Good afternoon, ladies and gentlemen, and welcome to Mota-Engil's full year 2021 results presentation. I now pass the floor to Mr. Pedro Arrais, Head of Investor Relations. Please go ahead, sir.
Hi, good afternoon, and thank you all for assisting this call where we will present the annual results of 2021. With me, I have, as usual, Mr. Gonçalo Martins, the CEO of the company. We will start the presentation with some key highlights by the results overview, and at the end, we will have the usual Q&A session when we have the opportunity to clear any doubt that you might have. I will suggest that we move to slide four of the presentation. As a snapshot, I would like to start to say that the company reaches a record level in backlog of EUR 7.6 billion and a turnover of EUR 2.65 billion. That represents a relevant milestone for the company in a record level.
Our profitability reached 15%, and our net profit was EUR 22 million, which compares to a net loss of EUR 20 million in 2020. In line with the guidance, the company made a CapEx of EUR 213 million, while our net debt decreased to EUR 1.1 billion, with our gearing improving to 2.7 x, recovering to levels before pandemic context. Moving to slide six, we can see the breakdown of the P&L. Starting by Europe, the engineering performance with a small decrease in Poland in the second half of 2021, while profitability with the EBITDA margin moving up from 5%- 7%. In the environmental business, the revenues were up 6% year-on-year, and EBITDA margin reached 27% from 25% in 2020, positively impacted by the tariff revision approved by the regulator during the year.
In Africa, it's important to highlight the strong growth of 56% in turnover in the second half of 2021. That put the African division with more than EUR 900 million of sales, increasing 4% year- on- year, with EBITDA margin reaching 22% above the guidance. In Latin America, the company reached an increase in turnover of 15% year- on- year to EUR 685 million and an EBITDA margin of 13%, a positive result driven mainly by the operations in Mexico, the main market in the region.
For last, considering that in 2022, with the new strategic plan implemented and with the results being presented in the future by business units, I would like to give you some color about the contribution from the non-engineering construction business that achieved in 2021 a turnover of EUR 820 million, representing 31% of the total amount of turnover and EUR 224 million of EBITDA. In non-engineering construction, we should highlight the Environment with EUR 443 million of turnover and EUR 121 million of EBITDA, with the 27% margin, and industrial engineering services with EUR 235 million of turnover and EUR 94 million of EBITDA, representing a 40% EBITDA margin.
Moving to slide eight, looking to the commercial activity, we can see that the company achieved once again a new record level of backlog of EUR 7.6 billion, an increase year-over-year of 25%, reflecting the successful achievement of our commercial teams more recently and especially in Africa. From the total amount, almost EUR 7.2 billion corresponds to backlog in engineering construction, representing more than three years and a half of the annual turnover in construction. Very important to mention the consolidation of increasing trends with the long-term contracts with larger average contract size, which is very positive for the outlook, considering the profitability and stability of the cash flow generation.
Finally, important to mention that the contracts already signed in 2022 in several markets like Uganda, Mexico, this backlog at this moment above EUR 8 billion for the first time in our history. Moving to slide nine, I will not elaborate on that, but you can see that the majority of the major contracts are in what we consider the core markets, the markets in a higher dimension, showing in that way that nowadays the group don't depend on a specific market or business having a balanced exposure between regions and businesses. Slide 10, we can move to see the CapEx. We made company made a total CapEx of EUR 230 million with growth and long-term contracts representing 51% mainly channeled to projects recently awarded in Africa. That represents 45% of total CapEx.
The railway project in Mexico, Tren Maya, and EGF, the waste treatment company based in Portugal. The maintenance CapEx represents roughly 4% of the turnover of the company, in line with the recent years and due to the optimization of the procedures in planning, procurement and logistics. Moving to slide 11, we can see here the working capital evolution that was EUR 6 million reinforcing the positive trend of the last years. The main contributor for the improvement of the working capital was a higher exposure to private clients in projects with larger size and prepayments established, and the reinforcement of cooperation in recent years with multilaterals and export credit agencies, with positive impacts in the working capital evolution.
