Management Report

Output volume and revenue

STRABAG SE generated an output volume of € 8,329.29 million in the first half of 2024, a slight plus of 1% compared to the same period of the previous year. Output growth in the home market of Germany, in Poland and in transportation infrastructures in Romania had a particularly positive influence on this figure. Output fell substantially in Austria, on the other hand, where the sharp decline in the residential construction market is having an expected impact. Following the successful acquisition of several large-scale projects, which are being realised under joint venture arrangements, Group revenue fell by 3% in relation to output. This development is also reflected in the revenue-to-output ratio, which fell from 93% to 90% year-on-year.

Order backlog

The order backlog exceeded the € 25 billion mark for the first time at the end of June 2024, reaching a total of € 25,191.89 million. This corresponds to a year-on-year increase of 4%. Compared to the end of 2023, the order backlog grew by 7%, reflecting the state of project acquisitions in the year to date. The largest increases in absolute terms were recorded in Germany, Poland and Slovakia. In contrast, the volume of orders is down in building construction in Austria – here due primarily to the difficult situation in residential construction – as well as in Hungary and the United Kingdom – here as a result of the gradual completion of major projects.

Financial performance

Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased slightly by 2% to € 358.87 million in the first half of 2024. The depreciation and amortisation expense grew by 5% year-on-year to € 276.95 million. As a result, earnings before interest and taxes (EBIT) were slightly lower at € 81.92 million (6M/2023: € 87.35 million). Despite the slight decrease, however, the EBIT is still very much in line with the multi-year comparison. While earnings improved in the segments North + West and International + Special Divisions, losses in South + East increased in the first half of the year.

Net interest income almost doubled year-on-year to € 52.23 million (6M/2023: € 26.54 million). This development was mainly due to a significant increase in interest income. STRABAG SE’s solid liquidity and the prevailing interest rate environment had a positive effect. The net interest income includes negative exchange rate differences of € -5.54 million (6M/2023: € -4.65 million). Earnings before taxes (EBT) therefore came to € 134.15 million, compared to € 113.89 million in the previous year. Income taxes amounted to € -41.11 million (6M/2023: € -37.28 million), which corresponds to a slightly lower income tax rate of 31%. This resulted in net income of € 93.04 million, corresponding to a plus 21% over the first half of 2023.

The earnings attributable to minority shareholders remained almost unchanged in absolute terms at € 1.53 million. Overall, net income after minorities increased by 23% to € 91.51 million (6M/2023: € 74.14 million) – the highest figure ever achieved by STRABAG SE in a first half-year period. With a weighted number of 108,490,336 shares outstanding in the first half of 2024, earnings per share amounted to € 0.84 (6M/2023: € 0.74).

Financial position and cash flows

The balance sheet total fell slightly to € 13.6 billion, a decrease of 1% compared to the end of 2023. Due to seasonal effects, inventories and contract assets increased, while cash and cash equivalents decreased in the first half of 2024.

The final step in the capital measures to reduce the stake held by MKAO “Rasperia Trading Limited” – the implementation of the ordinary non-cash capital increase – was entered into the commercial register in March 2024. As a result, the share capital of STRABAG SE increased from € 102.6 million to € 118.2 million. Due in particular to the dividend distribution for the 2023 financial year, which took place in June 2024, the equity ratio fell from a still high level of 32.2% at the end of 2023 to 31.2% at the end of June.

STRABAG continues to report a net cash position. Compared to 31 December 2023, this figure fell, as is usual for the season, from € 2,643.24 million to € 1,619.08 million.

The cash flow from operating activities returned to negative territory at € -415.00 million (6M/2023: € 174.93 million), primarily due to the increase in inventories and contract assets.

At € -322.49 million, the cash flow from investing activities was slightly less negative than in the previous year (6M/2023: € -344.65 million). Higher investments in intangible assets and in property, plant and equipment were offset by higher inflows from asset disposals and slightly lower outflows for enterprise acquisitions. The focus of the Group’s investing activities was on acquisitions to further expand its expertise in mechanical and electrical engineering services (M&E).

The cash flow from financing activities amounted to € -299.76 million in the first half of 2024 (6M/2023: € -292.37 million). In addition to the distribution of the dividend for the 2023 financial year, this figure also includes the payment of the capital reduction to those free float shareholders who opted for the cash alternative as part of the capital measures and who have already submitted their book-entry securities in this regard. The first half of 2023 included the payment for the acquisition of own shares tendered as part of the mandatory offer made at that time.

Capital expenditures

Particularly significant capital expenditures include maintenance expenditures at our permanent establishments in the core markets of Germany, Austria and the Czech Republic as well as additional investments in tunnelling technology for international use on major projects. In Germany, in addition to the focus on transportation infrastructures, investments were also made in heavy equipment for railway construction and ground engineering. The focus remains on the modernisation of the company’s plants and other facilities and on circular economy projects. The capital expenditures include € 305.98 million (6M/2023: € 286.73 million) for the purchase of intangible assets and of property, plant and equipment, excluding non-cash additions to right-of-use assets from leases, as well as € 12.84 million (6M/2023: € 22.46 million) for the purchase of financial assets and changes to the scope of consolidation of € 57.26 million (6M/2023: € 68.22 million).

Employees

STRABAG had an average of 77,337 employees (FTE) in the first half of 2024, an increase of 2% compared to the same period of the previous year. The largest increases were recorded in Germany and the Benelux region from acquisitions in the property and facility services portfolio, specifically in M&E and energy management.

Major transactions, risks and strategy

During the first six months of the financial year, there were no transactions with related parties which significantly influenced the financial situation or the business result nor were there any changes to transactions with related parties which were presented in the annual financial statements of 31 December 2023 and which significantly influenced the financial situation or business result of the first six months of the current financial year.

In the course of its entrepreneurial activities, the STRABAG Group is exposed to a number of risks, which can be identified and assessed using an active risk management system and dealt with by applying an appropriate risk policy. Among the most important risks are external risks such as cyclical fluctuations in the construction industry, operating and technical risks in the selection and execution of projects, IT risks, investment risks as well as financial, personnel, ethical, legal and political risks. Additional risks exist with regard to work safety, environmental protection, quality, business continuity and supply chain.

The risks are explained in more detail in the 2023 management report. A review of the current risk situation revealed that in the reporting period there existed no risks which threatened the existence of the company and that for the future no risks are recognisable which constitute a threat to its continued existence.

In the first half of 2024, there were no significant changes to the Group strategy as detailed in the 2023 Annual and Sustainability Report.

Outlook

The Management Board continues to expect an output volume of around € 19.4 billion for the full year 2024, a target that is well supported by the current state of the order backlog. The EBIT margin should again reach at least 4%. Net investments (cash flow from investing activities) are also forecast to reach a maximum of € 750 million.