Hochtief Ag

Good afternoon to everyone, and thanks for joining us for this Hawke-Teef results call for the first nine months of 24. I'm Mike Pinckney, head of capital market strategy, and I'm here with our CEO, Juan Santamaria, and our CFO, Peter Sassenfeld, as well as our head of IR, Tobias Loskamp, and other colleagues from the senior management team at Hawke-Teef. We look forward to taking your questions later, but to kick off, our CEO is going to run us through the details of this strong set of numbers and provide you with an update on the group strategy. Juan, all yours. Thank you, Mike and team.

Good afternoon to everyone and thanks for joining us. ECOCTIV has delivered a solid performance during the first nine months of 2024, marked by a firm increase in profits sales, and net operating cash flow. This growth is supported by the continued strong expansion of our order book, driven by a further significant rise in the orders, particularly in our strategic growth markets. Furthermore, the group has made important progress in its strategic development with several important transactions. Let's run through the key financial highlights of the first nine months. Group sales of 23.6 billion euros, so a 7% increase year-on-year. Octaves operational net profit rose by 12% to 450 million euros, or 18% on a comparable basis. The nominal net profit of 579 million, up 61% year-on-year, was driven mainly by the strong operational profit growth and a 147 million one-off non-cash gain net of provisions in the second quarter. In terms of cash generation, and looking at the last 12 months, operating cash flow stands at a high level of around 1.8 billion euros. HoCTIF ended September with a net debt position driven by strategic capital allocation decisions taken during the period, as well as seasonality effects year-to-date. This strong growth trend in project wins has continued with new orders up 15% year-on-year to 32.1 billion euros. On the cash flow front, it's worth noting the following. The last 12 months performance with operating cash flow of 1.8 billion implies an increase of over 430 million euros in year and underlines the strong cash generation the group is delivering. If we consider just the nine months of 2024, octave cash flow shows a 64 million euro year-on-year improvement after next capex and leases. On the next slide, we can see the movement in net cash debt. COCTIV ended the period with a net debt position of 1.66 billion euros, driven by these strategic investment decisions taken through foreign countries for end seasonality. The year-on-year variation, which we show in the chart, is affected by several factors. The full consolidation of this, following the acquisition of an additional 10% stake, the Abertis capital increase, where Hoctiv subscribed €260 million for its 20% share, bought on M&A, FX effects of over €200 million, and the Hoctiv dividend of €331 million, which we distributed in July. Adjusting for these impacts, net cash would now stand at €790 million, And this would imply a year-on-year increase of almost 860 million euros. Let's take a closer look at new orders, where the group's order backlog ended September 2024 at a record level of 66 billion euros. This represents an increase of 18% year-on-year or 10% on a comparable basis, adjusting for the consolidation impact of this. This strong growth in our order book reflects the group's success in securing a significant increase in new orders, up 15% year-on-year, particularly of advanced tech, energy transition, and sustainable infrastructure projects. The strategic growth markets accounted for around 50% of the new work won during the period and continue to offer very substantial revenue growth opportunities going forward. Turning to the performance on a segment level, Let me mention some of the key highlights. On sales of 13.6 billion euros, up 14%, Turner achieved an operational PVT of 393 million euros for the first nine months of the year. This level of profits represents a very impressive increase of almost 40% year-on-year, or over 110 million euros in absolute terms. Turner. has increased its operational PVT margin by 50 basis points to 2.9% in the period, compared with 2.4% in the first nine months of 2023. And during the both second and third quarters, Turner has delivered a 3% margin. Margin expansion is being driven by Turner's successful strategy on advanced technology project opportunities and source blue supply chain service solutions. The company achieved very strong and sustained growth. New orders at 32% to 19.3 billion euros and a new record backlog of over 30 billion. At CIMIC, operational PVT of 312 million was up 4% on a comparable basis year-on-year. Operational net profit increased by 10% to 187 million euros, whilst nominal net profit reached 335. million euros, which includes a second quarter one-off cash gain of 147 million net off provisions. And CIMIC delivered a robust order backlog progression with 6% growth year-on-year to 24.6 billion euros. At our engineering and construction segment, sales increased by 12% year-on-year to 2.75 billion. Operational PVT was stable at 61 million euros with some project mix effects at the margin level. The ANC order backlog of almost 11.1 billion was up slightly during the year with new orders of 3.2 billion solid at over 1.1 times work time. During nine months 2023, two major European project wins totaling over 1 billion were secured. And looking at Abertis, average daily traffic was up 1% during the first nine months with operating revenues rising 9% and EBITDA up 10% supported by solid tariff increases. Operational