Sacyr : achieves a net profit of €64 million (+4.4 %) and its turnover increases by 6.5 %

29/07/2016

EBITDA increases by 6.5 % up to €165 million

The Sacyr Group earned a net profit of €64.5 million in the first quarter of 2016, which is 4.4 % more than the same period of the preceding year. There was a 6.5 % increase in the EBITDA, consequently amounting to €164.9 million, with the contribution of profit from all of the group's divisions.

These figures are confirmation that the group has implemented the right strategy, increasing its overall company profile while applying a strict system of risk management and cost control.

Total revenue grew by 5.6 % up to €1.413.9 million, thanks to the strong push from international activity which has increased 11.4 %. 54 % of revenue now comes from outside of Spain (51 % in June 2015).

The gross margin continues to improve, going from 11.6 % to 11.7 %.

The revenue backlog has grown 10 % since June 2015, amounting to over €26,381 million in June 2016. It comprises mainly the most recurring business: Sacyr Concesiones, with €12,864 million, makes up 49 % of the total, and Valoriza, with €6,424 million, 24 %.

52 % of the total portfolio now comes from international activity (up from last year's 42 %), even though important contracts such as the Pedemontana-Veneta concession in Italy or the Mar 1 freeway in Colombia are not within the consolidation boundary. Within the construction business, this figure reached 84 % as a result of the intense tendering activity outside Spain, while concessions represent 58 %, services represent 30 %, and industrial represents 23 % of the portfolio.

RELEVANT FACTS

The following can be highlighted as the most relevant company events during the last quarter (March to June):

• Hugely successful conclusion to the work involved in the Third Set of Locks in the Panama Expansion, which were inaugurated on June 26.

• Amortization of the issue of convertible bonds issued in 2011 for €200 million.

• Formalization of the final stage of the sale of Testa, devoting €317 million to partial early amortization of debt associated to the shareholding in Repsol, substantially improving the financial structure of the operation for Sacyr.

• Refinancing of the Madrid transport hubs (Moncloa and Plaza Elíptica) for a total amount of €190 million.

• Provisional award (to be definitively awarded in July) of the Rome-Latina freeway in Italy for a period of 43 years. With a total length of 186 km and investment of €2,800 million, it will generate operating revenue of €12,250 million.

BUSINESS PERFORMANCE

Sacyr Construcción.- Revenue in this area amounted to €687 million, a decrease of 8.2 %, due mainly to the slowdown in activity for Somague, whose markets are being particularly affected by the international downturn. EBITDA was €27 million, a hugely encouraging figure given the difficult economic environment in this sphere in Spain, Portugal and other markets. To mitigate this situation, during the quarter the company implemented a redundancy procedure which is still ongoing, along with other measures aimed at transforming the business model in order to improve efficiency and productivity in the coming months.

The work portfolio is around €4,418 million, of which 84 % corresponds to international projects. In this regard, the portfolio will be significantly increased and have even greater international emphasis thanks to the €919 million from the award of the construction of the Rome-Latina freeway in Italy and the contracts which are still to be signed in Chile and Mexico, amongst others.

Sacyr Concesiones.- This division has continued to increase the number of concessions of the group, whilst improving its portfolio and financial structure.

Turnover for concessions operated by Sacyr Concesiones improved by 12 % (+21 % if the effect of disinvestment in Portugal hospitals is eliminated) to €145.3 million, a highly positive figure which has come about thanks to the evolution of traffic in Spain (+5 %), the new operation of stretches of road in Rutas del Desierto and Rutas del Algarrobo in Chile, and the contribution of revenue from new concessions such as Hospital de Antofagasta and Valles del Desierto in Chile, and Pasto-Rumichaca and Montes de María in Colombia. Construction revenue was €117.8 million, a 12 % decrease due to the progress (to conclude shortly) of the concessions in Chile.

In total, turnover reached €263.2 million, practically the same as for the equivalent six-month period of the previous year (+2 % if the disinvestment effect is eliminated).

