Good afternoon, ladies and gentlemen, and a warm welcome to today's earnings call of the PORR AG. Following the publication of the Q3 figures of 2025, I am delighted to welcome CEO Karl-Heinz Strauss and CFO Klemens Eiter, who will guide us through the presentation and the results. Dear participants, kindly note that you are in a listen-only mode during the presentation. After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly to the management via audio line or chat. Having said this, I hand over to Isabella Steiner from Investor Relations of PORR.
Good afternoon and welcome. Thank you for being with us today. I now hand over to our CEO, Karl-Heinz Strauss, and CFO Klemens Eiter for their introductory comments.
Thank you very much. Good afternoon, everyone, and thank you for joining our conference call on PORR AG's results for the first nine months of 2025. Let us start by giving a brief summary of today's topics on slide number three. We begin with a quick overview of the current market environment. Construction is continuously trending up, with civil engineering as a major contributor. Supported by that, our order backlog climbed to a new all-time high of EUR 9.6 billion, rising by more than 17%. Order intake showed an even stronger increase of 26.7% to more than EUR 6 billion. Moving on to our profit P&L, we are proud to say that we again delivered as promised. With efficiency gains and reductions in other related services, we achieved a further improvement in our EBIT margin.
At the same time, our liquidity position remains solid, while our liquidity reserves even showed a slight increase compared to September of last year. Net debt has decreased by 8.7%. This further strengthens our financial position. In terms of equity, we do not only see our equity ratio standing at 20.1%, confirming that we remain firmly on track, but we also managed a slight absolute increase despite the redemption of hybrid bonds. Wrapping up, we confirm and concretize our outlook for the full- year. While we expect our revenues to amount to between EUR 6.2 billion and EUR 6.3 billion, we see EBIT between EUR 180 million and EUR 190 million. Let us now begin by taking a closer look at the current market situation on slide number four.
Looking at the growth outlook for the upcoming years, we see the market is developing in the right direction. Currently, all market segments point in the direction of growth, especially in the CEE countries, where growth rates by 4.8% and 4.4% are expected for 2026 and 2027 respectively. Civil engineering remains the main driver with the highest momentum in the construction industry. This is not least driven by the high inflow of European funding from the Next Generation EU budget, as well as the Recovery and Resilience Facility. Residential construction now, by the end of 2025, shows signs of recovery. While positive momentum is not expected to unfold immediately, we anticipate the positive trend becoming more visible over the next few quarters.
Due to the constant urbanization all over Europe, the housing need is about to rise even further, calling for new building and renovation of the existing substance. Other building construction remains solid, particularly in specialized segments as healthcare facilities, educational buildings, and so on. A good example is our recently secured hospital expansion project in Warsaw, reflecting ongoing demand in high-value sectors. On the left chart here, you clearly see that not only infrastructure, but especially civil engineering in the CEE countries, is a major contributor to the overall growth of the construction industry. This is not least supported by substantial infrastructure investments funded by the EU. Speaking of infrastructure, let us also discuss the latest news about the infrastructure package in Germany, worth EUR 500 billion and to be invested over the next 12 years.
Due to the ongoing discussions about the current budget, 2025 did not bring new contracts and volumes, whereas for 2026, we see first signs of investment. According to the plan of the federal budget for 2026, more than EUR 20 billion should already be invested in traffic infrastructure in the next year, with more than 80% availability for railway infrastructure. In terms of energy infrastructure, EUR 2.1 billion should be invested, while a big part of EUR 6 billion is also already reserved for the healthcare sector. While digitalization, including among other microelectronics, semiconductors in the countrywide broadband expansion, is funded with around EUR 8.8 billion. R&D, together with education, will receive a total of EUR 2.7 billion. Last but not least, slightly less than EUR 500 million are to be invested in residential construction.
