Thanks operator. Good afternoon to everyone, and thank you for joining this HOCHTIEF results call for the first nine months of 2022. I'm Mike Pinkney, Head of Corporate Strategy, and I'm here with our CEO, Juan Santamaría, our CFO, Peter Sassenfeld, as well as our Head of Capital Markets, Tobias Loskamp, and other colleagues from our senior management team at HOCHTIEF. We look forward to taking your questions, but to kick off, our CEO will run us through the key aspects of our performance during the first nine months of the year. Juan, all yours.
Thank you, Mike and team. Good afternoon to everyone, and thank you for joining us today. Let's turn to the key highlights of these results on slide three. HOCHTIEF delivered a solid performance during the first nine months of 2022, with further profit growth and increasing operating cash flows, accompanied by a firm order book, now withstanding the challenges of the current environment. Sales increased by 23% to EUR 19.1 billion or 11% in FX adjusted terms, with nominal net profit rising by 21% to EUR 355 million. Operational net profit was up EUR 59 million to EUR 381 million, an increase of 18% year-on-year. Underlying net cash from operating activities of EUR 122 million was up by EUR 43 million year-on-year, driven by a solid Q3 performance.
As of September, HOCHTIEF had a net debt position of EUR 226 million after the CIMIC minority buyout. The group's order book stands at EUR 52.8 billion and is up by around EUR 4.4 billion or 9% since December 2021. On slide five, we can examine cash flow trends. During the third quarter, underlying net cash from operating activities increased by EUR 60 million compared with 2021 Q3, with a nine-month figure of EUR 122 million also higher year-on-year. The figures are adjusted to exclude extraordinary payments for the legacy CCPP project at CIMIC in Q2, and the final payment for the legacy Chilean project at HOCHTIEF Europe in the third quarter. Looking at the last twelve months to eliminate seasonality, a robust EUR 800 million+ was achieved.
Net operating CapEx is ramping up, driven mainly by job-costed tunneling equipment being deployed for major projects at CIMIC. Free cash flow from operations in the last 12 months stands at a solid EUR 679 million. On slide six, we can look at the cash development on the balance sheet. At the end of September 2022, HOCHTIEF had a net debt position of EUR 226 million after group dividend payments of EUR 148 million over the preceding 12 months. Adjusting for the EUR 534 million investment in CIMIC shares, net of HOCHTIEF capital increase, as well as other non-operational items, the balance sheet would show a significant net cash position, as you can see on the chart. Our liquidity remains very robust at EUR 5 billion with substantial and strong credit facilities.
Slide seven shows more detail on the development of the group's orders. HOCHTIEF's order book reached EUR 52.8 billion at the end of September, an increase of 13% like for like in nominal terms over the last 12 months. FX movements, particularly the strength of the U.S. dollar, were a significant driver as shown. Over half of our backlog, like 55%, is located in North America, with a further 37% in the Asia Pacific region and 8% in Europe. New orders of EUR 21 billion are stable on a year-on-year comparable basis and represent 1x work done in the period. On Slide eight, we show some of our major recent project wins, including first, in Americas division, Turner sustained its strong position within the healthcare sector and was awarded, among others, a hospital project in Boston.
A Flatiron-led consortium secured the I-105 ExpressLanes Project in L.A. County. In Europe, we were awarded a contract worth almost EUR 200 million to widen the A1 in Germany. HOCHTIEF is leading a joint venture to expand the highway between the Rhine Bridge and the Leverkusen interchange in this project. Furthermore, a HOCHTIEF joint venture has secured an approximately EUR 240 million contract for the construction of a battery cell, a market segment which is seeing strong growth. At CIMIC, a CIMIC contractor joint venture was selected by the Victorian government to deliver a major works package for the Melbourne Airport Rail project. Thiess was appointed services provider for the Iron Bridge Magnetite Project in Western Australia, worth around AUD 480 million over three years, with options for a contract extension.
In Canada, Sedgman will deliver services at a gold extraction project. Let's look in more detail at Americas. HOCHTIEF Americas delivered a firm set of results for the first nine months of 2022. Sales year to date of EUR 12.8 billion were 27% higher than the corresponding period of 2021, a 12% increase FX adjusted. Operational activity of EUR 265 million was 9% higher. Operational net profit was up 16%. The division's net cash from operating activities pre-factoring in the nine months period reflects seasonality and timing effects. The strong third quarter of EUR 132 million showed a EUR 180 million increase year-on-year, bringing the last twelve months figure to EUR 294 million.