Moving to slide 12, we can see here that Mota-Engil had operating cash flow of EUR 350 million, and we managed a reduction of net debt in EUR 185 million. With stronger operational performance in the second half, the company achieved a net debt of EUR 1.118 million . Moving to slide 13, you can see the debt position in more detail, and you can see here the gearing has improved to 2.7x , returning to levels before pandemic, with the combined effort of increasing EBITDA and reducing debt, and broadly with a stable cost of debt. Worth to highlight that our liquidity position of EUR 964 million equals to 1.6 x of the non-revolving financial needs with maturities with less than one year and with the short-term debt.
In which EUR 232 million is to be financed broadly, shortly. That represents roughly 40% of the short-term needs for 2023, and are already refinanced in the first quarter of the year. In line with the ESG targets which we are committed, it's important to mention that the company issued in November the first sustainability-linked bond to retail market in Portugal with a successful achievement amounting EUR 132 million. Our focus for the next years will be strengthening the balance sheet and on increasing the debt maturities and reducing the cost of debt with new operations in the near future. Moving to slide 16, to an overview and outlook for each region.
We will start with Europe in slide 16, and the turnover in the engineering construction division shows a strong evolution of 11% year-on-year and in Portugal and EBITDA increased and the EBITDA as a whole increased million EUR, helped by the increase of the average size of contracts and higher profitability in the main markets such as Portugal and Poland, allowing that the EBITDA margin increased from 5%-7% in the engineering construction segment. The outlook for the engineering construction division in Europe is positive, as we expect a more dynamic public tender scenario going forward in Portugal, considering the Recovery and Resilience Plan for Portugal.
For the short term, we expect relevant decisions, namely the new hospital in Lisbon, for which we are competing only with one Spanish company at the final stage of the tender, and we are fully convinced that we have the best proposal for a very important project to improve the public health system in the country, where the quality of the infrastructure will be decisive for the future operation of the units. In the environmental business, the turnover was up 6% year-over-year to EUR 355 million, and the EBITDA was up 15% year-over-year to EUR 199 million, reflecting a better performance in the waste treatment business, positively impacted by the adjustments that followed the recognition of tariffs made by the regulators in the last year.
Regarding the environmental business, a new regulatory period will start in 2022, and we believe that there is also upside potential in this business, as we believe we have now a better starting point for the discussion, given the recent and positive tariff reviews from the regulator. Moving to slide 18, turning to Africa. We turned in very strong performance in the second half of 2021 with an increase of 56% year-on-year, and once again with the operational performance that allowed the African division to be above the guidance, achieving a 22% margin.
Another item that is fair to highlight is the very positive results from business development department, reflecting the recent contract awarded that brings the backlog in Africa to a record level of EUR 4.8 billion at this, allowing to anticipate a positive outlook regarding the execution of the existing contracts for the upcoming years. Although the focus will be in the execution, the pipeline remains strong with the commodities price opening new opportunities of public and private investment in the continent. Finally, we should bear in mind that goal in the environmental business in Africa, helping with our knowledge and technical skills, African continent capacity to enter in the circular economy. Moving to slide 20, Latin America. During 2021, you know that this region was the most impacted by the context of pandemic in 2020.
Here we can see the consolidation of a full recovery of the activity with a 20% growth in the second half of 2021, supported mainly by the main market, which is Mexico, that showed in the full year a very good performance, increasing 23% year-on-year to EUR 392 million, mainly supported by the ongoing project of the first stretch of Tren Maya, the biggest railway project in this moment being built in Latin America, and the positive contribution of the energy business. I would like to highlight also the positive contribution from the profitability of the region from Peru and Brazil, two important markets in the region that are increasing margins for all the region and focusing in a more selective backlog with a higher exposure in private clients.
Looking to the future, we have to say that our goal is to revamp the commercial activity in 2022, also and already with positive results from the commercial front, mainly in Mexico and Peru, that supports a positive outlook for the upcoming years. Now, we are available to any questions that you might have, and so we can proceed with the Q&A sessions. Thank you.
Thank you. Ladies and gentlemen, the question- and- answer session starts now. The first question comes from Artur Amaro of CaixaBank BPI. Please go ahead.
