Hochtief Ag

Ladies and gentlemen, welcome to the Oath Keep Publication Half-Year Report January-June 2026 Analyst and Investors Conference Call. I'm Lorenzo, the Callers Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mike Pinkney. Please go ahead, sir.

Thanks, operator. Good afternoon, everyone, and thank you for joining this HawkTeeth half-year 2026 results call. I'm Mike Pinkney, head of capital market strategy, and I'm here with our CEO, Juan Santamaria, and our CFO, Christa Andresky. as well as our head of IR Tobias Loskamp and other colleagues from the senior management team at Hawke Tief. We're looking forward as always to taking your questions but to start off with our CEO is going to run us through the details of another set of very strong results from Hawke Tief, the guidance increase that we've announced earlier today and the group's strategic progress. Juan all yours.

Thank you, Mike and team, and welcome to everyone joining us for this results call. Hochtief has delivered a very strong result in the first half of 2026 with significant increases in revenues, profits, and orders whilst making further positive progress in our growth strategy. As a consequence of the acceleration in growth and the group's enhanced prospects earlier today, we raised Hochtief's operational net profit guidance for 2026 to 1,025 million, from 1,025 million to 1,100 million, versus the previous 950 to 1,025 million, targeting an increase of around 30% to 40% year-on-year, versus the 20% to 30% before. Focusing on the first six months, octave sales rose by 13% if it's adjusted year-on-year, to 20.1 billion euros, driven very strong operational performance and the continuing successful strategic delivery. Supported by expanding margins, operational net profit was 35% higher at 480 million, up 41% on an FX-adjusted basis. Equality of Hochtis profit delivery is underlined by the strong cash conversion achieved. First half operating cash flow showed A year-on-year improvement of 280 million or 297 million prefactoring. Over the last 12 months, operating gas prefactoring stands at 2.4 billion euros, which is equivalent to a 396 million year-on-year increase. And I wanted to underline that we finished June with a net gas position of 72 million euros. A further highlight of our first half numbers is the significant increase in orders. New orders of 31.5 billion continued to increase substantially, up 25% as I suggested, year on year, with significant wins across our strategic growth verticals. These lifted Our order backlogged to another record high of almost 85 billion, up 23% year-on-year, providing a strong and diversified foundation for further growth. Let's take a brief look at our performance on the segment level. Turner delivered another impressive set of results. First house sales of 14.1 billion euros were 23% higher FX adjusted, driven Thank you. This substantial increase in profitability was driven by a more than doubling of data center work as well as the margin enhancement resulting from Turner's end-to-end strategy including expanded supply chain and modularization services and increased self-perform capabilities which includes MEC and ALEC. Operational net profit jumped 50% to 400 million euros underpinned by a continued high level of cash conversion with operating cash flow of 416 million euros plus 41 million year-on-year. and this is pre-factoring in the six months period. New order momentum remained very strong, up 39% effects adjusted to almost 21 billion, including $1 billion of semiconductor work, driving a record order backlog up 39% year-on-year to 46.1 billion euros. Following this outstanding set of numbers, we're increasing our 2026 guidance for Turner to an operational profit before tax and others. Next, we have Simic, who delivered steady performance with solid margins and improving cash flow metrics. Furthermore, on July the 1st, the company acquired the remaining 40% interest in TEAS, returning The global mining business to full ownership. First half sales of 5.2 billion euros were up slightly year-on-year on a comparable basis, adjusting for the sale of 50% of UGL transport. And revenue saw rising contributions from strategic growth markets, particularly data centers, which were around 40% higher, offsetting the winding down of large transport infra projects. Operational PVT, of 236 million euros rose 8% year-on-year on a comparable basis. A net operating cash flow pre-factoring shows an 82 million euros improvement year-on-year. Net debt was reduced by 1.2 billion euros, including a capital increase for the T's minority buyout and the investments of the UGL transport stake and a DC project. New orders for the period came in at 6.4 billion euros. with a book-to-bill ratio of 1.5 times and CIMIC ended the period with a solid order backlog of 23.7 billion euros, up 12% year-on-year comparable. Our CIMIC 2026 expectations are unchanged at an operational profit before tax of 2026 in the range of approximately 780 to 830 million, a 4 to 10% comparable rise. Next, our engineering construction business, which is in a very solid growth path. Although sales of 800 million euros were stable year-on-year, reflecting short-term project timing effects in our European business, the segment delivered very strong growth in operational PVT of 37% year-on-year to 55 million euros. Engineering construction also saw a strong last 12 months cash conversion, with net operating cash flow of 140 million supporting further investment in our edge data center network and PVPs. New orders of 4.0 billion euros were driven by the European business up 78% year-on-year. Overall, new work secure represent 1.5 times work done last 12 months with a year-on-year variation reflecting the exceptional level of project wins in early 2025. The total Order backlog increased to 14.9 billion euros up 17% year-on-year, highlighting the solid growth momentum of the business. For 2026, we continue to see strong performance at our engineering construction segment with operational profit before tax guidance of between 125 and 140 million euros, which implies an increase of up to 42% year-on-year and we're very confident that the business will deliver further strong growth in 2027 and beyond. Let's take a brief look now at Abertis which achieved a solid operational performance. Average daily traffic increased by 1% year-on-year while tariffs were 3% higher leading to sales growth of 5% and an EBITDA