Hochtief Ag

Good afternoon, everyone, and thanks for joining this HawkTeeth full year results call for 2025. I'm Mike Pinckney, head of capital market strategy, and I'm here with our CEO, Juan Santamaria, and our CFO, Chris Jandreski, as well as the head of IR, Tobias Loskamp, and other colleagues from the senior management team of HawkTeeth. We're looking forward to your questions, but to start with, our CEO is going to run us through the details of another very strong set of numbers and provide you with an update on the group strategy. Juan, all yours. Thank you, Mike and team.

Welcome to everyone joining us for this results call. I'm delighted to present to you HoCTIV's Resolve for 2025, a year in which we achieved an outstanding operational and financial performance, as well as major advances in our strategic delivery. Let's kick off with the numbers, and then I'll give you an update on the important progress we're making with our growth strategy. Octave's operational net profit increased by 26% to $789 million, which rises to 35% on an FX-adjusted basis. This result significantly exceeds the guidance we provided to the market 12 months ago of $680 to $730, and is even slightly above the updated 2025 target we indicated in November of $750 to $780. Nominal net profit is also higher at $902 million, up 16% year-on-year. The excellent profit trend was driven by strong sales growth of 15% to over $38 billion, 21% adjusting for FX, as well as higher margins. The quality of Hoctave's profit delivery is underlined by the strong cash conversion achieved. Operating cash flow in 2025 of €2.1 billion was €248 million higher year-on-year prefactory, supported by strong working capital performance. As a result, the group ended the year with a slight reduction in net debt despite significant net strategic money investments and dividends. If we adjust for capital allocation effects, we would have finished the year with a net cash position of over €1 billion. The further highlight of 2025 was the acceleration in the growth of our project wins. New orders were sharply higher at 52.6 billion euros, up 32% effects adjusted year-on-year, with a strong fourth quarter momentum and key wins across our strategic growth verticals. New work secured during the year represents a book-to-bill ratio of 1.3 times and highlights Octave's positive growth trajectory. As a result, we ended last year with our order backlog at an all-time high of $72.5 billion, up 18% on a comparable basis, and providing a strong and diversified foundation for continued growth. Furthermore, we continue advancing in our de-risking drive with around 90% of our project portfolio of a lower risk nature. Reflecting of TIFF's very strong performance and taking into account the solid growth prospects we envisage for 2026 and beyond, the proposed dividend for last year is €6.6 per share. This represents a 26% increase year-on-year consistent with the group's operational net profit growth and is in line with our 65% dividend payout policy. The group's operational net profit guidance for 2026 of €950 to €1,025,000,000 envisages another year of strong growth of HOPIF and corresponds to an increase of 20% to 30% year-on-year. Let's take a quick look at our performance at the second level. Turner delivered a standout performance in 2025. Sales increased by 34% year-on-year to $25.8 billion, or 40% if it's adjusted, driven by the very strong growth in our data center business. The acquisition of Doran Engineering, the rapidly growing advanced tech, mechanical, and electrical business, further enhanced growth. In other areas, such as healthcare, education, sports, and airports, we're also strong with solid double-digit revenue growth. Turner delivered a very strong operational PBT, reaching $921 million, an increase of 62%, and ABAP, the top end of the recently raised guidance of $850 to $900 million. And I think it is worth underlining that the original indication we provided to you a year ago of up to 750 million euros was exceeded by a striking 23%. This profit growth was supported by a further increase in the operational PBT margin 60 basis points year-on-year to 3.6%, meaning that we have already surpassed the 3.5% target we had for 2026, a year ahead of schedule. And Turner's outlook remains extremely positive. New orders rose a very significant 38% to 33.6 billion, with particularly strong growth in data center contracts, which more than doubled, as well as increases in areas such as biopharma, aviation, and commercial. As a result, the record year-end order backlog of 37.7 billion was up 34% in USD terms. Due to Turner's sustained growth, Trajectory, we expect an operational PVT increase of 25% to 30% to between 1.3 and 1.35 billion US dollars in 2026. Moving on, Simic delivered steady performance in 2025. On a comparable basis, sales were stable year-on-year with solid increases in the key growth verticals offsetting the completion of large transport projects. I would highlight that data center revenues almost doubled year-on-year. Operational PVT of 473 million was up 5% with a solid margin in line with 2024 and supported by improved operating gas flow development prefactory. CEMIC solid order backlog of 21.8 billion euros was up by 6% year-on-year adjusted for the UAGL transport state divestment and FX. Over half of the year-end work in hand relates to high-growth areas, including digital and advanced tech, defense, and further diversification of the group's commodity mix. We expect CIMIC to achieve an operational profit before tax for 2016 in the range of approximately 780 to 803 million, a 4 to 8, 10% comparable rise, adjusting for the UGL transport sale. Next, we have our engineering construction segment, which is on a very solid growth path. Sales of 1.7 billion euros increased by 9% year-on-year, and operational PBG grew by 28% to 98 million, both on a comparable basis, and just ahead of our 85-95 million profit guidance range. The business delivers strong cash conversion with net operating cash flow of 156 million in the period. During the year, engineering construction secured new orders of over 6 billion, up a very notable 38%. As a consequence of this strong development, the 13 billion euros order backlog is 18% higher on an