Elecnor reports sales of EUR 749 million and net profit of EUR 29.1 million in the first half

EBITDA amounted to Euro 96.3 million

With a solid backlog of contracts pending, the Elecnor Group is maintaining its overall 2014 target of surpassing last year's results.

Madrid, 14 August 2014.- The Elecnor Group obtained revenue of EUR 749 million euros in the first half of 2014, of which 51% came from international markets. Elecnor's internationalisation is also evidenced by the trend in its order backlog; growth in the backlog (19.1% to EUR 2,498 million) was driven by a sharp increase in new projects broad: +28%.

Sales in 1H13 totalled EUR 940 million. The difference was due to the impact this year of regulations approved regarding power generation from renewable sources this year; to scant public and private investment in Spain in the sectors in which the Group operates; and to delays in, and the lower pace of, order execution of one-off projects carried out by the Group in foreign markets, which it expects to pick up in coming quarters.

Results

Consolidated EBITDA in the first half of 2014 amounted to EUR 96.3 million, down from EUR 103.9 million in 1H13. Consolidated net profit was EUR 29.1 million, heavily impacted by the application of the new electricity framework. Had the same regulatory framework been in place in the first half last year, the Company's bottom line still would have been higher this year than last.

At in any, the linearised trend shows a 9% year-on-year increase in net profit in 1H14, from EUR 26.7 million last year. By "linearising" net profit in 2013, the exceptional negative impacts of the electricity reform are distributed more evenly, whereas in practice the effect was concentrated in the fourth quarter. In short, this is an exercise designed to achieve a more meaningful comparison between the first two quarters this year and last. 

In addition to the electricity reform, also undermining net profit for the Group through 30 June were thinner margins in Elecnor's traditional business in Spain caused by stiffer competition due to lower investment by the Group's customers and delays in the execution of one-off projects contracted abroad, not to mention start-up costs in countries where the Group had not been active before -these projects and new markets are expected to generate positive results in the short and medium term-. These factors were partly offset by ongoing control over overhead expenses; the Company has been applying a cost-control policy in the past few years.  

Outlook for 2014

After the first half results, Elecnor still expects to achieve a higher profit in 2014. This forecast will depend on the impact that the tax reform bill currently being considered could have on the Group's income statement.

At any rate, the Group does not foresee any regulatory developments that could affect the profitability of its power generation assets in Spain. The Group already recognised impairments in its 2013 and, above all, its 2012 income statements. 

Significant events

Alongside its earnings through 30 June 2014, a number of significant events took place in the first half and immediately after that should provide a major boost in coming years to the strategic areas the Elecnor Group will develop. The most significant were the agreement reached in June with Canadian investment fund Eolectric Club Limited Partnership, whereby the fund will take a 49% stake in the owner of the 100 MW L'Érable wind farm in Québec, and the strategic agreement signed in July with Dutch group APG, which manages the world's second largest pension plan, over the joint development of new power transmission projects in Latin America. Pursuant to the latter agreement, APG has taken a 49% interest in Celeo Redes, until now a wholly-owned Elecnor Group subsidiary which oversees investment in power transmission projects. APG will pay approximately EUR 237 million for this stake. 

Another significant event after the end of the reporting period was the EUR 600 million syndicated facility arranged with a group of 19 Spanish and international banks, which replaces the EUR 401 million outstanding on the syndicated facility arranged in 2012 and will provide funding for the Group's planned investments over the coming years, especially in foreign markets and activities with the strongest growth potential and stable regulatory frameworks. The deal was carried out at the upper end of the forecast range, further underscoring Elecnor's ability to raise finance with banks and their confidence in its operations. The new syndicated facility is for five years, thereby extending the average maturity of the Company's borrowings, and includes considerably better conditions in terms of interest and covenants than the previous facility taken out in January 2012.