Hochtief Profit Beats Estimates as Asia Compensates for Europe
Hochtief AG (HOT), Germany’s largest construction company, reported second-quarter earnings which beat analyst estimates as profit at the Asian and American units compensated for losses in its home European market.
Pretax profit jumped to 328.2 million euros ($435 million) from 164.8 million euros a year earlier, the Essen, Germany-based company said in a statement. The average forecast of eight analysts surveyed by Bloomberg was 157 million euros. Sales increased 10.4 percent to 7.1 billion euros.
Chief Executive Officer Marcelino Fernandez Verdes is focusing Hochtief, which is controlled by Spain’s Actividades de Construccion & Servicios SA, on its main building business, reversing a decade-long strategy of expanding into services. Verdes, who joined from ACS, reached a 1.5 billion-euro deal to sell the airports division and is also offloading property development and facility management units. Hochtief Solutions was sold to SPIE SA for about 250 million euros in June.
“We are well on course to implement our strategy and position Hochtief as a global infrastructure group,” Fernandez Verdes said in the statement. “To achieve this aim, various measures were decided, which we are now implementing systematically.”
Pretax losses in Europe narrowed to 5.8 million euros from 71.6 million euros a year earlier, while profit in Asia and North America jumped 45 percent to 299.9 million euros and more than doubled to 21.8 million euros respectively.
Hochtief, which built Frankfurt’s Commerzbank Tower, is midway through a 260 million-euro share buyback program which will boost the voting rights held by Madrid-based ACS to 59.9 percent.
Hochtief predicts full-year pretax profit of 580 million euros to 660 million euros, with net income at 160 million euros to 200 million euros, excluding earnings from the airports, service solutions and one-time reorganization costs, the company said today.
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