Nine months into the 2007 fiscal year, I am pleased to present
more good news and results that bear out our chosen
strategic direction: HOCHTIEF has further increased consolidated
profit before taxes to EUR 343.1 million and consolidated
net profit to EUR 70.7 million.
Our strategy of active portfolio management at every stage in the life cycle of real estate and facilities is delivering results. Keeping the risks in clear view, we are expanding in high-growth, high-profitability segments, and we further augmented our activities in the third quarter with several key acquisitions. In September, we took over Flatiron Construction Corp., a leading US player in transport infrastructure. This purchase strengthens our construction operations in the USA and opens the door to the US concessions market. Also in September, HOCHTIEF and a financial partner jointly acquired aurelis Real Estate GmbH & Co. KG, a subsidiary of the German rail company Deutsche Bahn AG.*
We have also further enhanced our position in the promising Middle East markets. In the HOCHTIEF Asia Pacific division, our Australian subsidiary Leighton Holdings merged its Gulf businesses during the third quarter with those of Al Habtoor Engineering, a leading regional construction and engineering company. Leighton also took a 45 percent stake in the joint company, Al Habtoor-Leighton, for an outlay of just under EUR 520 million. The merger creates an ideally positioned new player combining both building and civil engineering capabilities. The new company will generate sales of about EUR 1.65 billion in the 2007/08 fiscal year.
These acquisitions have great strategic importance for HOCHTIEF: We aim for selective growth wherever we can benefit most from synergizing our activities. And we are forging ahead with this strategy: Only a few weeks ago, on October 8, 2007, we took over the Vattenfall Group's energy contracting unit in Germany. Vattenfall Europe Contracting
The recent acquisitions fit in seamlessly with HOCHTIEF's strategy as well as with other activities so far this year. In our concessions and operation capability module, we have supplemented the airports portfolio in 2007 by taking a majority stake in Budapest Airport. We have increased our ownership interest in Sydney Airport to 8.13 percent. And we have also made strategic additions to our concessions portfolio in the public-private partnerships segment, chalking up a number of international successes with a total of five contract awards in Greece, the UK and Germany.
In the services module, HOCHTIEF has taken over the property management activities of Allianz Immobilien GmbH, placing us among the leading players in this sector. In an addition to the Group's development business in Australia, Leighton took a larger slice of the country's booming residential market by acquiring 40 percent of Devine Limited, Australia's leading developer.
These successes point the way forward for HOCHTIEF. Delivering on our promise to you, our shareholders, we are making selective additions to the portfolio to expand our Group's international, modular capability range. Our clear focus and strong overall Group performance mean we can fully offset the losses in the Europe division. We continue to forecast an up to EUR 120 million pretax loss for this division in 2007. As expected, we were able to halt the losses in the third quarter.
HOCHTIEF Europe's Building division is currently in the process of restructuring. The aim is to restore our German building construction business to sustained profitability. Our mainstream building services now comprise solely higher-value business models. Competing fairly on ability, we continue to provide high-quality construction services at competitive prices. All contracts must pass strict selective appraisal: We now only take on work that meets our criteria, which include risk apportionment negotiated on fair terms. Our activities in real estate development, in core and shell work as well as in residential construction are being combined into self-contained units. The market nonetheless remains structurally difficult. Our target with regard to expected margins and risk structure may result in lower new orders figures for the German building construction business, and we are trimming capacity accordingly. With our
