First Half 2017 Earnings Release
30 August 2017
Results overview
Regional segments
PAGE 16 PAGE 3 PAGE 27
Europe
Africa
Latin America
Final remarks
Turnover up 15% YoY to €1,196 Mn, mainly reflecting strong growth in Latin America, and also signs of Africa picking up BACK TO GROWTH
EBITDA up 25% and margin reached 16% with all regions presenting a robust operating performance
Healthy backlog up to €4.9 Bn in June, up c.€450 Mn from December 2016
Net debt down €139 Mn in the 1H17 to €1.0 Bn, representing 2.7x net debt/EBITDA NET DEBT DOWN
Current backlog and strong commercial activity ensures a positive outlook for the second half of the year, mainly in Africa and Latam POSITIVE OUTLOOK
Turnover up 15% YoY
|
1H17 |
1H161 |
YoY |
| Turnover |
1,196 |
1,036 |
15% |
| EBITDA |
186 |
149 |
25% |
| Margin |
16% |
14% |
2 p.p. |
| EBIT |
97 |
41 |
138% |
| Margin |
8% |
4% |
4 p.p. |
| Net financial results |
(47) |
47 |
n.m. |
| Associates |
1 |
1 |
(22%) |
| EBT |
51 |
89 |
(42%) |
| Net income |
40 |
77 |
(49%) |
| Attributable to: |
|
|
|
| Non-controlling interests |
35 |
5 |
n.m. |
| Group |
5 |
72 |
(94%) |
1restated
- P&L (€ Mn) Turnover of €1,196 Mn, of which 39% from Latin America, which delivered the highest growth
- EBITDA margin of 16% reflecting sustained margins in Africa and Latin America and slight improvement in Europe
- Non-cash costs are mainly related to D&A in Europe and Africa regions
- Net financial results include net interest costs of €41 Mn, which decreased 5% YoY
- Taxes reached €12 Mn, reflecting a marginal tax rate of 23%
- Net profit of €5 Mn, negatively impacted by minorities of €35 Mn that are mainly related to Europe (Suma/EGF), Africa (Mota-Engil Angola and Vista Waste) and Latin America (S.G.Fénix)
EBITDA margin of 16%
P&L breakdown (€ Mn)
|
1H17 |
1H16 |
YoY |
| Turnover |
1,196 |
1,036 |
15% |
| Europe |
380 |
410 |
(7%) |
| Africa |
349 |
335 |
4% |
| Latin America |
469 |
344 |
37% |
| Other and interc. |
(3) |
(53) |
94% |
| EBITDA |
186 |
149 |
25% |
| Margin |
16% |
14% |
2 p.p. |
| Europe |
62 |
43 |
44% |
| Margin |
16% |
11% |
5 p.p. |
| Africa |
78 |
78 |
0% |
| Margin |
22% |
23% |
(1 p.p.) |
| Latin America |
38 |
27 |
40% |
| Margin |
8% |
8% |
0 p.p. |
| Other and interc. |
8 |
1 |
n.m. |
- Europe's turnover decrease influenced by the deconsolidation in the 1H16 of the Ports and Logistics Business (c.€28 Mn turnover)
- Europe's higher profitability was driven by both E&C and E&S segments
Turnover in Africa reflects activity recovery with sound EBITDA margin
Latin America showed a strong growth of 37%, with a stable operating margin
Healthy backlog of €4.9 Bn
Total backlog evolution (€ Mn) Backlog by region
- Backlog up c.€450 Mn from December 2016, mainly driven by Africa
- E&C backlog to sales2 ratio of 2.3x
- Awarded contracts in Tanzania, Guinea Conakry and more recently in Cameroon contributing to Africa's backlog diversification
Major projects currently in backlog
| Project 1 |
Range (€ Mn) |
Country |
Segment |
Exp. Year of
Completion |
| Gran Canal highway |
> 250 |
Mexico |
Roads |
2018 |
| Dar Es Salaam |
> 250 |
Tanzania |
Railway |
2021 |
| Urban light rail Guadalajara – Tunnel |
[200;250] |
Mexico |
Railway |
2018 |
| Cardel-Poza Rica highway |
[200;250] |
Mexico |
Roads |
2018 |
| Tuxpan-Tampico highway |
[200;250] |
Mexico |
Roads |
2018 |
| BR-381 highway dualisation |
[150;200[ |
Brazil |
Roads |
2019 |
| Camama road |
[150;200[ |
Angola |
Roads |
2017 |
| Siguiri gold mine |
[150;200[ |
Guinea Conakry |
Mining |
2022 |
| Urban light rail Guadalajara – Viaduct |