FX-adjusted basis. For 2026, we see our engineering construction segment accelerating its growth with an operational profit before tax of between $125 and $140 million, which implies an increase of up to 42% year-on-year. Let's take a brief look now at Abertis, which achieved a solid operational performance in 2025. Average daily traffic at the toll road company increased by 2% year-on-year, with revenues and EBITDA on a comparable basis up 4% and 6%, respectively, reflecting a solid underlying business performance. The operational net profit pre-BPA amounted to just over 700 million with a year-on-year variation, including adverse tax effects in France. The profit contribution from our 20% staking opportunities after BPA amounted to 58 million, and we expect opportunities to deliver a similar operational contribution in 2026. Now, Allow me to update you on the group's strategic delivery and long-term growth opportunities. Active Strategy has positioned the group as a uniquely well-placed global provider of engineering-led end-to-end infrastructure solutions. During the last 30 years, we have advanced to become a leader in rapidly expanding strategic growth verticals, including the AI, digital, and tech sector, energy, including nuclear, critical minerals, and defense, where infrastructure investments continue to accelerate. This momentum builds on a long-established locally embedded presence in core infrastructure markets in North America, Australia, and Europe, which remains a foundation for competitive strength and our ability to scale into these next-generation markets as a lifecycle partner. We command a strong competitive position in the AI, digital, and tech sector, and we have solidified our global leadership in data center engineering and construction with 16.8 billion euros of new orders in 2025, representing 21% of the group's total backlog. Just last week, Turner was selected as a construction manager for the $10 billion one-gigawatt data center campus for Meta in Indiana. And we have solid medium-term visibility via our order book and our expanding private pipeline in North America, Europe, and Asia. Growth in the global data center market remains extremely strong. Soaring demand for cloud service and artificial intelligence is expected to quadruple dramatically. DNC and Compute CapEx by 2035, boosted by the growth of generative AI in further cloud migration. The group has the capacity and capabilities as a firmly established global end-to-end solution provider to address rising demand supported by its ability to attract talent and by, number one, leveraging our scaling relationships with hyperscalers and subcontractors, two, applying our global sourcing expertise, and three, by our increasing adoption of modularization and off-site manufacturing to deliver projects faster, safer, and with higher quality. As part of this strategy to expand the group's presence in the entire AI ecosystem, Hoqtiv is developing a pan-European network of sustainable edge data centers. A few months ago, we inaugurated our first edge data center developed, owned, and operated by Hoqtiv, a major milestone for the group's data center strategy. Three further data center sites will go live by the end of 27. Our ambition is to have over 30% of them in Europe by the end of the decade. Octave will operate this edge data center network with innovative cloud competing solutions that offer digital sovereignty and enormous growth potential. Overall, we're increasing our participation across the full AI stack, including not just data centers, but also semiconductors, cloud infrastructure services and applications, as well as moving into longer term opportunities in areas such as agents and robotics. Energy is now a strategic growth market for Hoctiv. Rising investment in energy security and the global transition to low-carbon systems underpin sustained demand for energy projects. Hoctiv is deeply engaged in these segments, delivering projects spanning electricity generation, grid-scale storage, high-voltage transmission, and regional grid fortification. We have several decades of experience designing and building nuclear power plants and facilities across the world, delivering end-to-end services in an industry which could see over 500 billion euros in investment in Europe by 2050. In the final quarter of 25, we secured a 685 million 50-year framework contract in the UK for civil infrastructure work at the Sellafield nuclear site. At the beginning of 26, An important strategic milestone was reached when Hoctoo was selected as part of Amentum's Global Pride Delivery Team for the Rolls-Royce SMR nuclear program. In renewables, we continue to strengthen our market presence, particularly in Australia, where companies have delivered more than 20 major renewable and storage projects. We're also capitalizing on the accelerating requirement for critical minerals, driven by clean energy technologies, digital infrastructure, and defense modernization. ACTIV, through the combined capabilities of Setsman and TIS, has built a global position in minerals, processing, and sustainable mining services with projects across key commodities including lithium, copper, rare earth, nickel, vanadium, uranium, and zinc. In December, the group expanded its partnership with Vulcan Energy with a significant cornerstone equity investment, as well as securing an end-to-end role in developing its lithium production and processing infrastructure here in Germany. As part of the agreement, the group has been appointed as the Engineering, Procurement and Construction Management Contractor and named as preferred supplier for the project's civil construction works. We have also won a contract to provide a feasibility study in front-end engineering design work for a major lithium project in France. Defense is an archi-growth vertical for the group, with investment in related infrastructure expected to substantially increase globally for several years. In Europe, major multi-year defense investment plans, including in Germany, present substantial opportunities in defense-related capital works and potentially via the PAP model. And in the U.S. and Australia, governments plan major ramp-ups in defense spending over the next decade. At the end of 