In Austria, funding remains more stable despite the latest news on budget cuts over the government. Investment programs from both ASFINAG and ÖBB, totaling EUR 27 billion, along with housing subsidies worth EUR 5.6 billion, provide a solid pipeline and support for the construction sector. On top of that comes the EUR 4 billion EU recovery and resilience plan, which directly goes into healthcare and educational infrastructure, as well as the energy and digital transition. Moving to the next slide five, let us take a look at our order backlog. We have reached a new all-time high, up 17.2% year-on-year, mainly driven by transport infrastructure in all our home markets. Compared to year-end 2024, the backlog increased by an additional EUR 1.1 billion. Austria also recorded an increase, adding further stability to the overall portfolio.
We see ongoing strong momentum in Poland, Austria, and the CEE countries, mainly driven by infrastructure projects. This is also confirmed by the value of railway construction that more than doubled in the order intake, while also the tunneling and bridges sectors grew by more than one quarter. Impressive figures, in my opinion. On the other hand, building construction remains stable, broadly in line with expectations. Here, educational building construction showed a major increase, while renovation also contributed to the good environment. The high quality of our backlog is reflected in flagship projects such as the Brenner Base Tunnel, the CPK Tunnel in Łódź, the railway line LK 108 between Jasło and Nowy Sącz, and the Caransebeș railway project in Romania.
In addition, the ongoing work on major industrial construction sites in Munich, Vienna, and Frankfurt underlines our expertise beyond infrastructure and strengthens our positioning in the industrial and commercial sector. Turning to slide number six, I would like to talk about the higher order intake. After strong development in the first six months, the strong momentum continued. The strongest increase is coming from international tunneling and railway construction, particularly in Poland, where we continue to expand our strong market presence. In German building construction, we are seeing signs of improvement. In the non-residential segment, healthcare and education remains an important driver, and we continue to receive follow-up orders from long-standing and well-known industry clients. In addition, we were able to secure larger residential projects in both Austria and Germany, indicating a cautiously improving market sentiment.
To give you a brief overview of our latest orders, please follow me on slide seven. In the third quarter of 2025, we secured two significant design and build contracts in Polish railway construction. The LK 108 line between Jasło and Nowy Sącz, and the LK 104 between Rabka Zaryte - Fornale, with a combined volume of more than EUR 300 million. These projects underline both our strong position in the market and our technical expertise in transport, infrastructure, and the modernization thereof. In Austria, we were awarded the remediation of a contaminated site in Angern an der March, a technically demanding project with a volume of around EUR 89 million. Additionally, the railway construction in Pilsen, Chotěšov, further strengthens our footprint in the Czech Republic.
Another highlight is the Voivod wind farm phase II project in Romania, which demonstrates our increasing involvement in renewable energy solutions and supports the diversification of our other portfolio and orders. Overall, these new orders reflect the strong quality and resilience of our pipeline and reinforce our confidence in the medium-term outlook. Let us move on to slide number eight and begin our performance review with the production output. Over the first nine months, output recorded a slight decrease of 0.7% year-on-year. This temporary decline is primarily attributable to the ramp-up of new major projects, which are currently in the design phase and therefore cannot yet contribute fully to output. As these projects progress into the active construction phase, we expect a corresponding recovery in output over the coming quarters. These effects are purely time-related and do not reflect underlying demand, which continues to develop favorably.
Besides that, we still see a slow economy in the residential construction sector, which only gradually starts to improve. In contrast, we observed a major increase in industrial construction, which also led overall building construction to show a slight improvement in output. Speaking of improvement, please follow me to slide number nine and the discussion of our earnings development. I'm very pleased to report a further improvement in earnings. Efficiency gains, reductions in related services and strict cost discipline contributed positively. This clearly proves our focus on building as much as possible ourselves. Personnel expenses increased due to the inflationary adjustments in the collective wage agreements. Also, the increase has slowed down compared to the half-year figures. EBIT came in with a plus of 17.7%, a clear indication of the continuous rise in our earnings.