Hi. Good afternoon. Just a minor correction to the moderator. It's not CaixaBank BPI. It's from CaixaBI. It's a little different. So thanks for taking my question. The first one relates with the EBITDA performance of the quarter. EBITDA was down 2.5% year-on-year, despite a very significant increase in revenues. I would like to know more precisely what was the reason behind the EBITDA fall. I assume that we're talking about a very significant increase of raw material prices. The second question relates also with the very significant reduction of financials. It's a positive use, - 38% year-on-year. Just to have an idea, what was the reason behind this very significant reduction of financials, and if this can be considered recurring going forward. Thanks for taking my question.
Hi.
Hi.
Hi.
Yes, you are right. CaixaBank BPI and CaixaBI is a very large difference. The first question is about the EBITDA in the second half, I think, comparing with the previous year.
Yes.
Basically doing the other. You know, EBITDA is different from operational margin. If you see the operational margins, we, I think we disclose there, the average is almost the same. A little bit better in that 2020 than it was this year. The EBITDA has some impact sometimes because we have internal corrections when we close some projects. In 2020, we closed some important projects, and that led to the difference in EBITDA. But I would say it's not relevant and it's not linked to this inflation of raw materials. Nothing of that potential dimension, not at all, first of all. The second question is about the.
Sorry, reduction of financials.
Yes, we have materially and effectively a difference, an improvement in our financial costs. Of course, this main difference is related with the capital gain with an operation that we did at the end of the year in Mexico.
Okay.
With our tourism subsidiary.
Which means it's non-recurring, right?
Part of that is not recurrent.
Okay. Thanks for taking my questions. Very clear your answer.
Thank you.
Thank you very much, and I apologize, Mr. Artur. The next question comes from Filipe Leite, from CaixaBank BPI. Please go ahead.
Hello, everyone. I have three questions, if I may. First one regarding EGF and if you can give us more detail regarding the ongoing negotiations for the new regulatory period, which I believe it's from 2022 to 2024. Namely, what is the RAB and return on RAB that you are expecting or that you are proposing to the regulator? Second question on factoring, leasing and confirming it reached in 2021 an historical high level of 26% of top line and has been increasing significantly in the recent years. I understand that this is partially or at least partially related with the mining contract. Can you give us what should be the level of leasing, factoring and confirming that you are comfortable with?
I mean, should we assume that in terms of percentage of top line, this amount will continue to increase, or it will remain in the upcoming years at roughly the same level we passed in 2021? Last one is on the pro forma figures that you present on page 26. If you can tell us what is included in Capital, the subsidiary Capital, which had more than EUR 140 million top line and EUR 9 million EBIT. Also the reason for the other contribution in terms of EBIT standing at -EUR 54 million this year, when in 2020 it was only EUR 7 million. Thank you.
Hi, Filipe. How are you?
Muito legal.
Hi. Thank you.
Hi. No, no, fine. Okay. Okay, three questions. First of all, EGF. Okay, we are in. Of course, we are in a process of renegotiation of the future, the next period of regulatory period of EGF. As you know, we changed the conditions dramatically, this ending period, which was a very important and significant capacity for the company to show to the regulator that we were right and he was not at that time. I think our main ideas was very well accepted by the regulator. I think now the company, which is serving the public interest company, it's a provider of a public service. These, our ideas, our figures, investment are much more aligned with the regulator now after this very troubled discussion than was before.
Our expectation for the negotiation of the next regulatory period are very aligned with our goals. You can understand, I cannot disclose details of that negotiation because I think we'll have final outcome of the decision in the middle of this year. More than saying that, we will be aligned with the actual performance of the EGF Group, I cannot more detail from this negotiation. Factoring, confirming, and leasing. Yes, we are comfortable with the level of these financial instruments. It is very important to analyze that, to highlight that leasing is a very important instrument for some contracts in which we amortize all the equipment during the delay or the period of that contract.
It makes a lot of sense to have financed the equipment with a specific financing in order to align the equipment, the contract and the period of the payment. It's for us, makes a lot of sense, and of course we should use more this instrument in contracts that allow the capacity to pay during the same period. The other question which is relevant to confirming. Confirming, you know, it's not an instrument, a financial instrument. It's a very short-term financial instrument. But we normally don't use a lot. What is new this year? This year, when we start in Tren Maya and mainly in Tren Maya, the client has to pay an advance payment by having a confirming to a down payment.
