Thank you very much indeed. As usual, this is Thomas Birtel from Vienna calling. A very good morning to all of you. Thank you for your interest in STRABAG's figures for the first half of the current fiscal year, 2022. I trust that our presentation, as usual, is in front of you, and we'll be starting on page three, where we give our output volume and order backlog figures. We generated a +9% with regard to the output volume and achieved EUR 7.6 billion in the first half of this year. This growth comes from our core markets, above all Germany and Austria, but also from the Czech Republic, in particular from the United Kingdom.
With regard to the order backlog, this figure reached, again, a new record level of almost EUR 24 billion as at third of June 2022, an increase of +14% compared to the same period of the last year. The backlog grew by around EUR 2 billion in Germany alone, with significant increases also recorded in Austria and Poland. We now come to the earnings figures on page number four. Our earnings before interest, taxes, depreciation, amortization, EBITDA, amounted to EUR 325 million compared to 406 million in the first half of 2021.
EBIT, that means earnings before interest and taxes, stood at EUR 64 million, which represents a decline compared to the exceptionally good figure in the previous year, although it still fits in well with the long-term comparison, and it's still the second-best result of a first half year in the group's history. Earnings were reduced in the North and West segment and South and East. The earnings for the first half of the year, again, was slightly negative, as is usual in the construction industry, while international and special divisions achieved an increase attributable, among other things, to the successful large-scale projects in the United Kingdom, which I already mentioned. On page number five, we give our net income figures. Net income.
Net interest income was positive at +EUR 6.24 million, primarily due to increased interest income and the positive exchange rate differences of +EUR 5.74 million contained therein. Our income taxes amounted to -EUR 26 million, which corresponds to a tax rate of 37%. In the previous year, income taxes had amounted to -EUR 46 million. The net income this year reached EUR 44 million, whilst it was EUR 91 million the first half of 2021. The earnings attributable to minority shareholders at EUR 3 million only changed very little in absolute terms. Overall, a net income after minorities of EUR 40 million was achieved. With 102.6 million outstanding shares, this corresponds to earnings per share of 0.39 EUR compared to 0.86 EUR the first half of 2021.
On page 6, we come to our balance sheet. The balance sheet total remains stable compared to the end of 2021, with EUR 12.3 billion. An increase in property, plant, and equipment, a property was purchased in Stuttgart to expand the local presence there, and in inventories, as well as seasonal increases in contract assets, were offset by a decrease in cash and cash equivalents. Compared to June 3, 2021, our equity ratio increased from 30.1% to 32.8%. Increases in equity from the change in the discount rate for personal provisions and the change in the valuation of hedging instruments had a positive effect there. At the end of 2021, the equity ratio had amounted to 33.3%.
We continue to report an overall net cash position, although, as is usual for the season, this figure fell from EUR 1.937 billion to EUR 1.147 billion. The dividend for 2021 in the amount of EUR 205 million is still included in the other financial liabilities as the payment this year only took place after the reporting date of June 30. On page seven, we give our cash flow figures. Our cash flow from operating activities turned even more negative at EUR -606 million, mainly due to the increase in inventories and contract assets, a result of our higher output volume.
The purchases made for the expansion of the Stuttgart location are also reflected in the cash flow from investing activities, which amounted to -EUR 289 million compared to -EUR 220 million in the same period of the previous year. Our cash flow from financing activities reached -EUR 192 million as at 3 June 2022. This figure included the repayment of one bond in the amount of EUR 200 million. In comparison, Q1 of 2021 included the distribution of the increased dividend, resulting in a cash flow from financing activities of -EUR 714 million. I now come to our three operational segments and start with the first one, which is North + West, comprising our construction activities in Germany, in Poland, in Scandinavia, and the Benelux countries.
In this segment, we recorded a 9% higher output volume of EUR 3.7 billion in the first half of 2022. The development is mainly attributable to the German market, both in transportation infrastructures and in building construction and civil engineering. The second major market in the segment, Poland, showed a slight decline in output volume, as did Denmark and the Benelux countries. Revenue of the segment grew as well, gaining 13%, while the EBIT decreased noticeably to EUR 11 million. This is due to declining results in German road construction. 2021 had been an exceptionally strong first half year, and in Poland, as well as earnings burdens from large projects in Denmark and the Netherlands.
