Mota-Engil Unaware of Why Stock Slid, Reiterates Tough Climate

  • Stock fell as much as 23% intraday before being suspended
  • Exposure to emerging markets may have hurt stock, trader says

Portuguese construction company Mota-Engil SGPS SA said it isn’t aware of any reason for the plunge in its shares.

In a regulatory filing today, Mota reiterated that the global economic environment is “difficult,” and said it reduced debt in the fourth quarter. Shares were suspended from trading in Lisbon after dropping as much as 23 percent to 1.115 euros. The stock closed 19 percent lower, the biggest decline in 17 years.

“Mota-Engil has been executing the refinancing of its debt in line with its plan and strategy, having closed several operations during the fourth quarter of 2015 and during the first days of 2016,” it said in the statement.

The Oporto, Portugal-based builder is among a handful of construction companies that have expanded abroad to counter a stagnant domestic market. It relied on Africa and Latin America for 61 percent of its 1.79 billion-euro ($1.9 billion) revenue in the first nine months of 2015. Mota-Engil’s net debt was 1.56 billion euros at the end of September.

“The only reason I see for Mota-Engil’s drop is the fact that the company is exposed to markets in Africa and South America that are suffering from the drop in oil prices,” said Joao Queiroz, a trader at Banco Carregosa SA’s Go Bulling brokerage in Lisbon.

Mota said it has increased its business in Latin America, whose revenue contribution surpassed that of Africa in November. Angola, sub-Saharan Africa’s second biggest oil producer after Nigeria, is Mota’s largest market in the continent. A rout in crude prices has sent them near a 12-year low in 2016.

The company said it’s also working on changes to its management structure to better support coordination of activity in Africa.

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