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ACS net profit of € 769 million for the first nine months of 2019, an increase of 11.2%

Sales increased by 6.3% to € 28,800 million

  • EBITDA rose by 10.8% reaching € 2,406 million
  • Backlog stood at € 77,584 million, up 10.3%

 1.    Consolidated Results

ACS reported sales for the first nine months of 2019 of € 28,800 million, representing an increase of 6.3% and driven by our presence in the North American, Australian and Spanish markets which are the most relevant to the Group.

Sales in North America represent 48% of the total, Europe 20%, Australia 19%, Asia 6%, South America 6%, and Africa the remaining 1%. Sales in Spain accounted for 15% of the total.

By countries: USA, Australia, Spain, Canada, and Germany contributed with 82% of the total sales.

Backlog as of 2019 September-end amounted to € 77,584 million, growing by 10.3%. A key factor was the good performance in the North American markets, both in United States and Canada, with a year-on-year growth rate over 15%.

Total EBITDA of € 2,406 million increased by 10.8% with an improving margin to 8.4% on sales up 40 b.p. This is due to the solid operational performance of the group’s key activities and a greater contribution from Abertis, integrated since June 2018.

Likewise, the EBIT of € 1,652 million increased by 7.0%, keeping the margin at 5.7%.

The Group’s attributable net profit stood at € 769 million, an 11.2% increase with a good performance in all areas of activity.

In the Infrastructures area, Net profit grew by 5.6% after the incorporation of Abertis in June 2018, whose net contribution during 2019 amounted to € 193 million, compared to 123 million in the previous period.

Construction activity includes Dragados with a Net profit of € 91 million and HOCHTIEF which has reduced its contribution to the Group due to the change of stake 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, Construction Net profit grew by 6.2%.

Industrial Services Net profit grew by 4.0%, up to 270 million euros supported by the strength of the renewable energy investment in the Spanish market.

Net profit in Services reached € 29 million, growing by 17.9%.

2.    Financial situation

The Group reported a net debt of € 1,236 million at the quarter-end, equivalent to 0.4x annualized EBITDA, and up by € 1,364 million since September 2018 due to:

- Abertis’ acquisition (completed as of 2018 end) for a net amount of € 1.04 billion; and
- The investment in renewable energy projects for € 850 million.

The Group’s total net investment during the first nine months 2019 rose to € 1,271 million with the following breakdown:

- Net operating CAPEX  amounting to € 427 million and mainly corresponds to the acquisition of equipment for mining, civil works, and industrial facilities projects.
- Financial and concessions investments of € 844 million, include Industrial Services which invested over € 700 million in renewable energy projects.

Additionally, the Group has increased the remuneration to shareholders, both ACS and minority shareholders, reaching 995 million euros in the last 12 months.

3.    Results per Area of Activity

3.1. Infrastructures

The Infrastructure business area generated a turnover of € 22,348 million, growing by 7.1% compared to the same period last year.

Likewise, its net profit increased by 5.6% reaching € 470 million, boosted by Abertis’ contribution to the Group of € 193 million.

a)    Construction

Sales in Construction activity of € 22,291 million, showed an increase of 7.2%, 3.9% f/x adjusted.

International sales in the Construction area amounted to € 21,369 million, which represented 96% of total, with North America and Australia the most important markets. Domestic sales represented 4.4% of total.

Sales are moving towards a business mix with a lower risk profile as a consequence a greater contribution from “Construction management”, mining and infrastructure services, Alliance-type contracts and P3 projects, which represent 70 % of the activity.

Construction EBITDA accounted for € 1,559 million, with margin of 7.0%, after growing 8.2% and improving by 10 b.p. compared to 2018 same period.

Net profit reached over € 263 million, 16.7% lower due to the increase in HOCHTIEF minorities after selling 23.86% of the company. This result does not include Abertis’ net contribution via HOCHTIEF, reclassified under Concessions.

The September 2019 Construction backlog rose to € 65,115 million, growing by 12.0%. The backlog’s good performance is based on significant order intakes during this year including the following projects:

  • 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)
  • Contract extension by Coronado Global Resources Inc to provide mining services at the Curragh Mine in Queensland (Australia)
  • Construction of a plant and tunnel for the treatment of water (Los Angeles, United States)
  • Upgrade the Monash and Princes Freeways in Victoria state (Australia)
  • 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)
  • Upgrade for I-405 widening between Renton and Bellevue in Washington (United States)
  • Design, construction and maintenance of improvements along I-2 and I-69, Texas (United States)
  • Building the new Sydney Metro City & Southwest Pitt Street Station (Australia)
  • Nepean Hospital (construction of a new 14-storey), New South Wales (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, (Australia).
  • 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 (United States)
  • Construction of the CDC East car parking, as well as the associated infrastructures in Atlanta, Georgia (United States)
  • Project to deliver the next stage of works on the Sunbury Line Upgrade in Victoria (Australia)
  • 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 contributed € 206 million to the Group’s Net profit, of which € 193 million came from the stake that the Group holds in Abertis.

Of this, € 144 million corresponds to the ACS direct stake, while the remaining € 49 million corresponds to its indirect stake via HOCHTIEF, after minority interests are deducted.

Abertis’ highways performance was positive due to the solid growth of traffic rates registered in Spain (+4.7%), Chile (+2.9%) and Brazil (+4.1%). Traffic levels in France and Italy remained stable.

On a like for like basis: revenues during the period increased 4.4%, EBITDA grew 6.9%, while net profit rose 9.0%.

3.2. Industrial Services

Sales in Industrial Services of € 5,283 million rose by 3.4%. The positive evolution of the domestic market, driven by investment in renewable energy assets, and Industrial Maintenance activities growth are the main drivers of this increase.

EBITDA accounted for € 554 million, 3.4% more than in the same period of 2018, with a sales margin of 10.5%.

Net profit of € 270 million was 4.0% higher compared to last year.

Industrial Services increased its backlog by 2.5% up to € 9,968 million in 2019 third quarter-end, with 78% being international contracts. Amongst the most important awards achieved during 2019 are:

  • Engineering, construction and commissioning of the floating offshore wind farm Kincardine with a nominal capacity of 50 MW (Aberdeen, United Kingdom)
  • Works for engineering, construction and implementation of two 5,000 tons-per-day sulphuric acid plants in Jorf Lasfar industrial site (Morocco)
  • Project fo Azito´s combined cycle power plant extension to 280 MW in Ivory Coast.
  • EPC contract for the construction of two photovoltaic plants in Takasaki of 11.6 MW and 53.7 MW of installed power (Japan)
  • Design, construction and maintenance of two news Hospitals in Nicaragua
  • Facility management contracts for two Cepsa refineries in Huelva and Cádiz (Spain)
  • Contract fot the delivery of the Communication Systems for the Finch West Light Rail Transit Project in Toronto (Canada)
  • Design and construction of the sewerage network of Burunga (Panama)
    3.3. Services

Sales in Services activity (CLECE) accounted for € 1,180 million, rising by 5.3%.

EBITDA of € 71 million advanced by 9.0%. The margin over sales stood at 6.0%, 20 b.p. higher than in 2018.

Net profit reached € 29 million.

The Services backlog stood at € 2,501 million, equivalent to 19 months of activity.

Amongst the most important awards achieved during 2019 the most significant include:

  • Contract for different security services in the Ministry of Health (Valencia, Spain)
  • 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)
  • Renewal of the 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)