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Σοφοκλέους 10 Τοις Μετρητοίς

Euroxx / Ellaktor:Q1’20 Results: Significant Construction-Driven EBIT Sequential Improvement

Q1’20 Results: top-line down 37.4% y-o-y (and 12.8% q-o-q) to €224.6m, with group EBIT turning positive (€24.5m) after 3 consecutive quarters of losses, primarily driven by the construction turnaround and the good performance of Concessions (despite the Covid-19 impact) and RES (owing to capacity additions); group remained in the red in Q1’20, recording well contained q-o-q group net losses of €8.8m (from +€2.6m in Q1’19 and -€106.5m in Q4’19).

Ellaktor’s Q1’20 consolidated revenues fell by 37.4% y-o-y and 12.8% to €224.6m, with construction decline (-52% y-o-y in line with management strategy) not offset by the y-o-y growth in RES and Environment. Regarding profitability, Ellaktor recorded group EBIT of €24.5m in Q1’20 vs. €36.7m in Q1’19 and -€97.5m in Q4’19. The large sequential improvement was largely due to the construction division turnaround, which narrowed operating losses to €4m from €109.7m in Q4’19, and RES, with the increased installed capacity supporting profitability.

Further down the P&L,  accounting for higher y-o-y and q-o-q financial expenses (due to increased leverage), Ellaktor recorded pre-tax profits of €2.8m in Q1’20 from €20.3m in Q1’19 and -€115.1m in Q4’19. Finally, owing to the lower y-o-y 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 €8.8m in Q1’20, from +€2.6m in Q1’19 and -€106.5m in Q4’19.

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 €1,089m (from €1,028m in FY’19), while excluding BOOT-related non-recourse debt, Total Group Corporate Net Debt rose sequentially by €44m to €890m in Q1’20 from €846m in FY’19. The q-o-q increase was mainly due to the negative OpCF (-€39m mostly due to increased working capital needs) and the marginally negative flows from investment (on group CapEx of €9.5m driven by Wind Farms). Note that in Q1’20 the Net Debt/EBITDA (based on annualized Q1’20 EBITDA) was 5 4x.

Ellaktor will host a conference call  today at 17:00 (local time) for analysts and at 19:00 for bondholders. Dial in numbers: GR: +30 213 009 6000, UK: +44 (0) 203 059 5872 and USA: +1 516 447 5632.

Construction Sector – Q1’20 sales and EBIT amounted to €126m (-52% y-o-y and -20% q-o-q) and -€4.0m (from €1.1m in Q1’19 and -€100.9m in Q4’19). Similar to previous quarters, the turnover decline was attributed to the reduction of the construction activity, as the Group continued its strategy focusing for new construction projects only in Greece and Romania. Regarding profitability, Ellaktor said that the restructuring of the Construction segment is proceeding, with the plan including the rationalization of its cost base, a new Group Procurement Office, further exploitation of its assets as well as the pursue of discussions for additional potential funding. As of 31/03/2020 the backlog stood at €2.0bn vs. €1.3bn at end-2019; note that this figure includes projects where Aktor has been declared preferred bidder (including those, the backlog at end-2019 was €2.06bn).

Concessions – Q1’20 sales and EBIT amounted to €50.3m (-12% y-o-y and -17% q-o-q) and €15.6m (-28% y-o-y and +10% q-o-q on a reported basis), with the related margin down 690bps y-o-y to 31.0%. The top-line decline was due to the decreased traffic (Attiki Odos -11%, Olympia Odos -10%, Gefyra -11%) as a result of restrictions in movement and eventual full lockdown by the State in response to the Covid-19 pandemic, with the March decline fully offsetting the strong trading in Jan-Feb’20, when traffic in Attiki Odos rose by more than 4%, and all other motorway were up 7%-20%. That said, following the gradual lifting of the lockdown on 4May’20 traffic volumes in Attiki Odos have showed clear signs of recovery averaging 196k vehicles between 18-28 May vs. average of 61k in April’20. Note also that on 13May’20 Aktor Concessions signed the Alimos Marina Concession project for 40+10 years.

Environment – Q1’20 sales and EBIT amounted to €22.4m (+22% y-o-y and flat q-o-q) and €2.1m (118% y-o-y and -52% q-o-q). The y-o-y top-line increase was mainly due to the increased completion rate of construction projects and the inclusion of ASA Recycle as a subsidiary (acquired in May’19), while the profitability decline was mainly attributed to the decreased profitability of the construction projects and the increased overheads from full consolidation of ASA Recycle. Ellaktor said that the Covid-19 impact on divisional ops has been limited, while future prospects appear strong.

RES – Q1’20 sales and EBIT amounted to €23.9m (+17% y-o-y and +58% q-o-q) and €14.8m (+16% y-o-y and +127% q-o-q), with the improvement attributed to the increased installed capacity and despite the lower y-o-y capacity factors (30.1% in Q1’20 vs. 35.1% in Q1’19). The total installed capacity stood at 491MW as of 31March’20, of which 196MW are in trial operation (during Q1’20 401MW contributed to revenue and cash flow, while the remaining 90MW were connected at end-March’20). In terms of future prospects, two wind farms with a total installed capacity of 88.2MW are currently under construction, for which completion is now seen at 2021e (due to Covid-19); moreover, the Greek government has already extended deadline for the relevant PPAs by 4 months due to the onset of the Covid-19 pandemic). Finally note that the average PPA life as at 31March’20 stood at 18.8 years.

Real Estate – Q1’20 sales and EBIT amounted to €1.8m (+16% y-o-y and -20% q-o-q) and €0.8m (from €0.3m in Q1’19 and €0.4m in Q4’19). Note that in the first 4 months of full operation after Smart Park’s expansion of 15k m2 was completed, i.e. before the measures adopted to fight Covid-19 were launched, the number of visitors to Smart Park rose by 23% and the sales of its outlets by 33%; since re opening on 11May’20, figures are moving back in track. Finally note that REDS was appointed to manage the real estate development of the Alimos Marina and the offices of former Pegasus Publishing, with regards to the Cambas project, as Cambas Park is expected to acquire Town Planning Permission within the next months, REDS is preparing for the project’s next stages.

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