[150;200[ |
Mexico |
Railway |
2018 |
Classes: G1 Caribbean and G3 Antioquia - Eje
Cafetero - Pacific |
[150;200[ |
Colombia |
Civil Construction |
2019 |
| Relaves dam, Las Bambas |
[150;200[ |
Peru |
Power |
2019 |
| BR-381 highway dualisation - 3.1 |
[100;150[ |
Brazil |
Roads |
2019 |
| Fourways Mall Extensions, Fourways |
[100;150[ |
South Africa |
Civil Construction |
2018 |
| First stage of the General Hospital of Cabinda |
[100;150[ |
Angola |
Civil Construction |
2018 |
Total capex of €24 Mn
- Capex in E&C remained contained, including in Africa, based on tight policy of assets optimisation
- E&S capex of €7 Mn was mostly channelled to EGF, which will accelerate its investment plan in the next quarters
- Europe was responsible for 44% of total capex
- Africa growth capex of €3 Mn reflects the early stage of new projects execution, which is expected to accelerate in the next quarters
Capex in 1H17 by region (€ Mn)
In Latin America capex reached €6 Mn, mostly channelled to Mexico, Brazil and Peru
Net capex (€ Mn)
Positive free cash flow generation
Cash-flow (€ Mn)
|
1H17 |
2016 |
1H16 |
| Opening balance net debt |
1,159 |
1,455 |
1,455 |
| EBITDA |
186 |
338 |
149 |
| Change in working capital |
19 |
109 |
(15) |
| Operating cash-flow |
206 |
447 |
133 |
| Maintenance capex |
(19) |
(47) |
(23) |
| Net Financials |
(47) |
(2) |
47 |
| Corporate tax |
(12) |
(9) |
(12) |
| Free cash-flow bf growth capex |
128 |
388 |
145 |
| Growth capex |
(5) |
(20) |
(14) |
| Dividends |
(38) |
(17) |
(17) |
| Líneas cash in |
145 |
- |
- |
| Other changes in m/l term & perimeter |
(91) |
(56) |
120 |
| Change in net debt |
(139) |
(296) |
(234) |
| Closing balance net debt |
1,020 |
1,159 |
1,221 |
| Net debt/EBITDA |
1
2.7x |
1
3.4x |
1
3.4x |
Net debt/EBITDA evolution
- Strong operating cash-flow benefiting from good profitability and positive working capital management, despite usual seasonality negative effect
- Dividend outflow includes Mota-Engil SGPS dividend payment in June totalling €30 Mn
- €75 Mn of Angola's sovereign US\$ bonds received in the period
- Gearing of 2.7x, downward trend in line with Group's strategic goal
9
Free cash flow to equity generation
Recurring free cash flow to equity (€ Mn)
Working capital maintains positive evolution
Balance sheet (€ Mn)
|
Jun.17 |
Dec.16 |
Jun.17-
Dec.16 |
|
|
|
|
| Fixed assets |
1,192 |
1,274 |
(82) |
| Financial investments |
251 |
243 |
8 |
| Long term receivables |
74 |
65 |
9 |
| Non-current assets held for sale (net) |
91 |
229 |
(138) |
| Working capital |
347 |
367 |
(19) |
|
1,955 |
2,178 |
(223) |
| Equity |
550 |
571 |
(21) |
| Provisions |
94 |
102 |
(8) |
| Long term payables |
292 |
347 |
(55) |
| Net debt 1 |
1,020 |
1,159 |
(139) |
|
1,955 |
2,178 |
(223) |
Fixed assets down €82 Mn as capex on the period was lower than the D&A charge
Non-current assets held for sale evolution reflects Líneas assets disposals in January 2017
- Working capital initiatives continue to deliver results, leading to a decrease of €19 Mn, driven by Angola
- Long-term payables are mainly related to EGF, and mostly include investment subsidies and regulatory liabilities, amounting to €161 Mn
Working capital improvement
Working capital evolution(€ Mn)
- Positive trend notwithstanding seasonality
- Company committed to continue improving working capital
Net debt down €139 Mn in 1H2017
- Net debt, excluding leasing and factoring and including the Angolan bonds, amounted to €1,020 Mn, down €139 Mn in 1H2017
