ACS net profit reached € 962 million in 2019, an increase of 5.1%
Sales increased by 6.5%, up to € 39,000 million
- Backlog reached € 77,756 million growing by 7.7%
- EBITDA rose by 7.0%, reaching € 3,148 million
- The Group’s Net debt remained virtually inexistent (€ 54 million)
1. Consolidated Results
ACS Group sales in 2019 accounted for € 39,049 million, representing an increase of 6.5% backed by the solid performance of the Group’s key markets; North America, Australia and Spain.
Sales in North America represented 50% of the total, Europe 20%, Australia 19%, Asia 6%, South America 6%, and Africa the remaining 1%. Sales in Spain accounted for 14% of the total.
By countries: USA, Australia, Spain, Canada, and Germany contributed with 82% of total sales.
Backlog at year-end amounted to € 77,756 million, growing by 7.7% (6% not considering the exchange rate effect).
Total EBITDA accounted for € 3,148 million, increasing by 7.0% and placing its margin over sales in 8.1%, 10 b.p. higher versus the prior year. Likewise, EBIT reached € 2,126 million increasing by 3.7%. Sales margin rose up to 5.4%.
The Group’s attributable Net profit stood at € 962 million, showing 5.1% increase with a positive operating performance in all areas of activity. Meanwhile, ACS net impact due to CIMIC’s termination of its operations in Middle East has been offset by the results obtained from the sale of renewable energy assets and the application of a provision related to international risks.
Infrastructure Net Profit grew by 4.6% after Abertis’ incorporation in June 2018, whose net contribution during 2019 amounted to € 245 million, compared to € 175 million in the previous period.
Construction activity included Dragados with a Net profit of € 117 million and HOCHTIEF who reduced its contribution to the Group’s Net Profit due to the change in the stake from 71.8% to 50.4% after its sale to Atlantia in 4Q 2018. Not considering this effect and without taking into account the termination of operations in Middle East, Construction’s Net operating profit would increase by 10%.
Industrial Services Net profit grew by 7.8% up to € 350 million boosted by the rebound of the activity in the Spanish market. These results do not include Profits obtained from divestments in energy assets, mainly the partial sale of PV plants in Spain in December 2019.
Likewise, Net profit in Services reached € 38 million, growing by 3.3%.
2. Financial situation
At year-end ACS Group reported a Net debt balance of € 54 million, equivalent to 0.02x EBITDA, remaining barely stable in relation to the leverage position of two previous periods, almost non-existent.
In fact, not considering project finance debt, without recourse to shareholders, the Group maintained a net cash position during the last three periods, closing 2019 with € 87 million operating net cash position.
Cash flow generation coming from operations before investments, which reached € 2,379 million in 2019, enabled the Group to maintain a solid financial position and to significantly increase its remuneration to both ACS shareholders and minorities up to € 1,054 million, 55% more in comparable terms.
In particular, ACS paid € 195 million of dividends, brought in € 568 million in treasury stock intended to pay the scrip dividend, and the remaining € 291 million corresponded to dividends for minority shareholders, mainly from Hochtief and Cimic.
Furthermore, ACS Group net investment volume in 2019 amounted to € 1,254 million, structured as follows:
- Net operating CAPEX amounted to € 659 million and mainly corresponded to the acquisition of machinery and equipment for mining, civil works, and industrial facilities.
- Financial investment and projects rose by € 1,000 million, while divestments stood at € 450 million.
Net financial investments and projects are detailed as follows:
- Infrastructure invested approximately € 300 million in highways and railways capital concessions in USA, Canada, and Europe, as well as the creation of Joint Ventures to develop projects in America and Australia. Likewise, Hochtief allocated more than € 45 million in the construction of its new HQ in Essen.
- On its side, divestments over € 100 million included the sale of different stakes that the Group had in different concessions in USA, Canada, and Spain.
Industrial Services invested € 674 million to develop different type of energy assets (PV plants, wind farms, transmission lines, etc.) and in different locations (Spain, UK, Mexico, and Brazil).
- It has also divested € 340 million in different energy assets such as PV plants, wind farms, and transmission lines.
- This figure includes the partial sale carried out during December-end of the already-built PV plants in Spain (914 MW), transaction which has been completed in 2020 with the total sale of the built-assets and the development of additional 2,000 MW until 2023.
4. Results per Area of Activity
ACS Group Infrastructure area generated a turnover worth € 30,955 million, growing by 7.5% compared to last year.
Net profit reached € 193 million. Excluding non-recurrent impact after CIMIC’s exit from Middle East, Infrastructures net profit accounted for € 613 million, +4.6% in comparable terms, of which € 358 million came from the Construction activity and € 255 million from the Concessional business.
Sales in Construction accounted for € 30,867 million, showing an increase of 7.6%, 5.3% when adjusted by exchange rate variation impact.
On its side, international sales amounted to € 29,596 million, which represented 96% of total sales in this area, being North America and Australia the most important markets. Domestic sales represented 4.4% of total.
Sales evolution show a moving trend towards a business mix with a lower risk profile as a consequence of a greater contribution from Construction Management (Turner), Contract Mining, maintenance contracts and P3 projects, which represented approximately 70% of total activity.
Construction EBITDA accounted for € 2,063 million, with a sales margin of 6.7%, after growing by 4.8%.
Construction Net profit, excluding the extraordinary impact in CIMIC exiting Middle East, reached over € 358 million and growing 10% in comparable terms (that is, maintaining the same stake in HOCHTIEF in both periods; stake which went down to 50.4% from 71.8% after its sale to Atlantia).