I put a public bank to give support by that during as was an amortizing of down payment. That's why the confirming increase in such an expressive amount. For that, it was important to clarify how we deal with confirming when the value came to be more material than it was before. Does it make any sense not to treat confirming like factoring and leasing? I think it's much more short-term than the others, much more not linked with real debt than the others.
What if you want to compare this year with last year, the confirming in 2020 was, I don't have the figure here, but should be immaterial, EUR 15 million-EUR 20 million, something like that. You can check that on the balance sheet. I don't. It's not material. The point, the last question, I'm so sorry, but I missed that. Can you repeat? Can you be so kind to repeat?
Basically looking at your presentation on page 56, you are providing pro forma information. My question or what I would like to understand is what activities are included in Capital, which we report to EUR 142 million top line in 2021. The reason for the other and intercompany EBITDA to reach a contribution of - EUR 29 million EBITDA in 2021, when in the previous year it was only EUR 7 million negative.
First of all, in Capital we have some not related with concessions, but we don't consolidate in terms of turnover our bit of consolidations. What is here is mainly the facility services, the landscaping company that we have, which were initially integrated in construction area but are not anymore. Basically this turnover are coming from that is some real estate that we still have, which is not expressive as you know. The margin is that. The difference of intercompany and others, I really don't know.
I will check and send to you later on because of course when we are doing some change in the perimeter and the way that we aggregate the businesses as we are doing now, perhaps difference are higher for that reason, but I will check and share with you more as soon as possible. Sorry for that.
Thank you. Thank you very much. Ladies and gentlemen, let me remind you again, if you wish to ask a question, please press zero one on your telephone keypad. Thank you. The next question comes from Daniel Gandoy from JB Capital. Please go ahead.
Yes. Good afternoon, everyone. Thank you very much for taking my questions. Two if I may. The first one is if you could provide us with more color on the guidance for 2022, either by geography or by division. The second question relates to the working capital trends in 2022. What should we expect in terms of working capital to revenues, if we should expect something similar to this year close to 80% and then further increase of the confirming, leasing and factoring lines. Thank you.
Hi. Thank you for your questions. First of all, related with the guidance, it's much more, much less that we have here on the slide 22. Of course, depending on regions and depending on markets, we will be more focused in turnover or margin. To be totally clear. Of course, for instance, in Europe we'll be much more focused on margin. We've consolidated these good margins that we are having in such a mature market than in turnover. Of course, we have a large backlog to perform in Africa. In Africa, I hope that we can increase our activity, and surpassing for sure the EUR 1 billion turnover next year. Latin America, we will be more focused, of course, in consolidated the good margins that we had this year rather than grow expressively, I would say.
Basically, I don't know if you want more details than that because it's our indications that we are going to have a sound activity going further next year. All the indicators that we have, we have already the first months of the year closed. Is that what indicates. Basically, we have more activity to perform in Africa than we have in the other two regions. Of course, we have to consolidate these markets that we have in the other two markets. I mean, the other two regions, Europe and Latin America. The second question was about, I think, we'll be graceful. We'll be a little bit worse than for this year because we are going to speed up the activity in Africa.
Normally that and an effort of working capital more than we were able to manage this year. Just to know that as you know, we have an indication in our business plan of 7%, but let's see if it is less of working capital on turnover. I think that will be different than what was this year.
Okay. Thank you very much.
Thank you. The next question comes from João Safara from Banco Santander. Please go ahead.
Yes. Hi. Good afternoon. Thank you for taking my question. I have two. The first one is regarding the down payments this year. Can you quantify how much have you received in down payments? You started some very large projects. So could you give us an idea of how relevant that was for the sound performance? Then the second question, just wanted to have your view on the backlog, specifically on countries that are oil driven. Just I'm thinking mostly about Angola and Mozambique. I mean, if you're seeing an uptick in terms of backlog in those two countries.
Specifically in Mozambique, if you could give us some color on the LNG project as it restarted. Are we seeing more potential new contracts coming in? And are you bidding also for those projects? Any color on this would be very helpful. Thank you very much.
