the depreciation of the Mexican peso by 19% and the slowdown in the oil&gas projects in this country.

EBITDA accounted for 365 million euro, with a decrease of 8.6%. Not taking that sale of renewable assets in 2015 into consideration, EBITDA declined by 1.0%. Likewise, Net Profit stood at 200 million euro.
Industrial Services has increased its backlog by 5.5% up to 8,572 million euro at the end of the first half of 2016, equivalent to 16 months of production, being 76.9% from international contracts. The most important awards of the period are:
- EPC project for various transmission lines 500kw with total length of 3,376km in Minas Gerais, Bahía, Ceará, Piauí y Maranhao (Brazil)
- Contract for the development of engineering, supply of equipment and materials as well as the construction, including erection, commissioning and start-up for a new fertiliziers complex which includes a Sulphuric Acid Plant, and a DAP & TSP Plant (Egypt)
- EPC project for the construction of Ras Al Khaimah desalinisation plant with a capacity of 100,000 m3/day (United Arab Emirates)
- Fabrication of 4 substation jackets for the Hornsea offshore wind farm project (Denmark)
- Contract for the development of Pastorale windfarm with an installed capacity of 53MW (Uruguay)
- Construction of a photovoltaic plant with an installed capacity of 33,4MW in Fukushima (Japan)
- Works for traffic control systems installation in Al Muntazah Street (Qatar)
- Construction of Hokota, Hayato and Kagoshima photovoltaic plants with a total installed capacity of 39 MW (Japan)
- Works for traffic control systems installation, signalling and lighting of the I-95 phase 3 (United States)
- Construction of container yard 6 south at Bayport terminal in the port of Houston (United States)
- Maintenance services of potable water systems and sewerage systems in Lima (Peru)

Environment accounted for sales of 1,604 million euro, showing an increase of 2.0% despite the negative impact from the depreciation of latam currencies against the euro.
EBITDA in Environment accounted for 175 million euro with a margin over sales of 10.9%, the same as last year.
Net Profit accounted for 49 million euro in 2015 growing by 3.2%.
Backlog accounts for 9,738 million euro, equivalent to 37 months of activity, with a 37.9% coming from abroad. Amongst the most important awards of the period are:
- Contract for solid urban waste collection and treatment and street cleaning services in the provincial jurisdiction of Jaen (Spain)
- Renewal of the contract for home care services in Madrid city (Spain)
- Contract for cleaning services in buildings of Valencian Community Health Department (Spain)
- Extension of the contract for the exploitation of the Romainville urban waste treatment plant (France)
- Contract for home care services in Barcelona (Spain)
- Contract for urban solid waste collection in San Pedro de Cholula (Mexico)
- Management of the at-home medical care service in Málaga (Spain)
- Freight service contract at the airport of Madrid (Spain)
- Cleaning service contract for high-speed trains of Alstom (Spain)
- Street cleaning services in Antofagasta (Chile)
- Street cleaning services and selective collection of urban waste in Fondi (Italy)