Despite the financial result being burdened with one-off effects, the result for the period also improved by 15.1%. Given that, earnings per share increased by 21.2% - 1.43 EUR, marking another strong step forward. Coming to slide 10, I would like to share my opinion about our cash situation together with the ongoing net debt reduction. The cash flow from operations was once again impacted by the high working capital usage, which is very common at current peak of the construction season at the end of Q3. Despite that, we see the cash flow from operations still beyond the long-term average for Q3, confirming we are on track. In terms of cash flow from investing activities, we saw a decrease in the reporting period coming from a low investment activity.
This is also visible in our CapEx ratio, which currently stands at 3.6% of output. Therefore, we revised this year's target there and now expect the CapEx ratio for 2025 to come in below the multi-annual average of 4%. Taking all of that into account, the free cash flow improved by EUR 25.5 million, now standing at -EUR 180 million. In the cash flow of financing activities, both share programs, the buyback as well as the sale of treasury shares are visible, together with the successful refinancing of bonded loans in August this year and the redemption of hybrid capital in Q1. These one-off effects are also reflected in our net debt development, which once again show a decrease by 8.6%.
Before one-offs on operational improvement of nearly 20%, please bear in mind the EUR 229 million of our net debt are long-term office rentals accounted for under IFRS 16, so our classical financial debt at the end of Q3, the peak of the construction season, is clear below EUR 100 million. Let us turn to slide number 11 for a brief review of our equity. We recorded a year-on-year improvement in the equity ratio of 0.5 percentage points, which reflects our ongoing efforts to further strengthen our balance sheet structure. In February 2025, we redeemed EUR 40.65 million of hybrid capital. This step underlines our intention to gradually reduce the hybrid share of our equity capital and continue optimizing our capital structure.
Due to the sale of our treasury shares and our strong earnings development, we were able to improve our equity position in absolute figures by EUR 2.6 million compared to the end of last year, or even EUR 60.3 million compared to Q3 2024. On September 22, the PORR share has been included in the Austrian prime index ATX. This mark an important milestone in our history as listed company. It enhances our visibility towards institutional investors and further increases our attractiveness on the capital markets. Coming to the end of today's presentation, please follow me now to slide number 12, the current outlook. We confirm and concretize our full- year guidance. For 2025, we expect revenues in the range of EUR 6.2 billion-EUR 6.3 billion and EBIT between EUR 180 million and EUR 190 million.
Supported by our solid and still expanding order backlog, we are well-positioned for the coming months and years. However, please keep in mind that the latest order intakes will not contribute immediately. The full effects are expected to materialize increasingly over the next few quarters. Looking further ahead, our long-term ambition to reach an EBIT margin of 3.5%-4.0% by 2030 remains unchanged. With our strong market position in our home market, our broad value chain, and our ability to deliver as in one-stop shop, we are on the right track to increase our profitability building value for our company and shareholders. With that, I would like to thank you for your attention so far and open the call for your questions.
Yes. Thank you very much for the presentation, Mr. Strauss. Dear participants, it's your turn now. We are opening our Q&A session, and for a dynamic conversation, we kindly ask you to ask your question in person via audio line by raising your virtual hand. If you have joined by phone, please use the key combination star nine followed by star six. If you do not have the opportunity to speak freely today, you can also place your question in the chat box. However, we prefer to speak to you in person. We already received a question. Mr. Scharff, you should be able to speak now and place your question. Mr. Scharff, you can speak now.
Good afternoon, gentlemen. I have a couple of questions, but first of all, congrats for the very high order backlog and also for the margin improvement. The first question is about the segment reporting for Germany. You have a strong hike in production output, 13%, and the number of employees is just up 2%. We have now this Merz government package for next year coming with about, let's say, EUR 20 billion in traffic infrastructure and another EUR 10 billion or EUR 15 billion in energy infrastructure and digitalization. How do you plan or what are your plans to expand your employee number, your headcount in Germany to tackle the new projects and the new challenges?
