FY’19 Results: FY’19 top-line down 31.4% y-o-y to €1.27bn, with significant EBIT losses in Q4’19 due to construction despite the positive contribution from the remaining divisions; group remained in the red in FY’19, recording increased y-o-y group net losses of €131.4m (on EBIT of -€21.9m vs. €41.6m in FY’18) from €124.6m in FY’18, due to continued weakness in construction, which fully offset the solid performance of Concessions and RES; in Q4’19, Ellaktor posted net losses of €106.5m (from net losses of €16.6m in Q3’19) despite the positive taxes and the lower minorities stemming from the Eltech Anemos absorption (concluded in July’19); Ellaktor will not distribute a FY’19 DPS.
Ellaktor’s FY’19 consolidated revenues fell by 31.4% y-o-y to €1,274m (Q4’19 sales were also down 35% to €257m), with construction decline (-40% y-o-y in line with management strategy) not offset by the 6% y-o-y growth in RES. That said, concessions and Environment revenues were broadly flat y-o-y.
Regarding profitability, Ellaktor recorded group EBIT losses of €21.9m in FY’19 vs. EBIT of €41.6m in FY’18, entirely due to the construction division, which widened operating losses to €140.8m from €109.5m in FY’18, following the management’s initiatives to reset loss-making activities abroad; note that construction results were burdened by €113.3m non-recurring losses from P/V projects abroad as well as by goodwill impairment losses of €41.8m related to past acquisitions of construction companies. In Q4’19, group EBIT losses amounted to €97.5m from EBIT of €58.4m in Q4’18, implying a significant sequential profitability slowdown, entirely driven by construction-related losses (-€109.7m) despite the positive contribution from the remaining divisions.
Further down the P&L, accounting for lower y-o-y associate losses and increased financial expenses (due to increased leverage mostly related to the RES capacity additions), Ellaktor recorded widened pre-tax losses of €84.0m in FY’19 from -€25.8m in FY’18; however, owing to the lower tax-rate (effective at 25.7%) and minorities (Anemos absorption was concluded in July’19, leading to a recognition of a deferred tax asset), Ellaktor posted group net losses (after tax and minorities) of €131.4m, up from the €124.6m net losses recorded in FY’18. In terms of Q4’19, Ellaktor remained in the red, recording net losses of €106.5m from marginal net profits of €0.7m in Q4’18.
Finally, Total Group Net Debt rose sequentially to €1,028m (from €993.6m in 9M’18 and €785.5m in FY’18), while excluding BOOT-related non-recourse debt, Total Group Corporate Net Debt rose sequentially by €31m to €846m in FY’19 from €815m in 9M’19 and €584m in FY’18. The y-o-y increase was mainly due to the significantly lower OpCF (-€114m from €46.9m in FY’18 mostly due to the negative results and increased working capital needs of construction) and despite the lower net cash outflow from investment activities (largely due to the implementation of management strategy to disinvest from non-core activities and assets). That said, group CapEx was well up y-o-y to €132m in FY’19 from €83m in FY’18 (Wind Farms €107m, Construction €5m, Concessions €2m, Environment €5m, Real Estate €12m). Note that Ellaktor completed the issue of two international senior notes, the first of a nominal amount of €600m in Dec’19, and the second of a nominal amount of € 70m in Jan’20, hence expanding the Group’s sources of financing and gaining access to the international debt capital markets.
Ellaktor will host a conference call today at 16:00 (local time) for analysts and at 18:00 for bondholders. Dial in numbers: GR: +30 213 009 6000, UK: +44 (0) 203 059 5872 and USA: +1 516 447 5632.