EBITDA amounted to €99.7 million (11 % up on last year, +17 % in uniform terms) whilst margin was stable around 69 %. Net profit was €18.3 million. The activity portfolio is around €12,864 million, with 58 % of future revenue from overseas, compared to 46 % last year.

As part of its regular strategy of asset rotation, in the first quarter Sacyr Concesiones closed disinvestment in three hospitals in Portugal for €113 million including debt, but maintains its minority shareholding which will allow it to continue to offer hospital management services. Moreover, the Aunor concessions were refinanced through a bond issue amounting to €54 million, and the Moncloa and Plaza Elíptica transport hubs in Madrid were also refinanced with 25-year debt of €190 million. Both these cases benefited from the best conditions now available on the financial markets.

Valoriza.- The services subsidiary has consolidated its high level of turnover and contracts while maintaining suitable profitability.

Valoriza amounted to €399 million (+9.7 %), led by increases in the Environment (+3.7 %) and Multiservices (+20.3 %) businesses. The EBITDA reached €31 million, which represents a margin of 7.8 %. The breakdown of revenue by area was: Environment, €158.6 million; Multiservices, €173.6 million; and Water, €65.7 million.

Valoriza's revenue backlog increased to €6,424 million, of which 30 % involves international projects. The following contract awards are notable during this financial year:

- Valoriza Agua: Sohar desalination plant in Oman for $1,200 million; - Valoriza Servicios Medioambientales: street cleaning and wate collection in Albacete for €164 million over 15 years; - Valoriza Servicios Medioambientales: collection and transport of municipal waste, street cleaning and beach cleaning in Ibiza for €68 million over 10 years; - Valoriza Servicios a la Dependencia: home-help services in the Gracia and El Ensanche districts (Barcelona) for €29 million over 2 years; - Valoriza Servicios a la Dependencia: home-help services in the Centro, Arganzuela, Moncloa-Aravaca, Latina and Carabanchel districts (Madrid) for €154 million over 3 years; - Valoriza Facilities: cleaning services for hospitals and health center buildings and facilities in Elche, Alcoy and Requena for €15 million; - Valoriza Facilities: cleaning of Madrid Metro rolling stock, lots 1 and 2, for €21 million over 4 years; - Valoriza Facilities: cleaning of buses and facilities of ALSA transport company for €18 million, amongst others.

Sacyr Industrial.- The youngest division in the group maintains its high rate of growth and meets all forecasts.

Sacyr Industrial's turnover grew by 66 % up to €188 million, most notably the Oil and Gas segment, where turnover has almost tripled to €111.5 million, due to the progress of the projects currently under way and despite the fact the generation area (-21.5 %) has been affected by the lower prices of the electricity pool.

The EBITDA was €13.2 million, with a significant increase of 75 %. This means a business margin of 7 %, an improvement on the 6.7 % of last year.

The portfolio has also recorded a positive evolution (+4 %) up to €2,675 million, with the international component, which has grown by 58 % up to €619 million, being particularly notable.

In the first quarter of the year, Sacyr Industrial was awarded its first contract in Ecuador: the construction of a cement plant in Chimborazo for €150 million. It has also entered Chile thanks to maintenance contracts for electricity grids and the construction of substations, and has extended the portfolio of Sacyr Nervión in maintenance of installations, and that of EPC with Sacyr Fluor.

At June 30, the financial results (€-105.7 million) have improved by 16.2 %. The group's net financial debt was around €4,134 million, a 22.5 % drop compared to June 2015. Of the total debt, €2,315 million are related to company activities, of which €1,840 million correspond to concessional projects (89 % of it is very long-term financing), which is covered with the cash flows generated by the operations (EBITDA of €165 million up to June). A further €1,291 million correspond to the credit for the 8.4 % shareholding in Repsol, the financial cost of which is covered with the dividend and whose surplus is set aside for successive partial amortizations.