That's easy to say, Stefan. Welcome. In Germany, we have increased so far now because there is one or two huge construction sites, for example, like BMW in Munich. There is a lot of workers also of subcontractors. They are now finishing this big project coming in. You see the revenue going up and our own personnel is still the same or coming up like that. We are well prepared for the upcoming investments in Germany. We have, as you know, we have bought another company in Baden-Württemberg last year. We start up now building connections with our Austrian, Polish guys so that we see the German market in that one. We always said it will need a little more time to come up with the projects.
Unexpectedly, we see in Germany now strong movements into changing the tender preparations and the tender, how to go out into the markets. We see now that they try with these IPA facilities with design and build or some tenders where they only ask for a bridge, and you have to design the bridge under certain laws and all the norms and things. We think that it will come earlier to contract, so that we will start in 2026 with the first contracts like that. We see by STRABAG and some other activities coming very aggressive up now on these new tender methods, and this gives us very positive.
We are well prepared, and I also think the German construction industry is prepared to take up all the orders which are now will come up the next three-four years. There is not that much need to go aggressively in hiring people like that. Because as you have seen the figures for 2025 for the German construction industries, they are still decreasing.
Mm-hmm
There is the one. I think we are all very well prepared, and what come up will taken up by the existing companies. I'm afraid there will come other companies also to Germany, but this is another story.
Okay. If you look at the segment Infrastructure International, there was this very marvelous hike in order intake. You tripled your order intake to almost EUR 500 million.
Mm-hmm.
Here the number of employees was down 4%. What is your outlook here for the employees and for the development of infrastructure international? I think it's a lot about railway connections and tunnels.
Yeah, it's railway, tunneling, and also high infrastructure projects in Poland, Czech Republic, and mainly also in Romania. You know, starting a big project, another one when we win the tender, then we started at least one year design phase. Within this design phase, we do not have the need of so many people. Some people go on holidays, go away from a company, come back like that. We are well prepared for that. You will see, especially in the figures of 2026 half year, that all the revenues will show up again, very dramatically in these countries when we start the construction phase. All the big projects in that time are starting with design. Some start directly because the design is delivered. But it's always a good average.
We still see the next two-three years very high demanding orders coming up in Poland, Czech Republic and Romania. As a strong in railway infrastructure, this go on longer, but also in highways, state infrastructure coming down to local infrastructure, very strong. Also Austria will stay, as I mentioned earlier, with ASFINAG and ÖBB. In Germany will definitely speed up.
Okay. Okay, I see. Thank you.
Well, thank you very much for the questions, and we move on to the next participant, dialed in by phone and raising his hand. Mr. Remis, you should be able to speak now.
Yeah, thank you very much. Few questions as well. Firstly, on the guidance, is the change from output to revenue as the guidance yardstick something that is going to be kept going forward? Or is it just now a reflection of the situation that you describe in the report about output coming in a bit lower due to these delays?
Well, thank you, Markus. Actually, we changed our KPI for our guidance for earnings to EBIT margin, compared or in relation to sales revenue last year, I think. Therefore, we continue since then on to guide on our sales. I think there's not so much difference in the development of these both figures. As you see, it's a slight difference also for the current period that we're reporting. We stick to that.
Okay, because until the second quarter, output was still the primary reference for the top line guidance. Of course, it should develop more or less in parallel. Going forward, there will not be a output guidance, but just revenues. Is that the correct interpretation?
Well, I think that's your interpretation that we had it on output here. If you look also on our research, output is not really mainly covered, but sales and we try to guide on that. Yes.
Okay. On these delays here that you mentioned or these projects, this large infrastructure project that was still in the planning phase, is that something that came as a surprise? Because it was not kind of at least to my knowledge, and forgive me if I've missed something, but it was not that apparent until today. You talked about a catch-up effect. Is that something which will be kicking in already early 2026 or anything about the timing that you can tell us?
Well, I think we also commented that building construction was a bit weaker in output in sales.
Yeah.
It's also due to that. For the infra packages, I think that's a normal temporary effect, and it will continuously come in. I mean, it depends on. You got, for big projects, at least 6 months, something like six months of a design phase.
