Hochtief Ag

Good afternoon to everyone and thank you for joining us for the presentation of Hawktief's first half 2023 results. I'm Mike Pinckney, head of corporate strategy, and I'm here with our CEO, Juan Santamaria, our CFO, Peter Sassenfeld, as well as our head of capital markets, Tobias Loskamp, and other colleagues from the senior management team of Hawktief. We're looking forward to taking your questions as always, but to start off with, our CEO is going to run us through the key aspects of our performance during the first six months of the year. Juan, who are yours?

Thank you so much, Mike and the team. Good afternoon to everyone, and thanks for joining us. Octiv has achieved robust performance during the first half of 2023 with higher sales and profits, a strong growth in the orders, and a solid net cash position at the end of June. This reflects our strategy to further strengthen Octiv's position in its core markets, whilst at the same time pursuing selective growth opportunities in the rapidly expanding areas of high-tech, energy transition, and sustainable infrastructure markets. Furthermore, we continue steadily improving the risk profile of our order book and executing our ESG priorities. Now let's look at some of the key numbers. Sales increased by 9% during the first six months of the year to $13 billion, and Hochtief's operational net profit for the period rose by 8% to 170 million euros. Nominal net profit of 262 million was 9% higher year on year. During the second quarter, cash flow from operating activities pre-factoring showed a strong performance, increasing by over 100 million euros year on year to 676 million. On a last 12 months basis, this cash flow metric stands at close €1.2 billion, up over €400 million compared with the previous period. Octif ended the period with a solid balance sheet showing net cash of €346 million and increased year-on-year of €381 million. New orders during the first half of 2023 rose strongly to over €18 billion, up 26%, and include several important high-tech infrastructure projects. At the end of June 2023, the group's order book stands at $53.6 billion, up by 8% year-on-year on an FX-adjusted basis. On slide 6, we can see the group's outstanding cash flow performance in more detail. As I indicated, the group achieved a strong cash flow performance during the second quarter of the year. The cash flow figures for the first six months incorporate the characteristic seasonal movement seen during the early part of the year. Looking at the last 12 months, to adjust for decisionality, underlying cash flow from operating activities stands at a high level of close to 1.2 billion, highlighting Cocteau's strong and sustained cash conversion. On slide 7, we can look at the positive net cash evolution. For the end of June, Cocteau has reported a net cash position of 346 million. This represents an increase year-on-year of 381 million euros. Looking at the quarterly movement, the period end figure shows a 736 million year increase compared with March, driven by the firm second quarter cash flow performance. I would also like to note that in June, the credit rating agency, S&P, reaffirmed its investment grade rating with a stable outlook. The next two slides show more detail on the development of the group's orders. Our new orders rose substantially. during the first half of the year to over 18 billion, an increase of 26% year-on-year, an equivalent to approximately 1.25 times work done in the period. The 9.5 billion euro of work won in the second quarter was 21% above Q2 2022. These significant increases are being driven by the strong growth we are achieving in the high-tech energy transition and data infrastructure sectors, A central pillar of our group's strategy, around 50% of our new orders in the first half of the year were secured in the structural growth markets we have identified. At the end of June, our order book stood at €53.6 billion, which on an FX-adjusted basis represents an 8% increase year-on-year. As a result of active de-risking approach to order intake, the vast majority of the new work secured during the January-June period was lower risk in nature. The consequence is that proportion of low-risk projects in our order book is now approaching 85% up from around 80% at the end of last year. From a geographic perspective, over half of our backlog, 55%, is located in North America, with a further 35% in the Asia-Pacific region and 10% in Europe. In the presentation, You can find more details on the solid performance in H1 2023 of our divisions, but let me just highlight. First, the positive margin development and order book momentum in Americas. Second, the strong revenue growth at Scenic. Third, a sharp increase in new orders at Europe. And fourth, solid traffic and tariff growth at Abertis. I wanted to take some time now to give you an update of our new strategy which we presented at the full year 2022 results presentation back in February. Our pursuit of opportunities in a rapidly expanding high-tech, energy transition, and digital infrastructure markets is accompanied, as I just underlined, by our continued focus on further the Riskin Order Book. In parallel, we continue enhancing our engineering, systems, and logistics know-how and remain focused on delivering on our ESG commitments. Furthermore, Our capital allocation decisions support the group's diversification and simplification goals, as well as our high-tech infra expertise. We're now entering a new phase of our strategy where we can begin to harness our investment expertise in these strategic sectors. Let me give you some examples of areas and projects we're working on. A reliable energy supply system that helps to manage renewable energy distribution is essential if net zero aspirations are to be realized. Battery energy storage systems, or BES as they are known, will play an increasingly important role in this. In June, Simic Sub-Serie UGL announced it had been contracted to build a 219 megawatt BES and associated energy infrastructure in Western Australia for NEOEN, a leading independent producer of renewable energy. This is the third project of this type we have been awarded so far this year. At the beginning of 2023, a group was contracted to install a Tesla-supplied base and associated high-voltage grid connection 250 kilometers west of Brisbane. And during the second quarter, we were also selected to install a 35-megawatt one-hour facility in Port Headland, Western Australia. As a leading designer and constructor of sustainable electricity generation and storage assets, UGL has already delivered 17 major renewable energy generation and storage projects. I wanted to briefly touch upon the topic of hydrogen, which has the potential to be another important contributor to the global transition to net zero. In Australia, for example, the government has stated an ambition to become the world leader in hydrogen by 2030, with potential related investments of up to 300 billion Australian dollars. CIMIC has been involved in four major front-end engineering design studies based on its