2025, the group had a defense order book of over 2 billion euros, which included the construction of a major dry dock at Pearl Harbor for the U.S. Navy, work for the Royal Australian Air Force Base in Queensland, and defense infrastructure created in South Australia. Furthermore, a North American civil works business, Flatiron, has been selected as one of the group of companies for a potential 15 billion U.S. dollars worth of contract opportunities for the U.S. Air Force Civil Engineering Center. And yesterday, we announced that Hochtief has secured a major 10-year collaborative contract for the German Armed Forces in Hamburg worth several hundred million euros. Our core infrastructure capabilities are key for the group's ability to fully harness the growth opportunities we have identified. On average, around 85% of infrastructure investment in our growth verticals relates to our core construction know-how. As you know, we're holding in positions across several core segments, including healthcare, biopharma, and sports stadiums and education. And we have been a global leader in transport infrastructure and sustainable mobility for several decades, where the outlook is very positive due to several infrastructure stimulus packages in our key geographies, North America, Asia-Pacific, and Europe. In Germany, for example, the 500 billion infrastructure fund will see its first full year of deployment in 2026. Cocteau is very well positioned to benefit due to the scalability of its business model and its core expertise in bridges, rail, and transmission lines, with the group's German order book doubling over the last three years to over $5 billion. Let me take a moment now to outline our dynamic and disciplined capital allocation approach, which is a key objective for management. 2025 was a very active year for Stratige Manage. In January, we closed the $400 million acquisition of Dornan, a major milestone in Turner's European expansion strategy, and we also finalized the Flatiron-Rogados combination, creating the second largest civil engineering construction plant in North America. During the year, we strengthened our position in high-quality concessions through an 80 million euro participation in Abertis, 400 million capital raised to support its acquisition of the A63 toll road in France, extending its portfolio duration and enhancing our exposure to stable infrastructure assets. As part of the expanded agreement mentioned earlier with Volcan Energy, Octiva agreed in December 2021 to a €130 million cornerstone investment in Vulcan shares to become its largest shareholder. The move is aligned with Hoctee's strategy to expand across critical minerals and in a transition value chain, building an integrated presence in investment, extraction, processing, and infrastructure. And CIMIC announced the formation of a strategic partnership with Sojiets Corporation, under which the Japanese company will acquire a 50% equity interest in UGL's transport business. Our capital deployment remains focused on scalable high-return equity investment opportunities to increase our presence in the value chain for strategic growth markets and PPs. Group-wide cooperation and synergies are critical to delivering on this strategy. Over the last three years, we have committed 600 million euros of equity investment in strategic growth markets, including initial investment in our Edge data center platform based in Germany, as well as the acquisition of the remaining 50% of cloud services provider to Ryzen. Internally, we're optimizing our core tech platform and systems, as well as supporting our talent management, AI, and digital systems, transforming how we work and enabling the group to deliver innovative, efficient, and smarter solutions for clients. Our shared expertise, talent, mobility, as a collaborative culture, enable Hoctave to operate as one unified global organization, strengthening the quality, consistency, and impact of its work. Talent management is critical to create the teams which drive the business forward, and we're proud to have had a 2025 intake of 4,500 engineers and technical employees. Moving to ESG, our focus on environmental, social, and governance initiatives remains on track. On this front, it is notable that HoCTIV has been upgraded to premise status during the 2025 for its ESG performance and achievements by ISS DSG Rating Agency. So, let me conclude with a few closing remarks. As FADIG's agenda is focused on positioning HoCTIV for sustained high-quality growth while reinforcing resilience and long-term value for the group, our key priorities are First, driving top-line growth by expanding our value proposition and capturing megatrend demand. Two, expanding margins through the delivery of higher value services, engineering capabilities, supply chains, and integrated systems. Advancing operational integration by simplifying corporate structure and transitioning into a more high-tech-enabled, efficient organization with a lower cost base. enhancing cash flow stability and sustainability through furthering the risk in the group's business model, generating long-term value creation and sustainable dividend growth that drives the whole remuneration. Octif has entered 2026 with a strong financial foundation and with a unique position as a global end-to-end provider of infrastructure solutions across our high-growth verticals supported by our leadership position in core markets. The group's operational net profit guidance for 2026 of $950 million to 1,025,000 euros targets in our year of accelerating growth, implying an increase of 20% to 30% year-on-year. Based on our guidance, in 2026, we will have double HoCTIV's profit in the space of just four years. Looking forward, HoCTIV is embracing the future by developing its strategic presence in its growth markets. Our strong and expanding presence in these interconnected sectors It's a key competitive advantage and underpins our long-term growth strategy. Combined with our strong balance sheet and backed by disciplined cash management, we have created the necessary conditions to pursue further significant growth opportunities and continue delivering substantial value for all stakeholders. Thank you for listening and ready now to take your questions.