Mm-hmm
You won't see it in Q4. That's also if you look at our guidance for the total year, you see that's also a little-
Yeah
Weaker. Recognizing these developments of design phase, but also that building construction was a little bit weaker than we expected. I think it will take off in 2026, not in the first quarter, but probably from the second or third quarter on.
Mm-hmm. Okay. Is that also the reason why CapEx is lower and is there then kind of a catch-up effect also in investment spending into next year?
No, that's not what we plan to do. Actually, we see we got a policy that we really want to be equipped very well. We see it as one of the success factors in our business. We did high-risk investments in that regard in the recent years. We see that we don't need the 4% now and looking forward-
Mm-hmm
on 26. From today's view, I don't see that there will be a big catch-up or something like that, but actually a little bit slowing down investments.
Mm-hmm.
Save for our free cash flow in this regard, but not by cutting it, but we're rather well equipped.
Okay. I think that's it. I would have one question related to the P&L development in the third quarter. I see that your material expense ratio, so as a percentage of sales, is at a record low, historically for the third quarter. Anything you can share here about the drivers?
Well, in general, you see that's driven by the services rendered, and these are absolutely down. I mean, if you take the absolute figures, you also see that their revenue is down, so there is, of course, some effect there too. But I think that's, on one side, a good policy there towards our subcontractors. On the other side, with more infra projects where we have a bigger share of own work, a reduction there. That's also in-
Mm.
In the end, paying off in efficiency and our profitability, as our own share is with more margin than the share for the subcontractors.
Okay. Very clear. Well, yeah, I think that's it for me. Thank you.
Thank you.
Thank you.
Thank you very much, Mr. Remis. We move on to Mr. Speck. Mr. Speck, you should be able to speak now.
Yes. Good afternoon, gentlemen. Also from my side, congrats, and especially on the very impressive development and order intakes. My first question is, the only thing I'm missing here in order intakes is new orders in the field of data center construction. How satisfied are you with your leads in this field? And, yeah, maybe did you miss any bigger projects here recently? How do you see your competitive situation in this field?
No, we don't feel bad about that. We have one under construction and we are too now bargaining, let's say, in the finals. You see coming up directly now between 12 projects in Poland. We have more than 13 projects now in Germany we are discussing, and two in Austria, for example. There is one in line in Czech and one in Romania, but we will see. We are very careful with our capacities, and we always go on very strict figures, especially in data center, when we go on them. There were two other big data centers where the design was not really finished, so we did not tender on that, preparing our people for the coming up tenders with very good clients to us.
We have formed now our data center company, where we have put all engineering and the tender capacities together, and they go on with our local business in Germany, Poland, Austria, for example, on the construction of that one. It will come up. On one hand, you also saw a kind of a shortage getting more oxygen in the market. There was a shortage because of the data center industry has to think how the words of Trump are ongoing to them, whether they should go in Europe or in the U.S. Now it's coming back because the need of data centers is still the same, but it's a little delayed for six months, for example. We are very optimistic in that one. We always carefully.
You know, we have a strict acquisition policy. We focus on the margin before revenues.
Okay. Secondly, your sales development was a bit weaker than expected, at least from my side. Your guidance in terms of sales, EUR 6.2 billion-EUR 6.3 billion, indicates at least at the lower end a flat development for Q4. When do you expect your top line to show more dynamics? I mean, it seems like you have all the orders you need for that. So can we expect stronger sales development from Q1 already, or will this rather be the case in the middle of next year?
As I tried to explain before, we expect it more to the middle of next year as the big infra packages need that design phase. In building construction, we are gathering contracts, but they won't start immediately now. I think that will kick off next year. I think both effects coming in should contribute to a solid growth beginning from second or third quarter in 2026. Looking then into the future as when we start with the building phase of the infra packages, revenues will kick in. From then on when we start with the building phase, then we again expect stronger growth in revenues too.
Understood. Lastly, do you expect a positive free cash flow for the full- year?