engineering expertise, and we're currently constructing a hydrogen-ready power generation plant in the South Wales. This leaves the Hochtief Group in a strong position as hydrogen-related investments ramp up. Elsewhere, Hochtief continues to rapidly expand its presence in electric vehicle batteries manufacturing, a strategic market for the group. In the U.S., Turner's most recent major award was a project for Panasonic Energy's 4 billion USD EV battery production facility in Kansas. The plant is expected to begin production by the end of March 2025 and will eventually reach approximately 30 gigawatts of annual production capacity. The Turner Green Venture is also building a multi-billion electric vehicle battery plant for Honda and LG Energy in Ohio. Annual production capacity will be some 4 gigawatts hours by the end of 2025. Another area where HoCTIV is well placed is the digital infrastructure sector, where the rollout of high-tech infrastructure, including 5G, and its applicability in state-of-the-art facilities is rapidly expanding. So far, in 2023, Turner has been awarded projects to build four large-scale data centers worth in total over $500 million. Following several awards and completions of data center projects in the Asia-Pacific market, SIMC recently secured and our data center contract in Hong Kong for a major international developer. Overall, at the end of June, the group had over 4 billion euros in digital infrastructure projects in the order book. As we become a leader in these high-growth markets, capital allocation will play an increasingly important role in the strategic development of our company. We are now beginning to invest equity in these high-tech growth sectors, where we can apply the financing project management, and O&M capabilities we have built up over many years in our PPE business. In Germany, for example, OKTIV and an infrastructure partner will invest in decentralized and sustainable edge data centers. The demand for these sustainably built and operated data centers is very high, especially in Europe, and construction is carried out to the highest energy efficiency standards. They are the basic infrastructure for many new technologies and particularly suitable regionally-oriented companies that prefer computing power and data storage close to their headquarters and customers. Furthermore, as the importance of cloud computing continues to grow and artificial intelligence applications evolve, more and more companies want to convert their IT systems to this model to process and store data. Another example of how we're expanding our presence in the value chain of these high-growth industries is the Australian Glenrowan Solar Farm project. In the first half of 2023, CIMI commands construction of this solar farm in Northern Victoria, the development rights of which were acquired in 2022. The company will develop, invest in, and manage the solar farm with our services subsidiary UGL to undertake construction, operations, and maintenance. The 245-hectare solar farm will have an installed capacity of up to 130 megawatts and generate enough electricity to power approximately 45,000 Australian homes. This renewable energy project development is part of our strategy to establish a diversified portfolio of energy and utility assets within the Australian national electricity market. Let me move on to another strategic area, natural resources, which is playing a key role in driving energy transition globally and producing a significant increase in demand for lithium, nickel, copper, amongst others, as well as rare earth metals. Last year, we acquired Onyx, a company with strong project management and engineering expertise in this area. But to further develop our know-how, in July this year, CIMIC purchased a Canadian engineering and metallurgy company, NovaPro, which has strong know-how in lithium processing technology. Octiv gains additional access to opportunities in this expanding sector. As demand for batteries and electric vehicles increases, while enhancing the Group's North American presence and offering to clients. This bolt-on acquisition is consistent with the Group's strategy of expanding our presence in the value chain and high-tech infra, as well as with this strategy targeting a growing pipeline of metals and minerals opportunities. We also continue to be reactive in PEPs, a long-standing core area of expertise for the Group. In June, Octi won a major PEP building contract in Berlin, The group will refurbish and build new offices for the Institute for Federal Real Estate and subsequently operate and maintain them over a total 30-year period. Our objective is to help the client make the buildings more sustainable. As the retrofitting contracts cover the refurbishment and operation of the properties, we can optimize these buildings over their entire life cycle. As a result, we can reduce the carbon footprint as well as the operating cost of tenants and and in the process helped create around 2,400 jobs. Moctiv has also been awarded a PVP contract in Germany to build a new central location for the University of Applied Sciences for Police and Public Administration in the state of North Rhine-Westphalia. Moctiv will rent out the university campus and deliver operational services for an initial 20 years after the construction work of around 200 million euros is completed. Environmental, social, and governance, ESG, is a priority for management. In 2021, Octave made the commitment to be climate neutral by 2045. Our sustainability performance already puts us amongst the leading companies in our industry. Octave Subsea Returnal has been recognized for several years as the largest green builder in the United States. In Australia, we're one of the leading providers of sustainable infrastructure projects. Simic, for example, is a leader in mine rehabilitation with skilled teams of environmental and operational specialists. This has delivered award-winning rehabilitation programs globally for more than 30 years and is a trusted partner in sustainable mining operations with over 10,000 hectares of rehabilitation work executed since 2007. Meanwhile, back here in Germany, environmentally friendly projects in building and infrastructure account for the majority of our new projects. Our strategy and the high-tech markets we're focused on are helping our clients achieve their ESG goals. So to wrap up, Octiv has delivered solid figures for the first half of the year. A strong future cost of performance, positive operating margin momentum, further substantial progress in the risking or order backlog, and a significant increase in new orders, particularly in the high-tech sectors we're focused on and where we are starting to selectively invest equity. Furthermore, we continue to advance with our ESG commitments. Finally, we can confirm our guidance for 2023 for an operational net profit in the range of 510 to 550 million euros. Now, thank you very much, everyone, for listening, and I welcome your questions.

And we have the first question from Louis Prieto from Cap-Lageu-Vreux. Please go ahead.