Strabag earnings increase

Austrian-based contractor Strabag’s half-year figures show its order backlog up 4% and EBIT (earnings before interest and taxes) up 29%, which it pointed out was without adjustment for non-operating profit.

The management board of Strabag – which counts Austria and Germany as its home markets – said it expected a slightly lower output volume for 2016. It added that organic growth at about the level of inflation was expected for next few years.

The management board confirmed the target of achieving a sustainable EBIT margin of 3% starting in 2016, as it said efforts to improve risk management further and to lower costs had already had a positive impact on earnings.

CEO Thomas Birtel said, “A non-operating profit led to a steep increase in our earnings. But even adjusted for this effect, the earnings improvement would still have been quite positive.”

He added that he was pleased with the order backlog, too. He pointed out that as the market leader in Germany, the company was not only engaged successfully in building construction but has also seen growth in road construction.

Strabag generated output volume of €5.68 billion in the first half of 2016, a year-on-year decrease of 8%. Output volume declined in Germany against very high levels reported in the same period of last year. The company added that the same could be said of Hungary, and of Russia and Neighbouring Countries (RANC).

Like the output volume, the consolidated group revenue also lost 8% to settle at €5.3 billion.

The order backlog, on the other hand, increased by 4% on 30 June, 2016, versus the first half of the previous year, to reach €15.41 billion. While several building construction projects in Germany contributed to a rise of about a quarter in this home market, declines were registered in Eastern Europe – the RANC region, Slovakia and Romania.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) improved in the first half of 2016 by 27% to €156.76 million, which it said was in part because of large-scale projects and southeast European markets were no longer a burden.

It added, however, that this figure also included earnings from the sale of a shareholding related to the acquisition of the minority interest in subsidiary Ed Züblin that could not be assigned to the operating business.