Yes, of course. I mean, if you look at our development, it's typical until Q3 where we got the peak in construction, to be, let me say, operating cash flow rather balanced and we have a high degree of public clients that tend to pay in the last month, especially in December. If you look at our development, we're still negative up to Q3 in free cash flow. Compared to the previous year, even better. We expect a normal development in the fourth quarter, and therefore clearly a positive free cash flow. We're also down in investments, as I explained before to the question of Mr. Remis.
As we are well equipped and could reduce our investments there a little bit, so that also speaks for positive development.
Very clear. Thanks a lot. That's it from my side.
Thank you.
Thank you very much. There is another participant dialed in by phone, and he has or she has the opportunity to speak now. Please try to unmute yourself. Yes, you can speak now.
Perfect. Hello. It's Philipp Kaiser from Warburg Research.
Hello, Mr. Kaiser.
Congrats to the results. Thanks for the presentation. Just two questions left from my side. Firstly, on your record order intake, could you shed some light on the profitability on those new orders? Are they already in the ballpark of 3.5%-4% EBIT margin?
Well, actually.
That would be the first one.
Big part of our order intake is railway and we got a really good track record of our railway contracts in execution in the past. So we don't expect that to impact our margin negative, but rather positive.
Okay, perfect. Thanks a lot. Secondly, your expectation on the first order inflow from the infrastructure package, do you have already any visibility of the total volume or what's your idea of your volume size, which may get in by the end of next year?
Well, I think that's hard to say. I think it's positive that we see budgets now for that, and we see more than EUR 20 billion for traffic infrastructure next year. There's a basis for expectations there. What we also see is important, I think, what Mr. Strauss pointed out before, that we see a change in how they're going to tender. They're using new contract models, IPA models, which are also in favor for us in general, as they're clearly stating the risk upfront. On the other side, going towards functional tenders, that's a kind of design and build.
That's what we always said is the direction that needs to be gone to get more speed and efficiency on the package in total.
Okay, perfect. Do you expect any major impact on your P&L from those first orders in 2027 already?
Well, I think 2027, we will see some impact. I mean, we already got two railway contracts in Germany as well. Not the really big ones, but something about EUR 100 million. I think based on the budget, there is a good chance if these tenders are going to be quick and efficient to start off in 2027.
Okay, perfect. Thanks a lot. That's all from my side.
Well, thank you very much. We have two questions in our chat box. I will read the first out to you. It's from Nicholas Parton. I believe this is the first quarter in some time that you have delivered an EBIT margin in the range of your 20-30 guidance. Congratulations for that. Clearly, your backlog gives you confidence on hitting the longer-term margin. Can you perhaps give us a roadmap to get there? For example, could you give us some idea of the EBIT margin that you might achieve in 2026, 2027, et cetera?
Well, we always explained and guided that we see our margin development as a continuing process, as we did over the last year. We also see it for the future. It's also in accordance with our order intake and order backlog development. As these long-term contracts, as we said, they will kick off in 2026, probably second half, and then going on, 2027, 2028, and they will bring continuous growth also to our profitability. That's our expectation.
Thank you very much. One last question in our chat box from Stanimir Stoev. Do you currently have major backlog projects in Germany?
Yes. Yes, we have. There is, for example, the Stammstrecke in Munich. There is a reconstruction of very much of industrial construction and a lot of road construction in the northern and the western part of Germany. There is a new one, more than EUR 100 million, a railway or a railway construction, the Siemensbahn in Berlin, for example.
Okay, thank you. I'll wait a few seconds because in the meantime, we have received no further questions, and we therefore come to the end of today's earnings call. Should questions arise at a later time, please feel free to contact investor relations. Thank you for joining and showing your interest in the PORR AG. Thank you very much, Mr. Strauss, Mr. Eiter, for the presentation and the time you took to answer the questions. I wish you all a lovely remaining week. With this, I hand back to Mr. Strauss for some final remarks.
Ladies and gentlemen, thank you very much for joining us in our call. We are happy that you have been with us. I just wish you my first Merry Christmas and Happy New Year this year to you all, and stay healthy, and thank you very much. We hear us by the end of year. Thank you very much.