net profit pre-BPA amounted to 605 million euros at a similar level to last year. The nominal net profit figure incorporates the impact of the early termination of the Texas toll road. So let me move on and give you an update on the strategic front. Infrastructure sector investment is undergoing unprecedented and multi-year transformation, driven what I like to term the four Ds, digitalization, demographics, decarbonization, and legalization. Octive has positioned itself as a leading infrastructure and services provider to meet the rising demand that is being driven by these megatrends. We're achieving This, not just as a developer, but also as an equity investor and operator. And this is consistent with our overall group objective to deliver an attractive level of shareholder remuneration and create long-term value by first, generating cashback profits whilst maintaining a low risk profile. Second, further expanding our presence in the strategic growth markets. And third, also by investing equity in greenfield infrastructure projects accompanied by selective MF. We're delivering on our strategy and are well positioned for current and future opportunities. For example, Octif has carried out several significant M&A transactions during the first nine months of 2024, which support our strategy growth ambitions and further consolidate our strong competitive positions in specific market segments. During the third quarter, Turner has received the approval from the European Commission for the approximately 400 million euros for a tech acquisition we announced in July of Doran Engineering. This rapidly growing European advanced tech engineering business headquartered in Ireland is a leading mechanical and electrical engineering company in Europe and has a 1.1 billion euro order book with strong presence in the UK, Ireland, Germany, Netherlands, Denmark, and Switzerland, amongst others. Dornan is expected to achieve revenues of around 700 million euros in 2024 and EBITDA of around 55 million. The transaction is expected to close in January 2025. Together with Dornan and using the group's existing local capabilities, Dornan intends to offer full turnkey solutions to clients in Europe, applying its low-risk construction management business model to rapidly expanding advanced technology market where it has identified a potential project pipeline of over 20 billion euros. In July, Hochtief and its main shareholder, ACS, agreed to integrate their North American businesses, Flatire and Trocados, to create the second largest civil engineering and construction player in the region. The new company will have unparalleled civil infrastructure experience, credentials, geographical reach, and technical capabilities for large infrastructure projects, and the combined resources will support further growth in an expanding North American civil market. The transaction will provide meaningful annual synergies of 30 to 40 million U.S. dollars focused on procurement, shared services, and a centralization of a wide range of corporate functions. This value accretive proposition will result in Hoekty holding a 38.2% equity consolidated stake in the new business. Let me continue by providing you with an overview from a sector perspective. One of the fastest growing areas globally is the data center market, fueled by the rapid expansion in cloud computing and the exponential growth of AI. In the U.S., this market continues its unprecedented growth, from $82 billion in 2023 to a forecast of $128 billion in 2019. The European market is on track to rapidly expanding or increasing its size by over 40% to 55 billion by 2029. And Asia-Pacific is expected to be the fastest growing data center market in the next five years with a strong demand in highly populated countries which have low penetration rates. We have identified a pipeline of projects worth 120 billion U.S. dollars in the Central Asia and Southeast Asia region alone. Octave directly and through our companies has achieved a strong position globally. Turner continues to grow its strong position in North American market with new data centers orders of 5.3 billion U.S. dollars booked during the first nine months of the year versus 2 billion U.S. dollars in the first nine months of 23. The company's period and data center backlog has almost doubled year-on-year to 6.7 billion US dollars. And earlier this week, it announced it had been selected for a 2 billion data center expansion project in Ohio, which will provide a secure and reliable infrastructure for cloud technologies and AI. Euro Turner is assessing an addressable pipeline of advanced tech projects worth over 20 billion euros. big part of it in data centers, which complements this fatigue acquisition of Dornan and lays the foundation for the company's expansion in the European market. Octave, by Asimic, it's also well positioned in the Asia-Pacific digital infrastructure market. During the third quarter, the company was awarded data center contracts in Malaysia, India, and Melbourne, and has completed or is delivering work in Hong Kong, Indonesia, Macau, and the Philippines. In the first nine months of 24, we have taken significant steps to deploy equity in the data center market. In the Asia-Pac region, CIMIC is adapting an integrated and coordinated approach to data centers, aligned with the group's approach. Pacific Partnerships is leading the data center development strategy in the region, which is focused on achieving attractive returns by harnessing group companies' experience and expertise. And in Europe, Hochtief PVPs announced in September an agreement to establish the