Hi, João. How are you?
I'm very good, thank you.
Nice, nice. The first question is the amount of down payments received last year was around EUR 380 million, something like that. I don't have the precise figure, but it was on that level. Regarding the second question, of course we are. This crisis, this new crisis that we are living in with this war in Europe, of course will affect dramatically the balance between the demand and the offer in the oil and gas market. What will happen with Russia will change a lot the shares of the energy market in the world. Of course, new sources of oil and new sources of gas, mainly gas, will be very, very important in the message.
As you know, in the north of Mozambique are the biggest proven reserves of natural gas in the world. Of course, the project was suspended by Total. It's one of the major players because of the rebels and the attacks of the rebels and the small war that is going on there. Of course, now it's much more controlled. Total last week reinforced their full interest in the project and that project is important because all the Western companies, oil and gas, are selling their assets and their stakes in the oil and gas business in Russia. So they will be short of gas, for instance. But of course, the request of Total was that no incidents can happen in the area for three months or however.
I don't remember exactly the period, but they fixed to the Mozambican government very clear conditions, safety conditions in order to resume the project. As you know, there was a total change in the Mozambican government. They changed a lot of ministers, including the Prime Minister, in order to create, I don't know why, but the state or the government was not satisfied with the speed of the creation of conditions to resume the gas project. You know, we have a project which is suspended. A big one. The project was not canceled. The contract was not canceled with ourselves and our JV. The project was only suspended.
We are very keen to understand that the project could be resumed and going on with more, of course, work for ourselves because we have a very specific conditions and special conditions to address that big project. If of course we sign important contracts of energy in Uganda in the beginning of the year January and February already for Total as well. We are having a very good relation with Total as a client which is important. Of course as you can imagine, the budget in Angola was then based on an oil price of $40 per bbl, is in more than $220.
Now, the barrel the oil delivered on May is already sold. Selling price of the oil to be delivered on May is $251 now. Of course that will provide much more capacity of those countries to invest and of course to have a much more sound public budget for the coming years, I would say. Of course, war is not good. It's a terrible thing to happen. Of course, there is a lot of collateral damage and consequence of those terrible events. Of course, one of them is this changing in the energy sector. Of course, that will generate a lot of work.
Not even perhaps here in Portugal as people are discussing in scenes and other places. A lot of things will happen in the near future.
Thank you very much for the detailed view.
Thank you. Ladies and gentlemen, let me remind you again, if you have any questions, please press zero one on your telephone keypad. Thank you. Ladies and gentlemen, let me remind you, if you have any questions, please press zero one on your telephone keypad. Thank you. There are no further questions. Ladies and gentlemen, I will now pass the floor to our speakers.
Thank you for all the questions. We will make the final stage of this presentation. Looking to the slide 22, where we can see the outlook, the guidance for this year of 2022, with the turnover expected to increase high single digits for the full year with the EBITDA margin in line with historical margins. We increase considering the strong development of our backlog. We increased the goal for 2022 for standalone backlog level above EUR 7 billion with relevant progress in pipeline. The CapEx in range of EUR 250 million-EUR 300 million, in line with what we presented in the strategic plan, Building 26. We will maintain our focus in our financial strategy to have a focus on our ongoing cash flow generation and debt reduction.
Proceeding with the strengthening of the capital structure and diversifying funding sources and extending debt maturities. In the final slide 23, is a sum up of the year of 2021 and 2022. And we want to give you the main message that we would like you to retain. That our operations are back on track after the pandemic, and with the challenging crisis, the company achieved a very important strategic agreement with CCCC to operate globally with one of the leaders worldwide of the industry. We presented in November the new strategic plan Building 26 and showing in the second half of 2021 a strong performance that supports a positive outlook from 2022 onwards. In this sense, in this year of 2022, the company will be focused on executing the backlog.
Nevertheless, always looking to good opportunities that can promote synergies and profitability to the group. Considering, following a long period of preparation of the new strategic plan, the company and our teams are prepared to target sustainability as a priority in our agenda. Thank you very much for your presence. Thank you. Thank you all. Bye-bye.
Ladies and gentlemen, thank you for your participation. You may now disconnect your lines.