- Net debt, including leasing and factoring1 and the Angolan bonds, amounted to €1,183 Mn, down €158 Mn in 1H2017
- Average cost of debt of 5.79% on higher share of debt in Africa and Latin America regions
- Average debt life at 2.18 years impacted by Africa and Latin America's financing operations that have mostly a short term profile
Gross debt maturity2, June 2017 (€ Mn) Average cost of debt and average debt life (years)
1Leasing and factoring amounted to €163 Mn in June 2017; 2Excluding leasing and factoring
Short-term financing needs fully covered
Liquidity position, June 2017 (€ Mn)
- Total liquidity position of €805 Mn, corresponding to c.50% of total gross debt, and to 1.6x of the non-revolving financing needs with one year maturity
- Cash & equivalents include Angola's sovereign bonds amounting to €161 Mn
- Strengthening of the balance sheet with expected organic cash flow generation going forward
Results overview
Regional segments
PAGE 16 PAGE 3 PAGE 27
Europe
Africa
Latin America
Final remarks
Key financials (€ Mn)
|
1H17 |
1H16 |
YoY |
|
| Turnover |
380 |
410 |
(7%) |
|
| E&C |
230 |
242 |
(5%) |
|
| E&S |
153 |
169 |
(10%) |
|
| Waste |
139 |
129 |
8% |
|
| Logistics |
0 |
28 |
n.m. |
|
| Energy & Maintenance |
14 |
12 |
21% |
|
| Other, elim. and interc. |
(2) |
(1) |
(58%) |
|
| EBITDA |
62 |
43 |
44% |
|
| Margin |
16% |
11% |
5 p.p. |
|
| E&C |
7 |
(6) |
n.m. |
|
| Margin |
3% |
(3%) |
6 p.p. |
|
| E&S |
56 |
50 |
10% |
|
| Margin |
36% |
30% |
6 p.p. |
|
| Waste |
54 |
48 |
12% |
|
| Margin |
39% |
38% |
1 p.p. |
|
| Logistics |
- |
2 |
n.m. |
|
| Margin |
- |
9% |
n.m. |
|
| Energy & Maintenance |
0 |
1 |
n.m. |
|
| Margin |
3% |
7% |
(4 p.p.) |
|
| Other, elim. and interc. |
0 |
(1) |
n.m. |
|
E&C turnover down 5% YoY to €230 Mn mainly due to operations in Portugal, which represented c.60% of the segment's turnover
Profitability in E&C turned slightly positive both in Portugal and Poland
E&S turnover reached €153 Mn, of which c.€139 Mn from the waste business, with EGF accounting for c.€92 Mn. E&S turnover decrease influenced by the deconsolidation in the 1H16 of the Ports and Logistics Business (c.€28 Mn turnover)
EBITDA margin in E&S reached 36%, benefiting from EGF resilient profitability
Faro's airport expansion works, Portugal Backlog in Portugal in E&C was up c.€130 Mn
- from December 2016, reflecting early signs of sector's recovery (mainly civil construction)
- Positive outlook for the Portuguese infrastructure sector with major projects in the pipeline, which are expected to be executed from 2018 onwards
- In Poland public infrastructure sector remains attractive
- Organizational reinforcement in Poland with the recruitment of a new polish CEO
- Outlook for 2017: stable top-line and positive EBITDA
EGF's waste recycling operations, Portugal
- Waste collection and EGF activities provide a recurrent and attractive stream of cash flow
- EGF is analysing international expansion of the waste treatment activity
- EGF's capex expected to increase in 2H17 in order to comply with EU's urban waste treatment goals for 2020, set for Portugal
- Outlook 2017: stable top-line and EBITDA margin
EBITDA margin of 22%
Backlog by sub-region
- Turnover up 4% YoY to €349 Mn, with Angola representing the major contribution, notwithstanding tighter risk management of contracts
- Turnover evolution reflects the early stage of some important projects, whose execution will accelerate throughout the year
- EBITDA margin of 22% confirms the ability to maintain a high profitability in the region, even though currently still mostly dependent on small and mid size contracts