sustainable cloud provider business, Jorison, with a leading German server and storage systems manufacturer. The company plans to build a cloud computing infrastructure based on a network of sustainable, locally integrated data centers in Europe. The first of the JECSHA series data centers with Jorison equipment will open near Essen, Germany, in summer 2025. The land for two more of these data centers has already been secured, and more sites will be acquired by the end of the year, with further locations planned for 2025. The group is also advancing in the semiconductor space, where strong demand for AI chips is boosting investment levels, and global sector sales are expected to exceed $600 billion in 2024, rising towards $700 billion in 2025. Together, the reshoring trend, this is driving a rapid increase in semiconductor-related construction work. This is a strategic growth market for HoCTIF, where we see important opportunities and are actively analyzing a very sizable pipeline of potential projects. All of these are confidential in nature, but let me provide some color and mention three recent project awards. In the U.S., Turner was last month awarded a significant construction contract for the expansion of an assembly and test facility for cheap lithography machines. In Malaysia, we're working with Turner on an important semiconductor fab project. And in Europe, we're also active in this sector with Hoek Tief, winning an important contract for a semiconductor-related construction facility in Germany using clean room technologies. COCTIV is also supporting a build-out of infrastructure for the global energy transition. For example, Australia's green energy transition continues to provide the group with enormous opportunities. Federal government targets include reducing emissions by 43% by 2030 and achieving net zero by 2050, requiring a massive investment in renewable energy generation capacity by more than nine times what exists today. UGL is playing a central role in the delivery of the country's environmental ambitions through the construction and connection of renewable energy assets, as well as via design, construction, and connection of the high-voltage electricity infrastructure to connect those renewable assets to the national grid. During the third quarter, the company was selected to the project or the phase two of the 270-megawatt Western Downs battery in Queensland for NEON. In Queensland, the Copper String 2032 project to deliver 840 kilometres of new high-voltage transmission lines in the state is advancing and broke ground in July 24. Copper String is the most significant investment in economic infrastructure in northern Queensland in generations, worth potentially several billions, and will unlock affordable renewable energy for the region and support thousands of jobs. And on the equity investment front, our infrastructure development company, Pacific, acquired the development right for the 700-megawatt Kabura solar farm and associated the large-scale battery energy storage system in New South Wales, which will be one of the largest solar farms in Australia. Pacific will develop, invest equity in, deliver, and operate the solar farm and base, on a 3,000-hectare site with UGL carrying out the initial works, developing the project solution, and providing operation maintenance services upon completion. CUCTIV continues to deliver important social infrastructure projects around the globe. In healthcare, a semi-group company joint venture has been selected by the Hong Kong Hospital Authority to undertake the 4.3 billion North District Hospital Expansion Project, This project, which will generate revenue of up to 2.4 billion Aussie for light and Asia, will elevate the health infrastructure in the North District of Hong Kong and provide around 1,500 additional hospital beds. New orders in the healthcare sector have increased by 70% at Turner in the first nine months of 2024. Recently, for example, a Turner joint venture celebrated the groundbreaking of the 2.2 billion US dollars Henry Ford Hospital Expansion Project. the single largest healthcare investment in Detroit history. A new 1.2 million square foot hospital facility will feature a 20-floor patient tower and an expanded emergency department. In airport infrastructure, which is a sector that we're seeing strong growth in our key markets, in Australia, for example, CIMI continues to do work for the Western Tenure Airport. In October, the company was awarded its fourth construction package for this landmark project, which includes warehousing, aircraft approach, and taxiways to connect the main runways and the city infrastructure. The facility is designed to be scalable and will further expand it and demand increases in the future. And the North American market sector estimates suggesting potential capital needs of over $150 billion over the next five years. New orders year-to-date in this market Turner are three times the level of the corresponding 2023 period. For instance, in San Francisco, a Turner joint venture has announced the groundbreaking of the Terminal 3 West Modernization Project at the San Francisco International Airport. Turner will lead a $2.6 billion transformation of the terminal, which will result in a modern world-class facility. When it comes to sports stadiums, Turner maintains a leading position. During Q3, the company celebrated the opening of the $2 billion Intuit Dome in LA, along with its JD partner AECOM Hunt and the Los Angeles Clippers. The 17,700-seat arena features five basketball courts, including the NBA Clippers Home Court, the Training Center, and Outdoor