The robust balance sheet at HOCHTIEF Americas had a September 2022 net cash position of EUR 1.6 billion, up EUR 185 million year-on-year. At the end of the period, the order backlog remained solid at EUR 28.8 billion, up 16% year-on-year. Broadly stable effects adjusted with an absolute increase of over EUR 2.7 billion since the start of 2022. New order secured during nine months, 2022, reached EUR 11.5 billion, up by 4% year-on-year, with work secured in the last 12 months, representing 1x work done. HOCHTIEF Americas outlook for 2022, we target an operational pre-tax profit of EUR 350 million-EUR 370 million, subject to market conditions. On slide 10, we have the Asia-Pacific division, and we can see the positive performance of CIMIC.
Revenues increased by 13% to AUD 8 billion in the first nine months, 2022, driven by a growth in Australian construction and services. Net profit after tax of AUD 300 million was 5% higher year-on-year on a comparable basis. EBITDA and NPAT margins were resilient on a like-for-like basis as companies continued to tightly manage supply chains and mitigate wet weather impacts. Underlying operating cash flow pre-factoring improved by almost AUD 320 million year-on-year. EBITDA cash conversion pre-factoring reached 87% on a last 12 months basis, rising to 102% excluding Leighton Asia. Net debt stood at AUD 737 million with a year-to-date movement, including the CCPP settlement payment and the AUD 112 million dividend paid to HOCHTIEF in Q3, 2022.
New work of AUD 12.5 billion was secured during the first nine months of the year, comfortably exceeding the AUD 10.5 billion of work done in the previous period. The period end order book stands at AUD 29.6 billion, a 7% increase on a comparable basis since December 2021. We expect CIMIC to achieve an NPAT for 2022 in the range of AUD 425 million-AUD 460 million, subject to market conditions. I would like to highlight that during the third quarter, an AUD 372 million offer was made by CIMIC joint venture company, Thiess, for 100% of Australian resources company MACA.
This transaction will be successfully completed in Q4 2022, and the acquisition of MACA, with its strong presence in gold and iron ore, supports Thiess' strategy to diversify its operations across commodities and services as well as geographies. Moving on to slide 11. Let's look at Europe, which maintained steady profit performance. Sales for the first nine months of 2022 were EUR 927 million, and at a similar level to the previous year. Operational activity of EUR 43 million was EUR 3 million higher year-on-year with a solid margin. Net cash from operating activities in the third quarter was close to neutral, with the nine months figure reflecting the characteristic seasonality of the business. In both cases, after having adjusted for the final Q3 2022 cash payment that settles the legacy Chilean project arbitration decision announced in 2021.
At the end of September 2022, the division's balance sheet maintained a solid net cash position of EUR 600 million, up EUR 30 million year-on-year. HOCHTIEF Europe secured new orders in the period of approximately EUR 1.1 billion, with a Q3 figure around EUR 100 million higher year-on-year. New orders last twelve months are equivalent to 0.9x work done. The divisional order backlog ended September 2022 at EUR 4.3 billion, with a visibility of 2.5 years. For 2022, we maintain our operational activity guidance for Europe at EUR 45 million-EUR 65 million. On the next slide, we summarize the performance of Abertis. Average daily traffic in nine months 2022 was 12% higher year-on-year, with individual countries showing significant traffic growth.
Operating revenues rose 17% year-on-year to EUR 3.8 billion and EBITDA by 19% to EUR 2.6 billion, both on a comparable basis. Abertis net profit in the period pre PPA was EUR 506 million at a similar level to the nine-month period of 2021. Profit contribution from our stake in the toll road operator was EUR 53 million, compared with EUR 43 million in 2021. Abertis paid a dividend of EUR 602 million in Q2 2022, of which HOCHTIEF received its share of EUR 119 million. The expected total payout for the three-year period 2022 to 2024 is EUR 1.8 billion, including the April 2022 payment. We continue to expect that our Abertis investment will make a positive profit contribution to HOCHTIEF in 2022.
In summary, a solid performance from HOCHTIEF in all its divisions in terms of sales, profits, cash flow and orders. Looking forward, the global economy is currently facing significant macroeconomic challenges. HOCHTIEF is actively managing these challenges as it's well-positioned for the future based on, first, our solid long-standing local positions in our key developed markets. Second, our geographical and currency diversification. Third, a substantially de-risked and growing order book. And fourth, the identified tender pipeline of relevant projects worth over EUR 600 billion for 2022 and beyond. During October, we completed the long-term refinancing of our investment in CIMIC, which was a key element in our strategy of simplifying the group's corporate and capital structure and eliminating dividend leakages. Another strategic imperative for HOCHTIEF is to further advance in the implementation and application of ESG principles via our Sustainability Plan 2025.
