Interim Management Report
Financial Review
Earnings
Profit from operating activities reached EUR 177.5 million, an increase of 3.9 percent on the EUR 170.9 million generated in the first nine months of 2006. The increase was achieved despite a large negative contribution to earnings from the Europe division. Exceptionally good business performance in the other divisions more than compensated for this negative factor. The Asia Pacific division benefited from our Australian subsidiary Leighton's successes with major contracts in the infrastructure and mining segments, raising profit from operating activities by 51.3 percent to EUR 284.4 million. The Airport and Americas divisions also generated substantially higher contributions to earnings.
Net income from participating interests for the first three quarters of 2007 came to EUR 137.9 million, more than three times the corresponding 2006 figure of EUR 37.5 million. This increase mirrors the outstanding performance of our airport holdings. Sydney and Hamburg airports contributed particularly strongly to the improved net income from participating interests. Sydney Airport was able to pay out a special dividend following its successful refinancing. As a consequence of the corporate tax reform in Germany, the deferred taxes recognized under equitymethod accounting for Hamburg Airport have been remeasured. The resulting income item changes the carrying amount of the equity investment and is included in net income from participating interests.
The Group's sustained earning power is underscored by profit before taxes of EUR 343.1 million, up 61.7 percent on the figure of EUR 212.2 million for the first nine months of 2006.
Income taxes rose from EUR 90.5 million in the prior-year period to EUR 127.3 million in the nine months ended September 2007. This included a EUR 22.4 million increase in current income tax due to improved earnings from our subsidiaries Leighton and Turner. Deferred taxes were up EUR 14.4 million on the corresponding prior-year figure. This rise is mainly a result of the corporate tax reform in Germany, which necessitated a remeasurement of the excess of deferred tax assets over deferred tax liabilities, resulting in an extraordinary tax expense in the period under review. The effective tax rate for the nine months to September 2007 came to 37.1 percent, down from 42.6 percent in the same period of 2006.
Profit after taxes for the nine months to September rose significantly from EUR 121.7 million in 2006 to EUR 215.7 million in 2007. With the exception of HOCHTIEF Europe, all divisions contributed to this positive outcome.
Consolidated net profit for the period under review came to EUR 70.7 million, a substantial 44 percent increase on the EUR 49.1 million generated in the first three quarters of 2006. The minority interest doubled from EUR 72.6 million in the prior-year period to EUR 145.1 million in the three quarters ended September 2007. The minority stakes in Leighton and our airport holdings mean that a large share of earnings growth from these businesses goes to outside shareholders.