rise of 6%. Net profit pre-PPA amounted to 369 million euros and Abertis' operational and nominal restart contribution for a 20% stake worth 35 million euros, similar to last year. During the period, Abertis announced acquisition of the remaining 48.8% it did not already own in France motorway A63, which has a 25-year remaining concession life. Furthermore, Abertis extended its largest concession in Mexico, RCO, the country's main industrial corridor, until 2067. These moves further enhance Avertis' long-term business profile and cash flow replacement strategy and increase its average portfolio duration from 12 to 15 years. Now, allow me to briefly update you on the group's strategic delivery and long-term growth opportunities. Our strategic agenda remains focused on further strengthening Hochtief's positioning as an end-to-end infrastructure solutions provider, delivering sustained high-quality growth while reinforcing the resilience and long-term value of the group. During the last four 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 our long-established, locally embedded presence in core infrastructure markets in North America, Australia, in Europe, which remains the foundation of our competitive strength and our ability to scale into these next generation markets as a life cycle partner. In data centers, notwithstanding exponential growth in North American market over the last three years, we expect further significant and sustained growth. Our ability to embrace this growth is driven by integrated operating model that combines scale, innovation, supply chain, and increasing self-performed capabilities as well as industrialized construction. Together, these competitive advantages are allowing us to expand capacity while maintaining execution certainty. Working alongside our clients, we are at the forefront of advancing increasingly standardized design and delivery models that enable greater use of modularization and prefabrication. These approaches increase execution capacity and productivity, allowing the group to deliver significantly more work with greater speed, consistency, and quality while continuing to meet growing demand. During the first half of 26, we secured new orders for data centers worth around $13.3 billion, up around 50% year-on-year, including a project as one of the e-contractors for a $10 billion 1 gigawatt data center campus in Indiana As AI advances and demand for high-performance computing continues to grow, gigawatt-scale campuses will play a critical role in supporting next-generation digital infrastructure. Earlier this month, Turner announced it will help make a deliberately expanded $50 billion investment of its Louisiana project. Originally announced as a campus supporting more than two gigawatts of IT capacity, the upside spray will now deliver five gigawatts across nearly 10 million square feet, making it one of the world's largest data center campuses, with Turner expanding scope. And in July, we also secured a landmark 1 gigawatt AI-optimized data center in Canada, which will see Turner working with Flatiron Trogados on a $13 billion Canadian project. Our strategy to expand the group's data center presence globally by leveraging our in-house expertise and geographical footprint continues advancing. During the period, we won a contract to build a 36-megawatt facility in Berlin valued at several hundred million euros to be delivered by an integrated team of active infrastructure internal through its European subsidiary donor. and we also secured major data center contracts in Asia with Lighting Asia awarded a contract by to deliver fit out works at a data center campus in Thailand. Furthermore, Octiv's plan to develop European network of sustainable edge data center is clearly moving forward with the construction of a facility in Hernd underway, making the fourth edge data center site to be developed in Germany. And just last Friday in the UK, Blackpool Council announced its intention to award HoCTIV another highly sustainable six megawatt data center project within the H category. The contract covers the data center's full lifecycle from design, construction, operations and financing with HoCTIV intending to invest equity and deploy a unique cloud platform to offer the UK high performance, security and local data sovereignty. Overall, we're increasing Our participation across the full AI stack includes significant new orders relating to semiconductor sectors such as a major quantum research-related project in Princeton, USA, an important manufacturing facility in Europe, the delivery of infrastructure to support the semiconductor industry in Dresden, and a program management role for a major facility in India. Another strategic growth market for Co-Active is energy, including nuclear. Rising investment in energy security and the global transition to low-carbon systems underpin sustained demand for advanced technology infrastructure. Global nuclear investment, for example, is expected to approach a cumulative $600 billion by 2040, or deliver essential infrastructure for major renewable energy projects that support economic growth, strengthen energy systems, and create sustainable outcomes. In early July, for example, Semigroup companies were selected to build a 179 megawatt wind farm in Western Australia for NEON, a project that supports the state's energy transition in growing demand for reliable, lower emissions power. This is UGL's 26th clean energy development and expands the group's renewable energy capability into wind generation. At the beginning of 2026, an important project milestone was achieved UNFOCTI was selected as part of Amentum's global project delivery team for the Rolls-Royce small modular reactors, NICLAR program, with strategic leadership in construction management. Our role builds on decades of experience in NICLAR and complex infrastructure, combined with our capability in modular assembly and delivering large, technically demanding projects with certainty. We welcome the recent selection of Rolls-Royce to deliver three SMRs in Sweden marking a significant step forward in Europe's energy transition. As part of the global delivery team, Hochti will continue supporting the company's SMR deployment across the UK and Europe. The group is also capitalizing on accelerating global requirements for critical minerals driven by clean energy technologies, digital infrastructure, and defense modernization. There is