CEO’s review

Dear shareholders, associates
and friends of STRABAG SE

You’ve probably already noticed: everyone is talking about the crisis in the construction industry these days. And indeed, the general framework has shifted significantly since 2022. Factors such as high inflation, the completely changed interest rate landscape and stricter mortgage lending criteria are not at all favourable for construction companies. In this respect, 2023 signalled a clear slowdown of the construction industry after years of zero and negative interest rate policies.

But we’re pleased to say: STRABAG held up extremely well even in this challenging environment. For the first time ever, we grew our output volume to more than € 19 billion, specifically to € 19.1 billion.We maintained our high order backlog, which amounted to € 23.5 billion at the end of 2023 and extends all the way into 2025. And on the earnings side, we can report significant growth as a result of positive developments in the North + West segment: earnings before interest and taxes (EBIT) was up by 25% to € 880.20 million, which corresponds to an EBIT margin of 5.0% (2022: 4.2%).

This is a good time for us to leverage the strengths of our business model.

Why is that so? Because STRABAG’s business model allows it to leverage its strengths especially in challenging times. Our critical size and broad positioning by country and segment have enabled us to more than compensate for declines in residential construction with new projects in commercial and industrial construction and in building construction for the public sector. Our business activities in transportation infrastructures also remain solid. The foundation for our success is our strong balance sheet. At the end of the year, we continue to report a net cash position and an equity ratio of 32.2%. These factors have also earned us external recognition, with S&P confirming our investment grade rating of BBB with stable outlook.

We are also making progress in the areas of sustainability and digitalisation. CDP recently upgraded STRABAG to a “B” score in the category of Climate Change and our EcoVadis score of 67 out of a possible 100 points is also impressive in comparison with our peers. We have also initiated numerous change processes involving innovative digitalisation initiatives. You are bearing witness to one of these changes at this very moment: the 2023 STRABAG Annual and Sustainability Report, which for the first time has been made fully accessible in an electronic format.

It is our intention to share the success of 2023 with you, our valued shareholders, by proposing a dividend of € 2.20 per share, at the Annual General Meeting on 14 June 2024. Based on the average share price in 2023, this translates to a dividend yield of 5.7%. As a result, STRABAG continues to rank among those companies in Austria with the highest dividend yield.

Apart from the achievements in the operating business, we took an important step to avert disadvantages and risks for our company by enacting a series of capital measures to reduce the stake held in STRABAG by MKAO “Rasperia Trading Limited”. With entry of the ordinary non-cash capital increase in the commercial register on 21 March 2024, the volume of shares held by MKAO “Rasperia Trading Limited” was reduced from 27.8% to 24.1%.

We are in a good position to benefit from the increased demand for refurbishment works and projects related to the energy transition.

In conclusion, a look into the future: Buoyed by last year’s strong performance, we expect to be able to confirm our record output in 2024. We are planning for an output volume of around € 19.4 billion and an EBIT margin of at least 4%. I am also convinced that our Group Strategy 2030 People. Planet. Progress. puts us in a good position to benefit from the increased demand for refurbishment works and projects related to the energy transition.

These accomplishments would not be possible without the hard work and dedication of our 86,000 staff worldwide. On behalf of my colleagues on the Management Board, I would therefore like to extend a sincere word of thanks to all our employees, customers, partners and, of course, shareholders.

Yours,