The order backlog of the segment as of June 3, 2022 increased by 19% to EUR 12.4 billion due to the very good development in the stable core market of Germany. Noticeably was the intake of the US military hospital with an order volume of EUR 645 million. An increase in the order backlog was also recorded in Poland. Here, STRABAG will push ahead with the further expansion of the S19 motorway. The number of employees in the North and West segment remained unchanged at 25,771 across the segment, as well as in Germany, the segment's dominant market. Regarding the outlook, the high order backlog suggests that a slightly higher output can be expected in the North and West segment in the full 2022 financial year.
In the German building construction sector, the growth dynamic in material prices has slowed somewhat after the first few months, settling at a high level. Despite the increased prices, projects continue to come onto the market with a slight shift from the private to the public sector noticeable. In the first half of the year, transportation infrastructures recorded a significant increase in orders. The current challenge is to work off the high order backlog with our existing capacities. At the same time, the situation allows for a very selective approach to bidding. Fierce competition prevails in the Benelux countries and in Scandinavia. The management's focus is on stabilization and consolidation, as well as the completion of large projects. The Polish economy has been hit very hard by the devaluation of the złoty and the resulting inflation.
This is having a noticeable impact on construction materials and especially on the subcontractor market, which is also suffering from the lack of Ukrainian workers. Considering the fact that the order backlog in Poland is at its highest level in history, we expect a growth in output volume. On the other hand, negotiations regarding price escalation clauses, especially with the public sector, have not yet been finalized there. Let's now come to page number nine with the figures of South + East, which is the segment comprising our construction activities in Austria, Switzerland, and everything east of those two countries in Europe. The output volume in the South + East segment rose by 11% and amounted to EUR 2.3 billion in the first half of 2022.
This good start is based on the record order backlog at the end of 2021. Growth was recorded primarily in Austria, Czech Republic, and Hungary. In contrast, there was a slight decline in Slovenia and Bulgaria. Revenue increased by 11%. In contrast, the EBIT remained at a similar level as in the previous year at EUR -11 million, after EUR -10 million the year before. The order backlog increased by +14% versus June 30, 2021, growing to EUR 6.2 billion. Here too, the home market of Austria is the strongest driver. We were particularly successful in the acquisition of large projects in building construction and civil engineering. Czech Republic, Slovakia, and Hungary also contributed to the growth in orders, albeit to a lesser extent.
The number of employees remained almost unchanged with an increase of +1% to 20,258. Regarding the outlook for the segment, the performance trend exhibited in the first half of the year is expected to continue throughout 2022 as a whole. Due to the good order intake, however, output is again expected in Austria. Uncertainties exist for the second half of the year with regard to fixed price agreements for long-term projects. On the other hand, there are first signs of an easing in material prices, such as for structural steel. The Hungarian economy is suffering greatly from the high inflation and exchange rate fluctuations. Public budget constraints are already making themselves felt in the tendering activity within the infrastructure sector. The Czech road construction business continues to be stable.
In the building construction sector, on the other hand, smaller private investors are already withdrawing their first projects from the market. In addition to construction prices, the shortage of labor is also having a negative impact. The market developments in Slovakia is greatly influenced by the unstable political situation. Moreover, the few public sector contracts that do get awarded tend to be delayed by a non-functioning public procurement system. For this reason, STRABAG is mainly interested in cooperating with private investors in the country, for example, in the construction of production and logistics halls. The markets of Southeast Europe, like almost all of the Group's core markets, are also struggling with massive price increases and a shortage of skilled workers. While there is a mandatory price adjustment for public contracts in Romania, negotiations must be conducted individually in all other countries.
In Croatia, planned investments in the railway network offer opportunities for STRABAG, while the motorway network is largely completed. In Serbia, the pressure from Chinese companies is very noticeable, a problem that is characteristic of the entire region. In Switzerland, strategic and organizational changes were made some time ago. The group is positioning itself as a quality provider in the country, for example, through its BIM expertise and greater consideration of sustainability aspects, as well as its own building materials testing laboratory. In response to Russia's attack to Ukraine, the management board in March 2022 decided to wind down our Russian business. Now we come on page number 10 to the international special divisions segment, which is our real estate development business, our PPP business, our raw materials business, as well as our facility management activities and our global tunneling construction activities.