- Backlog was up c.€600 Mn from December 2016 driven by awards in Angola and in new countries, such as Tanzania and Guinea Conakry
- Angola's backlog is 79% exposed to public entities, a large majority of which already prefinanced
Bright future ahead
New Bugesera international airport first stone ceremony, Rwanda
- Several projects in the pipeline, mainly related to the mining sector in Mozambique, Angola and other countries
- South Africa also presenting good opportunities, namely related to transport infrastructures
- Project cash management being closely monitored with focus on working capital and equipment optimisation
- Expected pre-payments from potential large contracts awards, which will also lead to capex spikes
- Outlook 2017: top-line increase and EBITDA in line with guidance of c.20%
Turnover up 37% YoY to €469 Mn
- Turnover in Latin America accounted for 39% of the Company's total turnover
- Mexico was the largest market, accounting for c.50% of the region's turnover, followed by Brazil with 20%
- EBITDA of €38 Mn, with margin reaching 8%, broadly alike in the main markets
- Backlog of €1.7 Bn spread among seven countries and with Mexico representing the bulk of the order book with c.€680 Mn of projects
- In line with the business diversification strategy:
- The Group continues to analyse opportunities in the waste business
- Positive development of energy business benefiting from investments in 2016, higher electricity prices and better generation management
Tuxpan-Tampico highway, Mexico
- Despite strong focus on backlog execution, there is an interesting pipeline of new projects to address in the main markets
- Asset rotation continues to be the strategy for the concessions segment
- Outlook 2017: top-line and EBITDA margin increase
Results overview
Regional segments
PAGE 16 PAGE 3 PAGE 27
Europe
Africa
Latin America
Final remarks
Final remarks
- New projects in Africa and the acceleration of execution in Latam will allow for higher and sustainable margins overall despite 1H17 performance in E&C impacted by the still depressed activity in Portugal
- E&S performance brings earnings stability, as expected
- Pipeline of addressable projects is growing in Portugal (new airport, new hospitals, railway expansion and rehabilitation plans), with impact starting in 2018
- Africa is currently on a positive momentum with several projects being studied and tendered
- Organic cash flow generation will continue to be a key goal for management
- The extension of debt maturities, notwithstanding the Africa and Latin America financial profiles is a key strategic pillar
Disclaimer
This presentation used sources deemed credible and reliable but is not guaranteed as to accuracy or completeness. It also contains forward looking information that expresses management's best assessments but might prove inaccurate. The information contained in this presentation is subject to many factors and uncertainties and therefore subject to change without notice. The company declines any responsibility to update, revise or correct any of the information hereby contained. This presentation does not constitute an offer or invitation to purchase securities of Mota-Engil nor any of its subsidiaries.
The financial information presented in this document is non-audited.
João Vermelho Director, Head of Investor Relations
Email: [email protected]
Maria Anunciação Borrega Investor Relations Officer
Email: [email protected]
[email protected]
Rua de Mário Dionísio, 2 2796-957 Linda-A-Velha Portugal Tel. +351-21-415-8671