ACS Group increased its net profit by 4.8% in the first half of 2021 to € 351 million
- Sales reached € 13,330 million, down by 3.5% affected by exchange rates.
- EBITDA stood at € 737 million, up by 14.6% supported by Abertis’ traffic recovery.
- Backlog grew by 1.6% to € 63,993 million, 3.3% more adjusted by exchange rates.
- The Group's net debt was reduced by more than € 700 million in the last quarter, thanks to the improvement in working capital.
1. Consolidated Results
Attributable Net Profit in 1H 2021 accounted for € 351 million, showing an increase of 4.8% compared to 1H 2020 (+5.6% adjusted by currency effects).
All activities had a good operating performance, especially highlighting the recovery of traffic on Abertis’ toll roads after the sharp falls suffered in 2020 due to the impact of COVID-19; in detail, Abertis’ contribution to the Group’s EBITDA and Net Profit until June 2021 improved by € 77 and 62 million, respectively.
On its side, the Construction division's net profit grew by 4.3% reaching € 158 million.
The Industrial Services area, reclassified as a discontinued operation following the sale agreement with VINCI, reached a Net Profit of € 270 million, while the Services area developed by Clece recovered its profitability path and contributed with € 14 million.
The Corporation's net profit included the non-recurring net impact of the valuation of several financial assets and derivatives, with no effect on cash, which amounted to € -94 million in 2021, whereas in 2020 it amounted to € 21 million.
2. Operating Results
EBITDA reached € 737 million, 14.6% higher than the previous year, thanks to Abertis’ positive contribution in the semester. EBITDA for the rest of the activities increased by 2.5%.
Likewise, EBIT stood at € 482 million, up by 24.8% compared to the previous year. Not considering Abertis, it also grew by 4.4%.
3. International Diversification
ACS Group sales in the first six months of 2021 accounted for € 13,330 million, a reduction of 3.5% mainly penalized by the evolution of the U.S. dollar against the euro (-9%). Not considering currency effects, the Group’s sales remained stable.
The Group's sales breakdown by geographical area during the period was as follows: North America accounted for 60% of the total, Australia 19%, Europe 17%, Asia 3% and South America the remaining 1%.
By countries, United States, Australia, Spain, Canada and Germany contributed with 92% of total sales. Sales in the United States accounted for 53% of the total, while in Spain they represented 11% after the sale agreement of Industrial Services.
Backlog as of June 2021 stood at € 63,993 million, increasing by 3.3% in comparable terms, i.e. adjusted by the exchange rate evolution and the sale agreement of Industrial Services area.
4. Results per Areas of Activity
Infrastructures division Net Profit reached € 199 million distributed as follows:
- Construction Net Profit reached € 158 million, similar to the previous year.
- Concessions had a positive result of € 42 million. Abertis contributed € 25 million euros to this result, increasing its contribution by € 62 million compared to 1H20 following the significant recovery in traffic.
Sales in Construction reached € 12,363 million, down by 4.6% compared to the previous year, reduced by 0.9% adjusted by exchange rate. The sales’ performance in the United States was affected by the depreciation of the U.S. dollar against the euro in the last 12 months. Sales growth in the second quarter of 2021 confirmed the signs of recovery that were already noticeable at the end of the first quarter.
International sales accounted for € 11,754 million, which represented 95% of total turnover in the Construction activity, being North America and Australia the most important markets. Sales in Spain represented 5.3% of total.
Construction EBITDA reached € 617 million, with a margin on sales of 5.0%.
Construction Backlog as of June 2021 increased up to € 61,363 million, with 96% international and remaining stable despite COVID-19 impact. The most significant awards achieved during 2021 are:
- Construction and operations phase (to 2051) of three-lane twin tunnels of the North East Link Primary Package PPP in Melbourne (Australia)
- Development of stage 1 of Sydney’s M6 motorway in New South Wales (Australia)
- Construction of a high-voltage transmission network in Queensland (Australia)
- 10-year operation and maintenance contract of the country's regional rail network in New South Wales (Australia)
- Widening of the I-10 highway through Phoenix, Arizona (USA)
- Construction of the tunnel for the Pankrác- Olbtachtova section of the Prague metro D line (Czech Republic)
- Contract to revamp Anderson's Dam together with the Valley Water District, near two fault lines in Santa Clara County, California (United States)
- Bruce Highway Upgrade in Queensland (Australia)
- Amazon's logistics warehouse in the industrial area of Bobes in Asturias (Spain)
- Design and construction of the third section of the A2 over 12 km in the Mińsk Mazowiecki bypass (Poland)
- Structure for the foundations of 2 buildings in Boston (United States)
- SR 417 toll road widening in Orlando, Florida (United States)
- Design, construction and installation of a high voltage transmission line and a new switching station located at Mt Fox in Queensland (Australia)
- Construction of a pumping station in San Diego (United States)
- Upgrade of the Gippsland railway line in Victoria (Australia).