The most recent example is our announcement that as of 2023, we will implement a new biodiversity management action plan for all projects in environmentally sensitive areas. To conclude, we confirm our group guidance for 2022 of an operational net profit in the range of EUR 475 million-EUR 520 million, an increase of between 5% and 15% year-on-year, subject to market conditions. Thank you very much and to everyone for listening, and now I welcome your questions.
First question is from the line of Luis Prieto from Kepler Cheuvreux. Please go ahead.
Good afternoon. Thanks a lot for taking my questions. Two this time, very brief. The first one is if you could provide more light on the decline in margins in the U.S. Sales did beautifully, but the margin figure was not comparable to previous periods. The second question is how should we interpret the sharp drop in order intake in the U.S.? Is it a market slowdown? Is it one of the fact that I'm ignoring? How do I look at this? Thank you.
Thank you, Luis. Thanks for your question and nice to talking to you. I mean, first of all, we believe that right now, I mean, this is just a one-off. We believe and we're quite comfortable with Americas, and we believe that it continues to perform very well. In terms of the modest growth in profit terms, first there's a project mix, and there's a timing effect on margin sales ramp-up, number one. Secondly, from EBITDA, I mean, perspective of, we do have fewer, you know, from a revenue perspective versus the PBT, we have fewer equity accounted joint venture projects contributing to turnover.
That impacts the difference between the margin on the PBT and the margin on the revenues. Hopefully this answers the question. Mike, do you want to add something?
No, I think that's it. It's pretty much what Juan says. As you can see, the operational net profit grew by 16%, which was much closer to the sales growth. I mean, you know, we're not concerned about any structural effect there. In terms of new orders, I mean, basically, we believe that there's nothing, you know, it's not significant. There's a lot of variability in terms of new orders on a quarterly basis in Americas. If you look over the last three years, we've had anywhere between sort of $3 billion and $5 billion per quarter. In Q3, it was about $3.3 billion.
In particular, I'd highlight that there was a significant amount of preconstruction awards for several sizable projects. They're not in the new orders now, but they're expected to come through in the near term. Not a concern.
Excellent. Thank you very much.
Next question is from the line of Marcin Wojtal from Bank of America. Please go ahead.
Yes. Good afternoon. Thank you for taking my questions. The first one, how are you finding the acquisition of MACA by Thiess? Do you expect CIMIC to actually inject some cash into Thiess? Question number two, more broadly, how do you feel about the balance sheet of HOCHTIEF right now? Do you believe that you still have some firepower for potential new projects? Do you believe HOCHTIEF is still in the position to potentially support Abertis if they were to find some new opportunities? Thank you.
Thank you, Marcin. Starting with MACA. I mean, first of all, MACA, in my opinion, is a great acquisition by Thiess for different reasons. The first one is because it gives a huge diversification in revenue by commodities. MACA is very strong when it comes to iron ore, when it comes to gold, and when it comes to other minerals, while Thiess traditionally has been more strong in the coal space and other metals. As you know, we are trying to diversify very strongly Thiess out of coal. We have very important objective to reduce by 2027 Thiess to exposure to thermal coal below the 23%, and MACA is fundamental for it.
In addition, MACA is not only contributing to the diversification of Thiess in the commodity space, but also geographically, as Thiess is mainly based in Eastern Australia, Indonesia, Mongolia, and other markets like the U.S. or Canada. We are starting to grow in those markets. MACA provides the west of Australia as the core market, introducing around 14 new clients to Thiess. From that perspective is a very important acquisition. That's going to continue growing Thiess into minerals are gonna be key into the future. In terms of the capital contribution, yes, there's going to be capital contributions from both partners, both including Elliott and CIMIC into Thiess.
The total equity value of the transaction comes up to AUD 371.95 million. The idea is that the total investment per shareholder would be 50% of it, AUD 193.5 million. That includes AUD 7.5 million transaction cost for each. In terms of the balance sheet of Thiess, Mike, you want to-
Yeah. Thanks, Juan. Hi, Marcin. Yeah, I mean, basically, as we said, we've sort of ended September in a slightly net debt position. As you know, the fourth quarter is seasonally very strong in terms of working capital inflow, and we expect that to be the case this year in 2022 as well. You know, last year, for instance, you saw a cash inflow of EUR 500 million+ from net working capital, and we'd expect to see a strong fourth quarter again this time around. I think, you know, the balance sheet is solid. We, you know, continue to have our investment grade rating by S&P.
