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FCC maintains asset writedown policy in the first quarter of 2013


FCC maintains asset writedown policy in the first quarter of 2013

  •  Adjustments at Alpine, and at FCC Energy due to changes in renewables regulation, led to 140 million euro in negative net attributable income
  • The backlog expanded by 3.4% to 34.716 billion euro, equivalent to three-and-a-half years' revenues


FCC maintains asset writedown policy in the first quarter of 2013

FCC maintains the policy of asset writedowns that commenced at the end of 2012. In the first quarter, adjustments at Alpine, its construction subsidiary in Central and Eastern Europe, and those resulting from changes in the regulations governing renewable energy production, resulted in 140 million euro in negative net attributable income, contrasting with a profit of 16.6 million euro in the same period of 2012.

Net attributable income was negative as a result of the 112.3 million euro of net losses booked at FCC Energy due to regulatory changes plus 158.9 million euro in value adjustments on renewable energy assets.

Writedowns at Alpine, the construction subsidiary in Central and Eastern Europe, led to negative EBITDA in the amount of 140.4 million euro. Combined with falling business volume in the Construction and Cement divisions in Spain, the result was negative Group EBITDA of -34 million euro, contrasting with 236 million euro in the first quarter of 2012.

In a quarter marked by a sharp reduction in economic activity in general, and in construction in particular, the backlog expanded by a notable 3.4% to 34.716 billion euro. This positive performance was driven mainly by new contracts at Aqualia, the water management subsidiary. As a result, Environmental Services and Water account for 74.4% of the total backlog (26.324 billion euro), while Construction represents the other 25.6%. The 34.716 billion euro backlog represents three-and-a-half years' revenues for the Group.

Revenues amounted to 1.984 billion euro in the first quarter of 2013, down 18.5% year-on-year. That decline is due fundamentally to the process of strategic and market reorganisation that commenced at Alpine in 2012, together with the effects of lower government investment in infrastructure in Spain. Revenues in Spain declined by 17.4% to 931.7 million euro, while international revenues fell by 19.5%.

At 30 March 2013, net interest-bearing debt amounted to 7.254 billion euro, having increased by 166 million euro (+2.3%) with respect to the end of 2012. The main component of this change is the decline in operating profit, particularly at Alpine, together with the seasonal increase in working capital in the Construction area (+153 million euro). Both factors were mitigated by the 150 million euro reduction in bank debt agreed at the end of March as part of Alpine's financial restructuring process.

Milestones in the quarter

Aqualia lands contracts worth over 1.1 billion euro. Aqualia, FCC's water management subsidiary, obtained contracts worth over 1.1 billion euro in the first quarter. One of the most notable is a 25-year contract from the city of Jerez de la Frontera (Cádiz), which is worth close to 900 million euro. The company also added and extended contracts, with a combined value of over 200 million euro, in Madrid, Ávila, Oviedo, Girona, Cantabria, León, Vizcaya, Guipúzcoa, Pontevedra and elsewhere.

FCC enters Peru with contracts worth close to 200 million euro. FCC, the Citizen Services group, obtained its first two contracts in Peru: construction at Callao Port, in Lima (worth approximately 165 million euro), and upgrading the Trujillo sports complex (32 million euro). Callao Port is the largest in the country and one of South America's largest Pacific ports.

Asset swap and sale in Cement. In February, Cementos Portland Valderrivas (CPV) reached an agreement to swap its 98.75% stake in Cementos Lemona for CRH's 26.38% stake in Corporación Uniland. As a result, CPV now owns 100% of Corporación Uniland. CRH also acquired CPV's cement terminal in Ipswich (UK) for 22.1 million euro.

Refinancing bank debt at Alpine. At the end of March, Alpine signed a 2-year deal with more than 50 banks to refinance all of its bank debt. The agreement, which includes a haircut of 150 million euro, evidences the banks' support for Alpine's business plan.


KEY FIGURES (million euro)  

1Q 2013
1Q 2012
Change (%)
Net sales
Income attributable to equity holders of the parent company
Total interest-bearing debt
Revenue by region 1º trim 2013