Construction – FY’19 sales and EBIT amounted to €875m (-40% y-o-y) and -€140.8m (from -€109.5m in FY’18). FY’19 divisional operating results were burdened by €113.3m non-recurring losses from P/V projects abroad (mainly Australia, reflecting increased cost caused by defective supply materials, construction delays leading to penalties, and increased demands by the legal and regulatory framework), as well as by goodwill impairment losses of €41.8m related to past acquisitions of construction companies. In FY’18, construction results were hit by €18.9m losses from the ISF project in Qatar and €79m project losses from assuming JV partners’ obligations and backlog profitability reassessment mainly in Romania. In Q4’19, the respective figures were €157m (-58% y-o-y) and -€109.7m (from +€4.2m in Q4’18). As in previous quarters, the decline in top-line reflected the significant lack of new tenders and the delay in the completion of ongoing tenders in Greece, as well as the delays in the contractualization of projects that Aktor has already secured. As of 31/12/2019 the backlog stood at €1.3bn vs. €1.35bn at end-2018; in 2019 the value of signed contracts was €337.4m (Greece, Romania and Facilities Management in Qatar), while YTD additional contracts of €235m were signed and new projects of €570m that Aktor has secured are currently awaiting to be signed (Greece and Romania). In terms of future prospects, Aktor expects an increase in Public Investment projects, stemming from the Greek Government’s announcements for a fast track implementation of projects, but also as a consequence of the measures aiming to assist with financial recovery from the Covid-19 pandemic in the economies of countries where Aktor is strategically present, creating significant opportunities in Infrastructure projects. Note that the management’s strategy in construction includes the focus only on Greece and Romania as well as the interruption of operations (stop loss) in countries or projects that were undertaken in the past and have produced negative results
Concessions – FY’19 sales and EBIT amounted to €240m (-0.3% y-o-y) and €91.8m (-8.9% y-o-y on an adj. basis, i.e. excluding a €20.3m positive effect from a retroactive adjustment of the Additional Operating Subsidy of Moreas as well as a €10m provision for non-offsetable withheld taxes and a €4.6m impairment in FY’18), with the related margin down 360bps to 38.2%. In Q4’19, the respective figures were €60.7m (flat y-o-y) and €14.2m (down 53% y-o-y, due to increased heavy maintenance costs). The marginal turnover decline in FY’19 was mainly due to the non-inclusion of the financial results of “EPADYM”, which was sold to Helector in H1’18, and to the decrease of the revenues of Attikes Diadromes from the project of Egnatia Odos, due to a decreased construction revenue from new toll stations. That said, traffic volume in mature concessions were up y-o-y in FY’19 (4.5% at Attiki Odos, 6% in Gefyra, 4.7% in Olympia Odos and 7.6% in Aegean Motorway). Remember also that on 16April’19 Aktor Concessions was declared the Preferred Bidder (best bid €57.5m) in the tender for the award of the concession for the Alimos Marina for a period of 40 years, carried out by the HRADF; the signing of the concession agreement was scheduled for the end of March’20, but was postponed due to the Covid-19 pandemic and is now expected to be signed in the coming weeks, paving the way for an investment with a total value of c€100m. In terms of future prospects, Aktor Concessions focuses on projects whose budget exceeds €3.5bn (Egnatia Odos, Permanent Submarine Link of Salamis Island, Northern Road Axis of Crete), while it has submitted an expression of interest in numerous PPP projects.
Environment – FY’19 sales and EBIT amounted to €87.1m (+8.2% y-o-y on an adj. basis i.e. excluding a €5.8m non-recurring revenue in FY’18) and -€1.7m (from €20.0m in FY’18). On an adj. basis (i.e. excl. positive one-offs of €8m in FY’18 and €8.5m negative one-offs in in FY’19), divisional EBIT was down 43% y-o-y to €6.8m. Ellaktor said that divisional results this year were affected by decreased inbound quantities in waste management units, losses at the Osnabruck plant and Helector GmbH goodwill impairment.
RES – FY’19 sales and EBIT amounted to €64m (+6.4% y-o-y) and €35.2m (+23% y-o-y). The electricity production in FY’19 rose 6.6% y-o-y to 708GWh, mainly due to the increased installed capacity, as the average capacity factor remained virtually unchanged y-o-y. The total installed capacity stood at 401MW as of 31Dec’19, of which 105.6MW are currently in trial operation. YTD, an additional 90MW were put into trial operation, hence increasing the total installed capacity to 491MW. In terms of future prospects, two wind farms with a total installed capacity of 88.2MW are currently under construction, for which the original objective was to become operational by the end of this year (however due to Covid-19, completion will be delayed until 2021; that said, a four-month PPA extension has been granted). Moreover, Ellaktor possesses RES projects (mainly Wind Farms) with a capacity of 454.14MW, at various stages of the licensing process. Note that the merger through absorption of Anemos by Ellaktor was completed on 19July’19.
Real Estate – FY’19 sales and EBIT amounted to €7.1m (+3.7% y-o-y) and €0.8m (from €3.6m in FY’18, which however included positive one-offs of €2.4m). Note that in Nov’19 Ellaktor launched the commercial operation of the new development of the 2nd phase of Smart Park (additional 15,200 m2, total leased surface >80% of the additional area). According to Ellaktor, in FY’19 visits to the shopping mall were up by c9% y-o-y, with shop sales also up by c13% y-o-y over the same period.
Covid-19 Implications on Group Operations – In Construction progress in relation to Aktor’s backlog as well as the schedule of contracts regarding new projects should be negatively affected. In Concessions, traffic has been heavily impacted since the implementation of the restrictive measures on 23March’20 (c70% y-o-y decrease in daily traffic volume for the period 23/3-28/4, although overall traffic volume YTD at Attiki Odos has decreased by c25%); note that concession companies have submitted written requests to the State to trigger the relevant provisions of the concession agreements. In Renewables, assets in operation have not been affected to date, while more risks are involved in RES projects under construction with delays in the planned completion date (i.e. for the 88.2MW mentioned above). In Environment, business has not been significantly affected yet, although there is a risk of delays in collections and decrease in prices of recyclable materials. Finally, Real Estate has been affected by the suspension of shopping centers’ operation as well as the reduction of commercial lease rents.