Yeah, we're well positioned for any opportunities that arise.
Yeah. Thank you.
Next question is from the line of Christoph Dolleschal from HSBC. Please go ahead.
Thanks very much. Hi. I have another follow-up question on the sales growth versus the margins in the U.S. and Asia Pacific. So basically, when I strip out the foreign exchange effect, the Americas was up around about 25% in the third quarter. Asia Pac was up 20%. You said it's mix, but could you kindly elaborate a bit further? So how much, for example, was eaten away by inflation? I know that you have little risks in the projects themselves as price increases are usually passed on, but I think there is generally some risk left. Also in the presentation you state more generally that you have still six business projects that are not defined as low risk projects.
I would just like to know why it is so difficult to basically translate that sales increase into also the margins.
Sure. I don't think that inflation is playing a big part of it due to the nature of the contracts of Turner. I mean, basically, as I said before, there's a reduction on the joint ventures that typically are accounted on an equity accounting basis. That means that typically when we do account on through these joint ventures, they are not giving us revenue, but they are giving us the PBT. As that reduces, obviously the margins changes. I think that's the main reason in the case of Turner. In the U.S., we are not, I mean, we're not seeing any issue, any challenge.
Actually the contracts that Turner have are quite solid from a risk perspective. We're not anticipating any major issue. When it comes to Asia, the effects are a little bit different. One is explained through the Ventia deconsolidation, a part of that. There's also from a lease perspective, I mean, bad weather has affected significantly Thiess in this quarter, but more importantly, in the first nine months. I think that's driving a big part of that. You know that, I mean, our partner Elliott has priority over the dividends and impact of these processes. We do whatever impact has Thiess that comes straight to CIMIC.
I would say that those are the main impacts in the margin.
Okay, thanks.
As a reminder, if you'd like to ask a question, please press star followed by one on your touch tone telephone. Next question is from the line of Graham Hunt from Jefferies. Please go ahead.
Good afternoon, gentlemen. Maybe just two questions from me. Going back into the U.S. I don't know if there's any color, extra color that you can give on, maybe the relative strength and weakness across some of the end markets that you're in the U.S., in the last quarter. Just second question on your guidance. I know you've maintained that for the full year, despite seeing probably stronger, FX tailwinds than you must have been expecting. Is that just conservatism on your part? Or are you seeing sort of an underlying softening in the environment which is driving that maintenance? Thanks very much.
Thank you, Graham. Starting with Turner. I mean, Turner is quite diversified in infrastructure, in building infrastructure. If you go right now through the order book of Turner, there's an important part, currently around 20% of data centers. In fact, Turner is one of the few, if not the only company working for the four major tech companies, Meta, Google, Amazon and Microsoft. There's also an important part of a healthcare business in the portfolio, in the backlog, and there's plenty of opportunities in that space, both in hospitals and pharmaceutical. There's been a huge investment right now in North America. On the commercial front, new offices have decreased in North America.
However, renovations and fit out are increasing because as the new reality over remote work gets imposed, everyone has the need to change the way they do business, and that's driving a lot of the renovations in building. There's an important part in sports and aviation segments which Turner is in a very good position. There's work in education, especially with some of the big universities in the U.S. There's a lot of manufacturing coming into the U.S., I mean, in part, the de-globalization that is happening in the world and putting America First plan.
A lot of the not only general industrial manufacturing, but battery manufacturing is coming to the U.S., including support in the semiconductors domestic growth. So Turner is very well positioned in all those segments in the high-end space. I mean, part of our strategy is to continue consolidating Turner into those areas, especially at the infrastructure coming on the back of the 5G development and also manufacturing. But also we're trying to see there's opportunities in business areas around the operation of some of that infrastructure, but that's something that we're just considering at this stage. In terms of guidance, are we...
I mean, I think that we have explained before talking about the margins, the impact in Asia Pacific and the U.S.. Yeah, there has been an increase in revenue, but there has also been some impacts on the PBT that I did explain before. I think we are being, I'm not sure if realistic or conservative, but I think we're reflecting right now pretty much in the books what is happening in the market, and I did explain before. I mean, I think we're comfortable keeping the guidance at this stage.
Thanks very much.
We have a follow-up question from the line of Luis Prieto from Kepler Cheuvreux. Please go ahead.
Yes, sir.
