Poor weather hits Strabag first half

Harsh weather and flooding in Europe impacted results at contractor Strabag, which reported a 7% year-on-year decrease in output volume for the first half to €5.64 billion.

Revenues slipped 10% year-on-year to €5.16 billion, and the contractor reported a net loss of €105 million, albeit an improvement on the loss of €157 million it reported for the first six months of 2012. It said the previous year’s second-quarter income had been distorted by damage compensation payments related to a failed acquisition.

The order backlog stood at €14 billion at the end of June, down 7% compared to last year. Strabag said the completion of large projects had reduced the figure.

Strabag CEO Thomas Birtel said, “While we were unable to make up for the first quarter’s weather-related decline in output volume in the second quarter of 2013 – also due to the flood in vast parts of Europe – we remain confident of being able to report a full year figure for output volume that roughly corresponds to that of the previous year.

“In view of the harsh winter in Germany, there is a lot of work to be done in the area of road maintenance and repairs here. Moreover, several international projects that we acquired in the meantime were not yet included in the order backlog as at the end of June.

“In Poland, which recorded one of the greatest declines, a large portion of the projected 2013 output volume is based on previously acquired contracts. We can even see a slight improvement of the climate in the Polish construction sector for the years to come.”

Full-year forecast

Strabag expects to report full-year output volume of €14 billion, stable year-on-year. It said reductions in Poland were expected to be countered by increases in the international business and in building construction in Austria and Hungary.

It added that while it forecast another slight worsening of the business environment in the European construction sector in 2013, it also believed that larger negative nonrecurring items would not impact the result to the same degree as in 2012. Earnings before interest and tax are forecast to grow to at least €260 million for the full year.