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26 September 2018

Start of a new stage with the appointment of José Antonio Fernández Gallar as CEO, reinforcing the company leadership with Manuel Álvarez, as General Manager of the Group, and José María Sagardoy as the senior manager responsible for the Economic-Financial area

OHL ends the first half of the year with an Attributable Net Result Adjusted of -117.5 million, a 13.3% improvement over the same period in 2017

  • New awards: Up to the end of June the company obtained awards worth 1.2 billion euros, with 46.1% of the new projects located in the US
  • Debt reduction. Up to the end of June, the Gross Recourse Borrowings were reduced by 53% to 709.7 million, after repaying practically the entire bank debt and 25% of the outstanding bond debt
  • Liquidity. For the first time in its history, OHL has achieved a positive net cash position totalling 617.2 million euros
  • Recovery. The company expects a gradual recovery of its activity, centring on profitability and organic cash generation in its recurring business

OHL has ended the first half of 2018 with an Attributable Net Result Adjusted of -117.5 million euros, improving 13.3% with respect to the same period in 2017.

The Adjusted EBITDA figure was placed at -57.5 million euros, due to the slower pace of activity in Construction, the adverse performance of the EPCs (Engineering, Procurement and Construction) in the Industrial division and high Corporate costs now in a process of reduction.

Sales totalled 1.4 billion euros, 9% less than during the same period in the previous year, affected principally by a slower pace of activity in the Construction and Industrial divisions and a decline in the contribution by the Mayakoba companies following their sale in April 2017. International sales account for 74.3% of turnover.

The Attributable Net Result was placed at -843.6 million euros, due to significant accounting adjustments and non-recurring effects:

  • -550.5 million euros originating, principally, from an accounting adjustment as a result of the sale of OHL Concesiones, without effects on cash or on net assets. Specifically, this impact is due to the application of IAS 21 which requires accounting for the conversion reserves recognised in the company’s equity, due to the effect of the exchange rate changes accrued in the consolidated value of those assets, on the Profit and Loss Account, at the time of the sale of an asset.
  • -28.8 million euros, stemming mainly from the adverse outcome of the claim filed in the Xacbal Delta Hydropower Plant (Guatemala) project and the costs of the Collective Redundancy Procedure affecting Obrascón Huarte Lain S.A., and others, in the amount of -28.0 million.
  • -76.7 million due to the recognition of losses from excess costs incurred for  remedying the incidents arising during the start-up and putting-into-service period of the CHUM Hospital (Canada), after having successfully completed the provisional delivery and turnover of the first phase of the project to the customer at the end of the 2017. The second phase of the project has been transferred to a local contractor, whereby OHL no longer has any work whatsoever pending performance in this project.
  •  -42.1 million associated principally with the sale of stakes and other minor Mayakoba subsidiaries.

A highlight in terms of the company’s principal business activity, Construction, is that the short-term order book is now worth 5.6 billion euros - with 38.5% of the order book originating in the U.S. and 28.6% in Latin America -. At the same time, the new contracts obtained in the first half of the year totalled 1.2 billion, led by awards in Europe and the U.S. such as the modernisation of the Sudomerice-Votice railway line in the Czech Republic for 172.2 million or the remodelling work in the Nueva York subway worth 100 million.

Debt reduction and liquidity

The most significant event in the first half of the year was the completion on the 12th of April of the transaction for the sale and transfer of 100% of the share capital of OHL Concesiones to IFM. This transaction has contributed to simplifying the business structure of the company, to significantly reducing its borrowings and to substantially improving its liquidity profile.

Upon completion of the transaction, OHL received a net amount of 1.99 billion euros, enabling it to:

- Reduce its net debt by 53% through the repayment of practically its entire bank debt in the amount of 701.7 million euros and 228.3 million euros in bonds. Following these repayments, net debt is now placed at 709.7 million euros.

- Distribute an interim dividend on the 6th of June on 2018 earnings in the amount of 100 million euros.

- Materially improve its available cash position which totalled 1.3 billion euros at 30 June 2018.

With this liquidity situation, for the first time in its history OHL shows a net positive cash position, totalling 617.2 million at the close of accounts for the first half of the year, with which to address a new stage centred on profitability and cash generation starting from a sound and diversified order book.

Reinforcement of the company leadership

On 28 June 2018, the company embarked on a new stage following the appointment of  José Antonio Fernández Gallar as CEO; a stage that will be focussed on significant overhead cost  reduction and on the gradual recovery of the business activity which is expected for 2019 and, above all, for 2020.

To achieve this objective, the CEO has reinforced OHL’s top management with the appointment of Manuel Álvarez as General Manager of the Group, with an accumulated experience of almost three decades in the construction sector and who will be the most senior officer responsible for the corporate areas and for the engineering, construction and services business areas, while José María Sagardoy, with a professional track record of more than 25 years, will head the Economic-Financial area.

18.09.26 ENG Presentacion De Resultados 1S18

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