Interim Management Report
Orders and work done
Group orders and work done stayed strong through the first quarter of 2010. The order backlog set a new all-time record in the history of HOCHTIEF.
New orders
First-quarter new orders in Germany were 9.6 percent down in 2010. Internationally, new orders fell by 22.9 percent. Most of the shortfall on the international side is accounted for by HOCHTIEF Asia Pacific and there mainly by delays on major contract awards. Much of this was made good in April 2010, however.
Group work done
Work done in the first quarter of 2010 totaled EUR 4.76 billion, on a par with the prior-year quarter (down 0.5 percent). Work done at HOCHTIEF Americas was down on the prior-year comparative figure in line with new orders, while work done at HOCHTIEF Europe was lower due to the harsh winter.
Order backlog
The order backlog set a new all-time record with an absolute figure of EUR 36.74 billion. This marked an increase of EUR 5.37 billion on a year earlier, mostly due to positive exchange rate effects relating to the Australian dollar.
Financial review
Earnings
HOCHTIEF generated EUR 4.45 billion in sales during the first quarter of fiscal 2010. This was slightly above the EUR
4.4 billion achieved in the comparative prior-year period. The increase notably reflected strong sales growth at the HOCHTIEF Asia Pacific division. Our subsidiary Leighton benefited from ongoing robust demand for raw materials and construction services in the Asia-Pacific and Gulf regions. HOCHTIEF Asia Pacific boosted sales to EUR 2.47 billion, 40.5 percent more than the comparative figure for the prior year (EUR 1.76 billion). The buoyancy of the Australian dollar relative to the euro produced a positive exchange rate effect of EUR 567.9 million in the period under review. Adjusted for this effect, the sales growth figure was 8.3 percent. The HOCHTIEF Americas division continued to weather a difficult economic environment at the beginning of fiscal 2010. Despite the strong position held by Turner and Flatiron in their respective segments, the EUR 1.29 billion sales figure showed a marked decrease on the prior-year period (EUR 1.74 billion). The US dollar exchange rate trend also resulted in a EUR 74.6 million
decrease on currency translation. The HOCHTIEF Europe division generated sales of EUR 460.1 million in the first quarter of 2010. Construction activity was held back across much of Europe by a comparatively long and harsh winter. As a result, HOCHTIEF Europe’s sales were 13.5 percent down on the prior-year comparative figure (EUR 532.1 million). In light of the difficult situation on the real estate market, the HOCHTIEF Real Estate division pursues a highly selective policy with regard to the development of new projects. The value of projects in progress and the resulting sales figure were considerably reduced, with sales of EUR 34.7 million compared with EUR 155.6 million in the prior-year period. In contrast, HOCHTIEF Services division sales for the first three months of 2010, at EUR 153 million, nearly matched their level in the same period a year earlier (EUR 154.4 million).
Despite stabilization of the general economic environment from the end of 2009, effects of the economic crisis were still to be felt at the start of 2010. Operating earnings (EBITA), at EUR 152.3 million, was consequently 5.5 percent down on the prior-year comparative figure (EUR 161.1 million). All Group operating divisions were in profit, however, except for HOCHTIEF Europe, where EBITA was slightly negative at minus EUR 1.1 million (Q1 2009: EUR 4.9 million). Factors at HOCHTIEF Europe included the lower construction output due to the harsh winter and the resulting under-recovery of overheads. The HOCHTIEF Asia Pacific division, on the other hand, raised operating earnings to EUR 122.7 million, a significant, 28.6 percent (exchange rate adjusted: 0.5 percent) increase compared with the prior-year period (EUR 95.4 million). HOCHTIEF Americas and HOCHTIEF Concessions delivered similar earnings performance to each other and remained close to their prior-year levels. HOCHTIEF Americas achieved operating earnings of EUR 24.5 million (Q1 2009: EUR 26.2 million), while HOCHTIEF Concessions generated EUR 18 million (Q1 2009: EUR 19.2 million). The business trend in the HOCHTIEF Real Estate division was far more subdued. The changeover to accounting in accordance with IFRIC 15 in the previous year also had a positive impact in the first quarter of 2009. Operating earnings in the period under review, at EUR 7.1 million, was significantly down on the prior-year period (EUR 27.4 million). The HOCHTIEF Services division recorded operating earnings of EUR 2.7 million, likewise below the high comparative figure for the prior year (EUR 5.9 million).
Group net income from participating interests showed very healthy growth in the first quarter of 2010. The total of