The Construction backlog by December 2019 rose up to € 64,969 million, growing by 9.5% - meaning 96% of its international backlog - as a consequence of the good performance due to the award of large projects during this year.
Amongst the most important awards achieved during 2019, these are the most significant:
- PPP Project for the financing, design, construction and operation of the Cross River Rail project, new 10-kilometer metro line in the capital Brisbane, in Queensland (Australia)
- Project for the expansion of the I-64 tunnel in the Hampton Roads region (Virginia). The expansion project consists of improvements to the I-64 corridor between I-664 in Hampton and I-564 in Norfolk to expand capacity to six lanes throughout the corridor (United States).
- Project for extending and upgrading Euston Station (London), as required for the new High Speed railway (London, United Kingdom)
- Six-year 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 contamination (Los Angeles, United States)
- Alliance Style Contract to deliver the Rail, Integration and Systems (RIS) package of the Cross River Rail project, new 10-kilometer metro line in the capital Brisbane, in Queensland (Australia)
- Contract to deliver Stage 2 of the Monash Freeway Upgrade , the project will upgrade the Monash and Princes Freeways between Warrigal Road, Chadstone and Cardinia Road in Pakenham (Victoria, 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)
- 5 year contract for the maintenance and logistics services of the metropolitan trains of Sydney (Australia)
- Project for I-405 widening between Renton and Bellevue in Washington (United States)
- Contract to refurbish and modernize more than 50 police properties on two sites ( in Mühlheim am Main and Kassel) over a period of five years with a total concession period of 30 years (Hesse, Germany)
- Design, construction and maintenance of approximately 7.8 miles of improvements along I-2 and I-69 including the full reconstruction of the I-2/I-69C interchange (Texas, United States)
- Contract to build the new Sydney Metro City & Southwest Pitt Street Station (Australia)
- Contract to deliver the Campbelltown Hospital Redevelopment Stage 2 project (New South Wales, Australia)
- Contract to deliver the Yanchep Rail Extension and the Thornlie – Cockburn Link, as part of Perth’s METRONET program (Australia)
- Contract to deliver the Nepean Hospital Redevelopment Stage 1 project involving construction of a new 14-storey clinical building (New South Wales, Australia)
- Contract to deliver the second phase of the London Power Tunnels (LPT2) project that construction of a 32.5 kilometres tunnel for the energy supply of London (United Kingdom)
- Project for M80 ring roadupgrade in Melbourne (Australia)
- Earthwork project for the construction of Western Sydney International (Nancy-Bird Walton) Airport (Australia)
- Project for the expansion of the Centerm terminal of the Port of Vancouver (Canada)
- Building of warehouse and y offices for Amazon in Seville (Spain)
- Project for the construction of the section of the high-speed rail line between Atxondo-Abadiño in Vizcaya (Spain)
Concessions activity in ACS Group contributed € 255 million to the Net profit from which € 245 million came from the stake that the Group holds in Abertis. Of those, € 184 million corresponded to ACS direct stake and the remaining, € 61 million, to its indirect stake through HOCHTIEF, once minority interests were deducted.
Abertis’ highway performance was positive during the year due to the solid growth of traffic rates registered in Spain (+4.3%) and in France (+1%).
On a like for like basis, revenues during the period increased by 4.4%, EBITDA grew 6.9%, while comparable net profit rose 9%.
4.2. Industrial Services
Sales in Industrial Services reached € 6,530 million, increasing by 2.3%. The positive evolution of the domestic market, driven by the investment in renewable energy assets, and Industrial Maintenance activities growth are the main causes for this improvement.
EBITDA accounted for € 693 million, 2.7% more than in 2018, with a sales margin of 10.6%.
Likewise, Net profit reached € 600 million, of which € 250 million corresponded to the initial transaction related to the PV plants located in Spain and the remaining to the Net Operating profit of € 350 million, 7.8% higher compared to last year.
Industrial Services increased its Backlog by 0.8% up to € 9,924 million in 2019 year-end, with 74% being international contracts. Amongst the most important awards achieved during 2019 we may highlight:
- Engineering design, supply, construction and commissioning of the floating offshore wind farm Kincardine with a nominal capacity of 50 MW (Aberdeen, United Kingdom)
- 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 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)
- Facility management contracts for two Cepsa refineries in Huelva and Cádiz (Spain)
- Maintenance contract of networks and distribution of medium voltage for Endesa (Spain)
- Contract for the delivery of the Communication Systems for the Finch West Light Rail Transit Project in Toronto (Canada)
- Delivery of the OMCS head-end system for the M4-M5 Link Tunnels (Stage 3A) and the Integrated OMCS for the entire WestConnex project (Australia)
- Design, construction and maintenance of the Huanta Regional Hospital (Peru)
Sales in Services to Citizens (CLECE) accounted for € 1,579 million, rising by 5.0%.
Services EBITDA accounted for € 94 million, growing by 7.7%. Margin over sales stood at 5.9%, 20 b.p. better than in 2018.
Net profit reached € 38 million.
Services Backlog accounted for € 2,863 million, equivalent to 22 months of activity.
Amongst the most important awards achieved during 2019, these are the most significant:
- IBERIA and Vueling aircraft cleaning service in 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)
- Logistics service contract for Cat Spain (Spain)
- Renewal of the cleaning service contract at the PSA-CITROEN factory in Vigo (Spain)
- Extension of the home help service contract at Edinburgh City Council (Scotland)
- Awards of the cleaning service of Son Llátzer y Joan March hospitals (Palma de Mallorca, Spain)
- Extension for the contract for the interior cleaning service of military headquarters and bases (Spain)