HOCHTIEF Aktiengesellschaft (HOCFF) Full Year 2024 Earnings Call Transcript

2025-02-19 15:04:21 ET

HOCHTIEF Aktiengesellschaft (HOCFF)

Full Year 2024 Earnings Conference Call

February 19, 2025 9:30 AM ET

Company Participants

Mike Pinkney – Head-Capital Markets Strategy

Juan Santamaría – Chief Executive Officer

Conference Call Participants

Graham Hunt – Jefferies

Luis Prieto – Kepler Cheuvreux

Dario Maglione – BNP Paribas

Marcin Wojtal – Bank of America

Marcus Cole – UBS

Nicolas Mora – Morgan Stanley

Presentation

Mike Pinkney

Good afternoon to everyone, and thank you for joining this HOCHTIEF 2024 Results Call. I'm Mike Pinkney, Head of Capital Markets Strategy, and I'm here with our CEO, Juan Santamaría; and our CFO, Peter Sassenfeld; as well as our Head of IR, Tobias Loskamp, and other colleagues from the senior management team of HOCHTIEF. We're looking forward to taking your questions. But to kick off, our CEO will run us through the details of this strong set of numbers and provide you with an update on our group strategy. Juan, all yours.

Juan Santamaría

Thank you, Mike and the team, and welcome to everyone joining us for this results call. Our growth strategy has delivered a very successful 2024 HOCHTIEF and will drive further growth in 2025 and beyond. We have consolidated leading positions in our strategic markets, where growth is being driven by an unprecedented ramp-up in infrastructure investments by our public and private clients. We're deploying our geographic footprint to access this growth in all our regions, and we're expanding our presence in the value chains of these markets to enhance growth. This growth trajectory is supported by a solid balance sheet, a strong order book and a strongly cash generative business.

Turning to the numbers. The group delivered substantially higher sales and profits backed by another strong performance in cash flow generation. Group sales increased by 20% to €33.3 billion in nominal terms, accompanied by solid operating margins. Adjusting for the impact of acquisitions and divestments, sales growth was over 10% on a comparable basis. HOCHTIEF's operational net profit rose by 13% to €625 million in 2024, exceeding the top end of the guidance range of €560 million to €610 million we provided to you at the beginning of the year. Nominal net profit of €776 million included a net €147 million one-off gain at our Australian companies CIMIC and [indiscernible] with €523 million reported for 2023.

The quality of our profit performance is underlined by HOCHTIEF's outstanding cash generation during the year. Cash flow from operating activities in 2024 was over €600 million higher, year-on-year at €2.1 billion, an increase of €100 million year-on-year on a comparable basis and reflecting a high and sustained level of cash conversion. HOCHTIEF ended the year with a slightly net debt position of €120 million, adjusting for the impact of strategic investments carried out in 2024, which I will describe later. We will have a net cash position of €1.6 billion, even after taking into account the €331 million dividend paid out to shareholders in July 2024.

The group's order book ended the year at €67.6 billion and is up by €7.8 billion, or 13% on a comparable basis versus December 2023. As a consequence of our strategy to further improve the group's risk profile, lower-risk contracts, which incorporate enhanced risk-sharing mechanisms, now account for well over 85% of our order book. As you will be aware, this proportion has risen substantially in recent years. The ongoing increase in our backlog reflects the strong growth recorded in new orders, which rose by 14% to €41.8 billion equivalent to 1.2x the work done during 2024. Around 50% of the new work we secured during the year relates to our growth markets....

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