Vienna, 29.11.2018 – PORR AG is continuing this year’s trend with a good third quarter. New records were once again set in both production output and the order backlog. As expected, production output rose in the first nine months by 21.3% to EUR 4,055m. In a challenging environment, EBT totalled EUR 31.2m, a plus of 9.9%. The order backlog of EUR 6,837m is again at a record level, representing a growth of 17.7%.
“Today PORR is on a solid footing. Despite the challenging market environment, we have been able to stand our ground”, said Karl-Heinz Strauss, CEO of PORR. “The high cushion of orders gives us momentum and we remain right on track with our capacity fully utilised. We continue to see growing markets; for the full-year we expect production output to increase to at least EUR 5.3 bn. Despite market challenges we are looking at a good year”.
Output, earnings and orders
In the first nine months of 2018, PORR managed to build on the good performance of the preceding quarters with a solid third quarter. In the period under review, production output totalled EUR 4,055m. This represents a significant increase of 21.3% against the same period of the previous year. Working at full capacity in every segment, Austria was still the most important market in percentage terms. The market environment remained challenging with rising prices for raw materials, logistics and subcontractor services. Despite this, PORR managed to increase EBITDA by 17.6% to EUR 130.3m. EBT totalled EUR 31.2m, thereby growing by around 9.9%. The EBT margin held steady at 0.8%. The profit for the period amounted to EUR 23.3m, whereby earnings per share improved to EUR 0.71 (previous year: EUR 0.66).
The order books are fuller than ever. At EUR 6,837m, the order backlog once again set a new record and surpassed the previous year’s value by 17.7%. This high level enables PORR to take an extremely selective approach to new projects. As a consequence, the rise in the order intake was moderate, increasing by 4.1% to EUR 4,525m. The most significant new order in the third quarter came in Austria with the Brenner Base Tunnel. The construction lot has an approximate length of 18km and a pro rata construction volume of EUR 531m. Poland reported a strong boost through attractive infrastructure orders. These included modernising the LK93 railway line between Czechowice Dziedzice and Oświęcim, as well as the new construction of the S61 expressway between Szczuczyn and Ełk. Numerous additional large-scale orders such as the FAIR accelerator complex in Germany, the office project QBC 1+2 in Austria, the Franklin Tower in Switzerland and multiple projects in industrial, office and residential construction, all add up to a stable order situation.
Balance sheet and cash flows
As of 30 September 2018 total assets stood at EUR 3,250.0m. The expansion of business activities and the seasonal nature of the construction industry led to net debt of EUR 460.3m. The equity ratio was 17.8%, whereby the payout of dividends and the increase in total assets had contrasting effects. A significant improvement of EUR 182.1m was achieved in cash flow from operating activities thanks to proactive working capital management. There was also a positive performance in cash flow from investing activities, which totalled EUR -28.3m (01-09/17: EUR –219.3m). The previous year’s figure was burdened by one-off effects such as the acquisitions concluded in 2017 and short-term financial investments. Cash flow from financing activities decreased to EUR 21.6m. Cash and cash equivalents amounted to EUR 164.2m.
Outlook
Demand in the European construction sector remains dynamic, reflecting the high order backlogs in the construction industry and the rise in employment figures. Despite the strong momentum in terms of orders, the underlying conditions in Europe are becoming ever more challenging. The shortage of skilled labour, bottlenecks at subcontractor level, as well as rising prices for construction and wages are dampening expectations – this is especially true for all of PORR’s home markets. This trend has been most pronounced in Poland.
Based on the aforementioned assumptions in PORR’s home markets as well as the record order backlog, the Executive Board expects an increase in production output to at least EUR 5.3 bn in 2018. In light of the challenges cited, the Executive Board anticipates good earnings for the fiscal year 2018. From today’s standpoint, a stable dividend is assumed to be paid out for the current business year. Nevertheless, the actual business performance may deviate from current expectations depending on external political and economic factors as well as the seasonal nature of the construction business.
