Interim Management Report
Orders and work done
New orders
Group new orders for the six months to June 30, 2010 outstripped the prior-year figure by 27.9 percent (exchangerate adjusted: 10.6 percent). Most of the increase relates to the HOCHTIEF Asia Pacific division: We secured major contracts—mostly contract mining and infrastructure projects— totaling EUR 5 billion in the second quarter. New orders in Germany dropped by 4.7 percent.
Group work done
Group work done in the first and second quarter of 2010 came to EUR 10.62 billion, up 3.9 percent (exchange-rate adjusted: down nine percent) on the prior-year figure. While HOCHTIEF Asia Pacific beat the prior-year figure both before and after exchange rate effects, HOCHTIEF Americas came in below the prior-year figure due to weak new orders in the preceding months. Operating in a difficult building construction market, HOCHTIEF Europe was not yet able to make good the weather-related shortfall from the first quarter.
Order backlog
The order backlog set a new record with an absolute total of EUR 42.52 billion. On an exchange rate-adjusted basis, too, the order backlog of EUR 36.56 billion marked growth of 10.4 percent on the prior-year figure. Based on the current annual total for work done, the order backlog corresponds to a forward order book of 24 months.
Financial review
Earnings
The HOCHTIEF Group generated higher sales in the first half of 2010 than in the same period a year earlier. At EUR 9.53 billion, sales surpassed the comparative prior-year figure of EUR 9.17 billion by 3.8 percent. The HOCHTIEF Asia Pacific division kept up its strong first-quarter trend to generate first-half 2010 sales of EUR 5.06 billion. This represents an increase of 34.8 percent on the comparative figure for the prior year (EUR 3.76 billion). Movement in the exchange rate between the Australian dollar and the euro accounted for a gain of EUR 1.06 billion. Alongside strong growth in contract mining in the Asia-Pacific region, the company is benefiting from sustained strong demand for construction services on infrastructure projects in Australia.
On the American continent, HOCHTIEF has a powerful presence in building construction and civil engineering with its subsidiaries Turner and Flatiron. At EUR 2.93 billion, however, HOCHTIEF Americas division sales in the first six months of 2010 were down on the prior-year period (EUR 3.5 billion) due to the restrained performance of the US building construction market. The US dollar-euro exchange rate trend produced a positive translation effect of EUR 49.9 million. Construction activity was held back across much of Europe by a comparatively long and harsh winter in the first few months of the year. It was not possible fully to make good this shortfall over the intervening months. At EUR 1.06 billion, sales at the HOCHTIEF Europe division were consequently slightly down on the prior-year period (EUR 1.11 billion). In light of the still difficult situation on the German real estate market, the HOCHTIEF Real Estate division continued to pursue its highly selective policy from the beginning of the year with regard to the development of new projects. Sales in the first half were considerably down as a result, at EUR 72 million compared with EUR 357.3 million in the prior-year period. The revenue trend at the HOCHTIEF Services division held steady relative to the prior year. The sales figure of EUR 308.5 million was on a par with the prior-year period (EUR 311.9 million).
HOCHTIEF once again demonstrated its strong earning power in the first half of 2010, pushing operating earnings (EBITA) up to EUR 396.2 million. Although the world economy picked up slightly overall, the economic environment still showed distinct patches of restrained growth. The EUR 373.9 million operating earnings figure from the prior-year period was nonetheless topped by six percent. Thanks to our good positioning, all divisions made a positive contribution to Group operating earnings. Above-average earnings growth was attained by the HOCHTIEF Asia Pacific division, which raised operating earnings from EUR 261.4 million in the prior-year period to EUR 320.4 million in the period under review. Exchange rate effects were a significant factor here. The HOCHTIEF Americas division put in a steady earnings performance, slightly increasing operating earnings to EUR 55.3 million, compared with EUR 52.6 million in the prior-year period. The HOCHTIEF Concessions division continued to do well in the first half of 2010. On account of higher tax charges at Athens Airport, the EUR 37 million operating earnings figure is marginally down on the comparative prior-year figure of EUR 39.4 million. In contrast,