Plaza for Gathering. Rooftop solar panels and battery storage will help to operate carbon-free. Hochtief has been a leader in the civil works and building sector for several decades. Let me mention a couple of recent project wins. CIMIC has been selected by both the federal and local South Australian governments to deliver the Tram Grid Separation Project in Adelaide. The project is designed to improve safety, efficiency, and the reliability of transport, and is also made at boosting connectivity and convenience for them in the region. In Austria, a Hochtief consortium won a €50 million railway project in Austria to extend a €3.6 million section of an important regional transport connection. And in California, Flatiron has secured the Heritage Road Bridge project to replace a river bridge crossing and deliver road widening improvements worth around 50 million US. During the period, the group also advanced in its more traditional VPs with 100 million Aussie equity invested by Pacific in its existing assets. These include the Cross River Rail project, where in September the first train used one of the newly built twin tunnels to arrive at the new underground stations. An important milestone as the project moves into its final testing and commissioning phase. And the group has also recorded other important PAP project awards during the period, including during the third quarter. In Europe, the DATS A15 highway project, where a Hochtief consortium was preferred, has got their go-ahead from local authorities. The PEP project, with a total investment of over €1 billion, is intended to reduce traffic congestion and will improve the transport links between Rotterdam and Germany. In the UK, Hochtief PEPs was awarded a Q3 2024 multi-million euro PEP contract to design, build, finance, and operate a new student village for Staffordshire University, as well as a transport infrastructure operation maintenance contract for a 12-year period in Scotland worth at least 190 million euros. Critical metals are central to the carbonization megatrend, and Hoctiv is developing its strategic position to offer attractive value propositions to clients. In July, Our natural resources company was awarded a $205 million Canadian three-year full-service mining contract in Ontario, Canada. The site was last mined in 2017 and is ramping back up in response to the world's increasing demand for critical minerals needed to transition to zero emissions. The work will help Canada's nickel and copper industry to provide metals that are vital to North America's transition to clean energy. And during the second quarter, this completed acquisition of underground metal business, Piper, one of the largest underground hard rock mining contractors in Australia, with a strong position in critical minerals and metals, including copper, gold, and nickel. Another key element to support the global energy transition is lithium. We're currently assessing a number of potential lithium investments opportunities with feasibility studies being carried out for some European projects. So far this year, we have been awarded a number of contracts, including a hard rock lithium contract in Portugal and a similar project in Brazil. And in Canada, we helped complete the pre-feasibility studies at the Clearwater Lithium Project in Alberta. Furthermore, we have been engaged in a validation early work space as the EPCM for a lithium extraction plant in Germany. Let me briefly update you on Abertis, which continues to deliver on its growth strategy of investing in assets to extend its portfolio duration. Via its subsidiary Valles Chile, the company won in August an international tender launched by the Chile's Ministry of Public Works for the Rutacincos and the Olos Vilos motorway. the 223-kilometer-long infrastructure links the capital, Santiago, with the coast, connecting two sporadic regions that account for more than half of the country's GDP. The concession has a maximum duration of 30 years and does not require an upfront payment. Abertis has committed to investments of around 1 billion euros within the next seven years to expand infrastructure's capacity and provide innovative technological services to users. In September, A purchase of Sierra Autopista Central was commissioned for a €370 million investment to expand the capacity of a toll road to the north of the capital, Sandel, which will be compensated for by a 25-month extension to the Autopista Central concession contract. As you know, ESG remains a long-standing priority for the group. Cocteau has been listed in Dow Jones Sustainability Index for 18 consecutive years. And last year, MSCI upgraded its ESG rating for the Cocteau to AAA from AA, making it the highest rated among its peers with an improved safety performance, seated as one of the drivers of the upgrade. So let me briefly summarize. The nine-month results show a solid performance with 12% growth in operational net profit and increasing net operating revenues. We're achieving strong orderable growth of 18% in the last 12 months, with particularly significant increases in areas including data centers and healthcare projects. And we're also advancing in the strategic shift to invest equity in our strategic growth market. We're delivering on our strategy at a local, regional, and group level. Looking forward, we anticipate a good final quarter of the year with a strong cash generation And our current expectation is to end up towards the top end of 24 guidance of operational net profit of 660 to 610 million euros. So thank you now, and let's move on to the Q&A.

Operator, we're ready for questions, please.