Juan, apologies for the follow-up question. I just wanted to check with you how we should think about share buybacks going forward, given the current situation with the shareholder structure, et cetera. Thank you.
I mean, we haven't made any decision. We always consider any different option, but at this stage, there's no decision about buybacks. If that was to change, we would announce. We always keep the options open.
Understood. Thank you.
Next question is from the line of João Safara from Banco Santander. Please go ahead.
Yes. Hi, good afternoon, and thank you for taking my questions. Three, a bit of detailed questions. The first one, it's a follow-up on what you mentioned regarding the margins in the U.S.. Just wanted to understand if, I mean, if this is something that has changed in terms of the way the lower contribution from joint ventures in the U.S., is this something that we will continue to see going forward? Just a little bit to understand if what has changed there or if there is any impact in terms of mix as well. You've mentioned that, for example, the.
I mean, the works in new office have decreased and this has been replaced by innovation. Just wondering if there's an impact in terms of mix there, if you could give a bit of color on that. Then the other question on the impact of Leighton Asia in CIMIC results in the cash flows. When should we expect this to normalize? I mean, the last 12 months is still a negative impact to your cash flows. When are we likely to see the Leighton Asia not impacting negatively to the CIMIC results?
The last one, just to clarify, I recall on the Chile litigation, you mentioned EUR 146 million cash impact, and now in your release, implicitly, it's EUR 111 million impact. Just wondering if there's still something that is coming in or just that the impact in the end turned out to be lower than you expected. Thank you.
Okay. Thank you, João. Starting with the first one on the margins in the U.S.A.. It's a difficult answer in the sense that, I mean, right now, yes, it happens that in Q3 or first nine months, we had a lower contribution from JVs, and that reflects the way that reflect in the P&L. Is that going to happen or not? At the end of the day, Turner decides to move forward in JVs or alone, depending on the project, depending on the strategy. It's difficult to answer. The important thing is, at the end of the day, Turner continues to grow.
It's very well positioned to perform and deliver in new infrastructure projects in North America, in a very good market, and it has a very solid performance. I think that's the key in the case of Turner. The main idea is how we continue to grow Turner, not only on the infrastructure space, but if there's opportunities for PPPs and other developments. On the second part on the offices, I think that Turner, one of the good things of Turner is that they continue diversifying, as I said before, into new sectors. The decrease in commercial offices space hasn't really affected them because that has been happening over the last years.
They've been able to diversify into new sectors in a very good way. I wouldn't see right now the renovation of offices as something that is replacing commercial in general. Commercial in general was replaced by data centers, by hospitals, by batteries, by manufacturing. I think that now the renovation is a new opportunity. I don't see as a replacement of a previous sector. I see as a new opportunity as we move forward to add to the current backlog. I think I see that as a positive. When it comes to Leighton Asia, for sure in 2023. For sure. I don't know in 2022. The reason why I'm saying this is that there's two things contributing to Leighton Asia cash flow.
The first one is the unwinding of the projects in Hong Kong as they finish, and the fact that Leighton Asia hasn't been able to win major projects over the last years. We are not being able to neutralize the unwinding with advanced payments. That's number one. Number two is the settlements on some of the reconciliation of accounts in each one of the projects. I believe that there will be new projects coming in potentially at the end of 2022, and I believe that there should be settlements coming up at the end of 2022, when it comes to the mediations on the projects. It's risky to say or to represent if that's gonna really happen in November, December. It will definitely happen.
It doesn't happen in Q4 this year, it will happen at the beginning of 2023. Definitely, at some stage, Leighton Asia should start performing from a cash flow perspective, and that's going very soon. When it comes to the Chilean litigation, I'm going to ask Mike to answer that question.
Thanks, Juan. Yeah. Hi, João. The final Chile settlement was better than expected. As you said, EUR 111 million versus the EUR 146 million cash flow effect that we'd announced back, well, a year ago now, November 2021. You know, the important thing here is that, yes, it was a bit better. There are no further liabilities in relation to the project. Yeah, there was some FX variations as well there, but that's now behind us.
Perfect. Thank you very much.
There are no further questions at this time, and I would like to hand back to Mike Pinkney for closing comments. Please go ahead.
Okay. Well, look, thanks very much to everyone for joining us for this call. Yeah, we'll look forward to following up via our investor relations department any further detailed questions you have, and we'll of course speak to you in February with our full year results. Thank you, guys. Bye-bye.
Thank you, Mike. Hey, Mike, and thank you everyone for your time today.