PORR delivered an extremely stable performance in the first quarter of 2024. Alongside clear growth in production output, the company was once again able to increase its operating result (EBIT) by 14.4%. Civil engineering and infrastructure construction proved to be the growth driver.
“PORR mastered the first quarter of 2024 with vigour and was once again able to hold its own in a difficult market environment,” summarised CEO Karl-Heinz Strauss. “The pleasing development of production output and the order backlog as well as the increase in earnings confirm that PORR is perfectly positioned with its broad range of services and infrastructure expertise.”
Civil engineering was the main growth driver in the sector: This was also reflected in the order books. On the one hand, PORR was able to increase its order intake in Austrian railway construction and civil engineering in particular. On the other hand, Polish industrial construction, among others, provided stability in building construction. Major new orders included a thermal waste utilisation plant in Gorlice, Poland, worth around EUR 96m and the railway engineering equipment for the Semmering Base Tunnel with an order value of almost EUR 90m. In total the order backlog rose by 2.8% to EUR 8,439m.
PORR’s production output totalled EUR 1,323m in the first quarter of 2024 and was therefore 4.1% higher than the previous year’s figure. This growth is particularly attributable to infrastructure projects in Romania and Germany. These include the construction of the Sibiu – Pitești motorway in Romania, the tunnelling of the Elbe as part of the SuedLink project and the conversion of the Forbach pumped storage power plant in Germany.
Despite the ongoing subdued order situation in residential construction, PORR won several major orders in this sector in the first quarter. These include the Garstedt neighbourhood with 198 flats in Norderstedt, Germany and 146 flats for the non-profit housing association WIGEBA in the Village im Dritten in Vienna.
Earnings growth and cost reduction
In the first quarter – traditionally the weakest quarter of the year due to seasonal factors – PORR kept its revenue stable against the same period last year at EUR 1,275.6m (1-3/2023: EUR 1,266.3m). Thanks to efficient supplier management, the cost of materials and other purchased services was reduced by 4.0%. The result is a substantial increase in the operating result (EBIT) of 14.4% to EUR 11.3m. The EBIT margin to revenue was therefore 0.9%. In addition, PORR almost doubled earnings before taxes (EBT) from EUR 4.5m to EUR 8.0m, while the EBT margin in relation to production output rose to 0.6%.
Optimised capital structure
PORR’s balance sheet structure was also robust: at EUR 4,146m, the balance sheet total at 31 March 2024 remained almost unchanged against the end of the previous year. Equity fell by 5.2% to EUR 815m (31 December 2023: EUR 860m). However, this was solely due to the early repayment of profit participation capital with a nominal value of EUR 40.0m and interest payments on hybrid capital. The equity ratio was therefore 19.7%, a significant increase of 0.5 PP compared to the same time in the previous year (31 March 2023: 19.2%).
Due to the reduced increase in working capital, cash flow from operating activities increased significantly by EUR 59.8 million compared to the same period of the previous year and totalled EUR -20.6 million, while free cash flow improved by 36.7% to EUR -76.3 million. As of 31 March 2024, PORR’s cash and cash equivalents amounted to EUR 478.3m, while the liquidity reserve stood at EUR 883.6m.
Outlook 2024
Economic growth remains sluggish overall and this also characterises the construction sector. Trends such as a good pipeline in civil engineering and infrastructure construction, a busy residential construction sector and solid demand in industrial construction will continue to dominate the year. Projects in the context of the green transformation and the energy transition are providing significant impetus for the construction industry. ‘With our Green and Lean strategy, we are ideally positioned here,’ says PORR CEO Karl-Heinz Strauss. He sees reason for optimism: ‘We expect the industry to recover over the course of the year, partly due to the expected interest rate cuts and the ongoing support measures from the European Recovery and Resilience Facility.’
Based on the high order backlog of EUR 8,439 million, the Executive Board continues to anticipate a moderate increase in output for 2024. At the same time, it expects an increase in the operating result.
The assessment of the further course of business is based on the current targets in the individual areas as well as the opportunities and risks that arise in the respective markets. Should the geopolitical situation worsen, this could have a negative impact on PORR and its business activities. Any assessment of economic development is therefore subject to forecasting risks.
Source: PORR AG