- Phase 2 of the New Colon Towers Project in Madrid (Spain)
- Construction of the Quay Wall Amalia harbour in Rotterdam (The Netherlands)
- Amazon's logistics warehouse in Zaragoza (Spain)
- Design-build contract for the expansion of the existing Health and Human Services Center in North Auburn, California (United States)
- Ferny Grove Central shopping center development in Brisbane (Australia).
- Reconstruction of Taxiway at George Bush Intercontinental Airport located in Houston, Texas (United States)
- Renovation and expansion of a correctional facility in Salina, Kansas (United States)
- Construction of a new 4.4 mile interchange on CR 1250 in Texas (United States)
- Construction of 6 buildings with 367 dwellings and 6 commercial premises in Barcelona (Spain)
- Construction of two office buildings in the 22nd district of Barcelona (Spain)
Abertis entered the recovery path with an average traffic growth of 22.4% compared to the first half of 2020, with positive data in all operating regions, approaching pre-pandemic traffic levels. In 1H 2021 Abertis had a contribution to ACS Net Profit of € 25 million, € 62 million more than the previous year.
Moreover, this recovery in average daily traffic, together with the recent incorporation of new toll roads in the United States (Elizabeth River Crossing) and Mexico (RCO), have enabled Abertis to achieve revenues of € 1,069 million (+2%) and EBITDA of € 709 million (+6%) in the first half of 2021.
On its side, Iridium obtained a Net Profit of € 16 million.
4.2. Industrial Services
Industrial Services sales reached € 103 million and came from the energy assets retained by ACS after the sale agreement with Vinci. The rest of the activity is considered as a discontinued operation, therefore only its profit is included in the Group’s results.
Net profit reached € 270 million in the first half of 2021. This result included the results from the energy asset sale and purchase transactions in 2021 and the non-depreciation of the business sold to Vinci in accordance with the accounting standards. Not considering these effects, net income would grow by 3%.
Industrial Services backlog is excluded from the Group’s scope as it has been reclassified as an activity held for sale.
4.3. Services (CLECE)
Sales in Service to Citizens area reached € 817 million, increasing by 7.7% compared to the same period the previous year. The recovery occurred after the temporary stoppage of most of the social services which, in the previous year, ceased their activity during the state of emergency, explains this positive evolution.
Services EBITDA accounted for € 44 million, returning to pre-pandemic operating margins.
Current Backlog reached € 2,630 million, equivalent to 20 months of activity.
Amongst the awards achieved during 2021 the following stand out:
- Renewal and re-awarding of the cleaning service for the health departments of the Consellería de Sanidad de la Generalitat Valenciana, Spain
- Renewal of lot 5 of the cleaning service for the stations of line 5 of Metro de Barcelona, Spain
- Renewal of the cleaning service for Renault's factories in Valladolid (Spain)
- Extension of 15 lots for the surveillance and security service of the Valencia Health Department, Spain
- Renewal of the cleaning and disinfection service for the Almeria Logistics Platform (Spain)
- New contracting and renewal of lots for the cleaning service of the buildings and faculties of the University of Seville, Spain
- New home help service award for Lincolnshire County Council, United Kingdom
- Renewal of the home help service of Alcalá de Guadaira in Madrid (Spain)
5. Financial Situation
At the 2021 first-half-end, the ACS Group reported a net debt balance of € 2,976 million. This figure did not include the cash from the industrial business (€ 859 million at year-end 2020) due to its sale agreement to Vinci in March 2021, and is therefore excluded from the Group's net debt balance in 2021.
Not considering this fact, consolidated net debt decreased by more than € 400 million over the last twelve months, supported by the Group’s solid cash generation and the good performance of operating working capital in all actiities, improving by € 304 million since June of 2020.
In the second quarter of the year, net debt was reduced by € 715 million, supported by the good operating performance of the company's activities and the positive evolution of working capital.