an estimated 500 to 600 billion in mining capital requirements to be met globally by 2040. Hochtief through the combined capabilities of Setsman and Thies has built a global position in minerals processing and sustainable mining services with a track record which spans over 630 engineering projects and studies. These include key commodities such as lithium, copper, rare earth, nickel, vanadium, uranium, and zinc. Central to our strategy in critical metals and minerals is Hochtief's 15% cornerstone investment in bulk energy, which earlier this year announced it had obtained the official permit for the commercial extraction of lithium at its Lionheart project. Hochtief has secured an end-to-end role in developing its lithium production and processing infrastructure. During the period, group company Setsman which is leading the development of our global critical minerals platform, expanding its North American footprint with the award of a feasibility study for North America's largest producer of hard rock lithium concentrate in Quebec. As well as a contract to deliver the front and engineering design for E3 Lithium's Clearwater project in Alberta, enabling the efficient and sustainable recovery of battery-grade lithium from brine resources. In addition, the group enhanced its presence in the Asia-Pacific region with the award of $400 million worth of contracts by the world's largest integrated zinc producer in India. Furthermore, TEAS secured three contracts across gold and critical minerals projects in Australia, reflecting the company's strength in technically complex underground environments. Public investment in defense infrastructure is said to have substantially increased and we expect an addressable market opportunity worth 80 billion euros annually by 2030. Hoctiv, which at the end of the first half of 26 had a defense order book of over 2.2 billion, is leveraging its strong civil engineering capabilities, proven price execution record, and long-standing presence across key defense markets. During the period, we awarded a major contract for the German Armed Forces Billion Euro-sized university campus in Hamburg. This collaborative 10-year project has an investment volume of several hundred million euros combined our end-to-end expertise in defense and education. In April, the group also won a joint venture project to modernize a military airport in the Czech Republic used by the country's Air Force and NATO allies. And earlier this year, a Flatiron Dragados-led joint venture secured a water storage facility, collaborative contract for the U.S. Army Corps of Engineers worth almost $700 million. Your data. For biopharma, health, education, social infrastructure competencies are key for the group's ability to fully harness global growth opportunities. Co-active leading position in the USA was recently highlighted with Turner named the nation's top Healthcare Construction Manager for the 25th time. During the first half of Turner JV, Turner JV was selected to provide construction services for a state-of-the-art cancer care facility to be built in Manhattan. And the company was also chosen to be part of the design-build team for a 590 million utility plant at the University of Kentucky. It's also noteworthy that several Turner projects have been in the global limelight in recent weeks. with five stadiums built or modernized by Turner hosting FIFA World Cup matches. The SoFi Stadium, for example, served as a flagship venue hosting group stage and knockout run matches and will welcome the world again as a venue for the 2028 Olympic Games. The group has been a global leader in transport and sustainable infrastructure for several decades. In the first half, for example, Flatiron Drug House was, for the first time, ranked number one in the North American transportation sector, Bainar. Recently, a joint venture led by the company was selected as the preferred proponent for the multi-billion US dollars expansion of the container capacity at the Port of Vancouver using a collaborative delivery model. In Q2, the Hochtief Consortium secured the next phase of the Prague Metro Line V for a total value of 1.23 billion. And in March, we all ordered a contract to design and expand a 26-kilometer section of the East Link railway line near Stockholm worth up to 900 million euros. Here in Germany, the 500 billion euros infrastructure fund is seeing its first four-year deployment and we're very well positioned to benefit due to the scalability of its business model and its core expertise in bridges, panels, rail, and transmission lines with the Group's German order book doubling over the last four years. The Group's leadership in PEPs was was also illustrated a few months ago when a co-active consortium was awarded a 200 million BEE project for the University of Southampton to build a 1,500 student accommodation unit facility in the UK and operate the mission-free facility over a 50-year period. As you are aware, capital allocation is a priority for management. We regularly assess strategic M&A opportunities with our capital deployment focused on our growth markets. In July, We announced the $1.2 billion acquisition of the remaining 40% interest in TEAS, returning the global mining services to full ownership. TEAS is a high-performing business with long-term contracts, strong cash flow, and a clear strategy aligned to the evolving needs of the resources sector. It is continuing to grow and diversify its commodities and services to support the energy transition, and is also pioneering new ways of working through advanced equipment and technology to enhance performance. Full ownership of TEAS supports our long-term growth strategy in critical minerals, providing our clients with a strong balance sheet in global capability. And also in July, we paid out around 500 million euros in dividends, a year-on-year increase of 26%, underlying our priority to remunerate Octif shareholders. Let me conclude by underlining how Octif is embracing the future by developing our leadership to support the growth markets. Our strong and expanding presence in these interconnected sectors is a key competitive advantage and underpins our long-term growth strategy. Combined with our strong balance sheets and backed by disciplined cash management, we have created the necessary conditions to pursue further growth opportunities and deliver value for all our stakeholders. Thank you. I'm ready now for your questions.