Interim Management Report
Financial Review
Earnings
HOCHTIEF further boosted sales in the first half of 2008. Sales of EUR 9.06 billion exceeded the EUR 7.9 billion achieved in the prior-year period by EUR 1.16 billion or 14.7 percent. This successful outcome was driven by resilient ongoing demand on international markets and in the segments targeted by HOCHTIEF for systematic expansion. The Group's strongly performing international activities were not the only success factor, however: Sales in HOCHTIEF's domestic market of Germany likewise showed a renewed gain at EUR 1.02 billion (up from EUR 919.7 million in the first half of 2007).The HOCHTIEF Americas division sustained the positive sales trend established from the start of the fiscal year. With sales of EUR 3.69 billion, HOCHTIEF secured doubledigit growth of 11.4 percent on the American continent compared with the EUR 3.31 billion generated in the same part of 2007. A major factor was HOCHTIEF's successful entry – via the activities of the Flatiron Group – into the growth market for transportation infrastructure in the USA. Turner"s sales also showed a slight rise, to EUR 3.28 billion compared with EUR 3.23 billion in the comparable prior-year period. Due to the persistent weakness of the dollar, sales growth expressed in the Group currency, the euro, does not adequately mirror performance in local currency. Looking at the dollar figures, Turner increased sales by USD 759 million – a gain of nearly 18 percent – to USD 5.07 billion. The HOCHTIEF Asia Pacific division generated sales of EUR 3.57 billion, adding roughly another half billion euros to the already high figure of EUR 3.08 billion for the first six months of 2007. Leighton profited here in the contract mining segment from sustained strong demand for coal and iron ore resources and from the execution of demanding infrastructure projects in Australia. The HOCHTIEF Europe division showed very satisfactory sales growth in the first half of 2008, with sales passing back over the one billion threshold to reach EUR 1.08 billion (up from EUR 906.4 million in the first half of 2007). This was largely driven by strong performance in the Eastern European business. The HOCHTIEF Real Estate and HOCHTIEF Services divisions each contributed over EUR 70 million to sales growth. While HOCHTIEF Real Estate mainly profited from good trading in real estate development and the new property management business, HOCHTIEF Services reaped benefits from the previous year's acquisition in energy management.
HOCHTIEF achieved a sharp increase in earnings in the first half of 2008 compared with the same period of the
HOCHTIEF's net income from participating interests was already well into the three-digit millions at the end of the first half of 2008, amounting to EUR 173.2 million compared with EUR 98.5 million in the same period of 2007. HOCHTIEF Asia Pacific benefited here with outstanding contributions to earnings from large-scale contracts carried out in joint ventures. EUR 114.6 million in impairment charges on investments in individual project companies prevented the division from turning in an even stronger performance on this front. The division's net income from participating interests increased from EUR 44.9 million in the prior-year period to EUR 113.1 million in the year under review. The HOCHTIEF Americas and HOCHTIEF Real Estate divisions also recorded strong growth in this regard. HOCHTIEF Americas took in larger earnings contributions from Turner and Flatiron, while HOCHTIEF Real Estate generated a notable share of income from its interest in aurelis acquired last year. Our airport holdings continued to grow very strongly in operating terms through the first half of 2008. Excluding the special dividend paid out in 2007 on the refinancing of Sydney Airport, our airport business improved its earnings contribution compared with the prior-year period.
The growth of the HOCHTIEF Group through acquisitions in nearly all divisions in 2007 required a corresponding amount of borrowing. The consequent interest expense resulted in net investment and interest income of minus EUR 38.9 million, substantially down from the EUR 22.7 million positive figure for the first half of 2007.
Profit before taxes improved significantly compared with the prior-year period, rising by 60.7 percent from EUR 181.8 million to EUR 292.2 million.
