HOCHTIEF Construction Services Americas Division
| (EUR million) | Q1-Q3 2007 | Q1-Q3 2006 (restated)* |
Percentage change | Q3 2007 | Q3 2006 (restated)* |
Full Year 2006 |
|---|---|---|---|---|---|---|
| New orders | 5.766,9 | 6.280,2 | -8,2 | 2.062,0 | 2.647,1 | 8.376,4 |
| Work done | 5.362,4 | 4.927,2 | 8,8 | 1.940,8 | 1.785,7 | 6.843,8 |
| Order backlog | 7.805,7 | 8.241,2 | -5,3 | 7.805,7 | 8.241,2 | 8.110,9 |
| External sales | 5.202,1 | 4.744,0 | 9,7 | 1.890,7 | 1.707,6 | 6.625,4 |
| Operating earnings (EBITA) | 61,9 | 41,9 | 47,7 | 14,0 | 14,6 | 60,5 |
| Profit before taxes | 63,6 | 39,8 | -9,8 | 14,2 | 14,6 | 58,8 |
| Capital expenditure | 14,0 | 14,4 | -2,8 | 5,1 | 4,9 | 19,9 |
| Net assets | 251,1 | 264,8 | -5,2 | 251,1 | 264,8 | 239,3 |
| Employees | 9548 (End Q3 2007) | 7587 (End Q3 2006) | 25,8 | 9548 (End Q3 2007) | 7587 | 7332 |
The third quarter was a successful one for the HOCHTIEF Construction Services Americas division.
New orders declined by 8.2 percent from the previous year's extremely high figure - adjusted for exchange rate effects, by 1 percent. This was due in part to the strategy of focusing on securing quality work. At 8.8 percent (17.3 percent adjusted for exchange rates) over the previous year's figure, work done was at a high level, as was order backlog, changing very little from the prior-year figure. Our Brazilian subsidiary HOCHTIEF do Brasil reported work done of EUR 199 million in the first nine months of the year, the highest in the company's history.
Operating earnings improved by 47.7 percent year-onyear. In addition to the nonrecurring items reported in the second quarter, strong operating performance contributed to the sustained increase in this figure. Profit before taxes was up sharply (plus EUR 23.8 million) as a result of factors including operational improvements as well as an increase in interest income due to the improved liquidity position.
The growth in the number of employees was primarily attributable to the high demand for workers in Brazil.
In the third quarter, Turner was selected for a number of projects in segments where the company and its expertise enjoy a dominant position. As the leading builder of healthcare facilities in the United States, we secured several contracts in this market including an expansion project for The Children's Hospital of Philadelphia. The two-phase expansion of the research facility totals almost EUR 175 million and is due for completion in 2010. Another major contract was awarded by the University of Kentucky: An existing hospital will be replaced with a state-of-the-art clinic complex in two phases ending in 2010. The total cost of this construction project is EUR 224 million.
In the public sector Turner secured another project for the Miami Intermodal Center for the Florida Department of Transportation. This transportation hub covering more than 100,000 square meters is being developed near Miami International Airport. We have already successfully completed three phases of the project and are currently working on the rental
car center, which includes space for 6,500 cars. The contract also includes a section of roadway connecting the facility to the nearby highways.
As a leading player in the sustainable building sector, our subsidiary once again received certification for a green building project in the period under review. The United States Green Building Council thus awarded the 50th distinction of this kind to a Turner project.
In the third quarter, HOCHTIEF entered the US infrastructure market with the acquisition of civil engineering company Flatiron Construction Corp.** Flatiron will likely be included in HOCHTIEF's consolidated financial statements for the first time in the fourth quarter of 2007. The acquisition of this key player will enable the Group to establish a presence in the North American civil engineering market and benefit from pending infrastructure investment programs in the USA valued in the billions as well as the developing market for public-private partnership (PPP) projects. Flatiron can rely on HOCHTIEF's PPP know-how and on Turner's broad network of offices throughout the US.
HOCHTIEF Americas outlook
The division's operating performance remains strong. In addition, the return of guarantees to the former associate Aecon in the second quarter resulted in a positive, nonrecurring effect. On the whole, profit before taxes in 2007 will be well over the prior-year figure despite the expenses incurred in developing new areas of business.** For further details on this acquisition, please turn to page 14.
