Sacyr : increased its ebitda to €94 million and posted a net profit of 31 million

08/05/2017

• EBITDA rose by double digits in all business lines: Construction (+14%); Concessions (+16%); Services (+23%); and Industrial (+39%).

• During the first quarter, 55% of business revenue came from outside Spain, compared to 48% during the same period of 2016.

• The backlog of future earnings closed at €28,297 billion, representing an increase of 9% compared to December.

• Net financial debt in March was €3,788 billion. Following April's derivatives hedging transaction conducted on the group's shares in Repsol, debt declined 20%, to €3,015 billion.

The Sacyr Group posted revenues of €786 million in the first quarter of 2017, up 15.6% compared to the same period last year. Between January and March, EBITDA rose 16.5% to 94 million, with double-digit growth in all business areas: Construction (+14%); Concessions (+16%); Services (+23%); and Industrial (+39%).

Sacyr's expanding internationalization was reflected in the quarterly financial statements, as the majority of its business revenue - 55% - came from outside Spain. Between January and March 2016, international income fell seven percentage points to 48%.

Allocated net profit fell 26.5% to €31.3 million from the fact that the same period in 2016 included €20 million from the sale of interests in three Portuguese hospitals. Net income rose 39% on a like-for-like basis

The positive change in business revenue and EBITDA was accompanied by improved gross margin, which stood at 12%, up one-tenth over the first quarter of 2016.

First quarter figures reflect the company's successful strategy and its strict system to manage risk and control costs, which puts particular emphasis on profitability and projects' cash-flow generation.

A growing and increasingly international backlog

The backlog of future earnings ended the first quarter at €28,297 billion, a 9% increase compared to December 2016. The period between January and March included among other things the Sacyr Concesiones and Sacyr Construcción contracts on Routes 2 and 7 in Paraguay, Sacyr Industrial being awarded a cement plant in Bolivia, the construction of a hospital in Chile, and various Valoriza contracts..

58% of the backlog is now international, compared to 52% in December. Sacyr's foreign presence is even broader than that, in view of the fact that these percentages do not include concessions in Italy and Colombia, which were recognized using the equity method.

By business, international contracts accounted for 86% of Construction, 67% of Concessions, 28% of Services, and 26% of total Industrial accounts.

Cancelled debt related to the stake in Repsol

Group financial debt ended the quarter at €3,788 billion, a figure close to that at the close of 2016. This balance includes €773 million for the loan associated with Sacyr's stake in Repsol, which was discharged last April

After the discharge, Sacyr's net debt fell 20% to €3,015 billion.

Sacyr used derivatives to create a hedge on 72.7 million of the oil company's share, thereby providing it with income of approximately €769 million and enabling it to free up all of the security interests associated with the loan

The infrastructures and services company will benefit from the dividends distributed by Repsol, given that it will not have to use them to service the debt or discharge the principal. The risk has also been eliminated that the oil company's share price will fluctuate below the threshold of €10.9/share.

Against this backdrop, first quarter financial income rose 13% to €46 million. The average interest rate for the loans was 4.1%, compared to 4.4% in the first quarter of 2016.

Change by business area

Construction.-Revenue in Construction grew 3.9% to €351 million during the first quarter. 80% of the income came from Sacyr Construcción with the remaining 20% from the Portuguese subsidiary Somague.

Sacyr's Construcción income posted noticeable growth of 9.3%, supported by business in Colombia, Mexico, Qatar, Peru, and Italy. International business overall grew by 33%, offsetting the slowdown recorded in Spain. Somague's billings on the other hand fell 13%.

Construction EBITDA increased 14% to €15 million and gross margin hit 4.3%, compared to 3.9% in the first quarter of 2016..

The backlog grew 8% to €4,463 billion thanks to the surge in international contracts, which increased 10.2% and now account for 86% of the total.

Concessions.-Sacyr Concesiones posted revenues of €131 million, similar to the first quarter of 2016. Of this total, €88 million came from concession income (+25%) and 43 million to from construction income (-30%), a drop caused by the progress in the projects in Chile and Peru.

Concession income increased due to the traffic improvement in the Spanish concessions under operation, which rose 4%, the commissioning of the two Chilean highways during the course of 2016, and the contribution from the concessions Hospital Antofagasta (Chile) and Montes de María and Pasto-Rumichaca (Colombia).

Generated EBITDA reached €54 million, up 16% compared to the same quarter of 2016

Services.-Valoriza revenues grew 21.5% in the first quarter to reach €228 million, owing to the positive change in its three business areas. .

EBITDA reached €17.5 million, up 23.2%, with 3.4% growth in Environment, 11.8% in Multiservices, and 145.7% in Water. The latter increase comes from the inclusion in 2017 of the portion of the Sohar (Oman) desalination concession that did not contribute to 2016.

The Valoriza backlog totaled €6,2 billion, 26% of which was international.

Industrial.-Revenue reached €122 million in the first quarter of 2017 (+41%) and EBITDA totaled 9.5 million (+39%).

Engineering and construction contracts (EPC) for Water, which had previously been included in Valoriza, contributed billings of €20 million. Oil&Gas billed €51 million and power plants totaled €33 million.

The industrial area backlog achieved €2,636 billion at the end of the quarter. It is worth noting that the first contracts for the operation and maintenance of power lines in Chile totaled €60 million over six years.