It's the smallest segment, and it generated a +9% with regard to the output volume, which amounted to EUR 1.5 billion in the first half of 2022. Especially noteworthy here is the work on large-scale projects in the United Kingdom and the Middle East. Revenue of the segment increased by 7%, while EBIT grew from EUR 58 million to EUR 78 million. Worth mentioning are the positive earnings contributions from large-scale projects in the United Kingdom. Stable results were also delivered by the property and facility services and the real estate development business units. The order backlog, as at 3 June 2022 of the segment, increased by +2% to EUR 5.3 billion compared to the same period in the previous year. Strong growth was achieved in mining and quarrying, the core business in Chile.
In total, orders worth approximately EUR 283 million were secured in this country. The contract to build 140 wind farm foundations allowed us also to tap in a new business segment in Chile. This contrasts with the significantly reduced tunneling order backlog in Austria, our home market, where mega projects such as Tulfes-Pfons lot of the Brenner Base Tunnel and the Koralm Tunnel are coming to an end. In the first half of 2022, staff numbers were down by -3% to 20,096, almost exclusively in connection with the completion of tunneling works for the Alto Maipo hydropower mega project in Chile. Regarding the outlook for the segment, the output volume for the full year 2022 is expected to be higher than in the previous year.
This forecast is supported by the aforementioned order intake in Chile. The mining business will also make a very positive contribution in the second half of the year. Due to the size of the projects, the tunneling business is subject to high volatility. We are looking for new opportunities worldwide where the group can use its expertise to its advantage. At the same time, projects of this size must be examined, especially with regard to the risk profile. In the international business, the COVID-related investment backlog and infrastructure projects is starting to clear, often supported by the public sector as a way to stimulate the economy. Meanwhile, Canada seems to be developing into an interesting market for infrastructure projects for STRABAG. At the same time, the recovery of the oil price is leading to a renewed demand for construction services in the Middle East.
In real estate development, the market uncertainties are becoming clearly noticeable among private investors. Years of rising property prices, coupled with an extremely dynamic price situation in construction, make profitability calculations difficult for the entire industry. The group's real estate development units, however, benefit from the cooperation with our in-house construction units by not only cushioning price uncertainties, but also uncertainties related to availability. The infrastructure development business can report an easing of the COVID-related decline in traffic volumes in the first half of the year. Construction delays caused by the pandemic also remained within tolerable limits. The Colombian Mar 1 project , PPP project, for example, went into operation on schedule. Overall, however, the number of PPP projects put out to tender in the markets we serve remains at a modest level. We must therefore continue to expect strong competition in this field.
Our property and facility services business has recovered well from the impact of the COVID pandemic. The focus now is on improving productivity in order to counter the higher costs and especially to deal with the lack of skilled workers. The digitalization measures of recent years are already showing positive results at STRABAG PFS. A new thrust here are the so-called green services with which PFS can increasingly impress its customers. The increased energy prices are also affecting the building materials business of STRABAG. In bitumen trading, it is important to ensure security of supply despite the temporary shutdown of the Schwechat refinery in Austria, which from the current point of view, is working well. In concrete and cement, on the other hand, it has been only partially possible to pass on the increased production costs to the market. Overall, however, the second half of the year should develop well.
Unfortunately, the long-term outlook is slightly clouded by the expected decline in demand. Within the corporate group, the current situation shows that the dense network of building materials operations, including materials-based services, remains an important basis for self-supply within the STRABAG group and thus for greater competitiveness. I come to the final remarks of our presentation, given on slide number 11. The forecasts may be fraught with uncertainty at the moment, but our half-year figures show that we are meeting our guidance so far. The output has increased as expected, and the order backlog is also showing an upward trend despite its already very high level. As predicted, we were not able to repeat the previous year's exceptional earnings results, but in a long-term comparison, we can speak again of the second-best figure for a first half year.
To underpin that, we have given you the first half year's figures as from 2013 onwards on this page. We remain committed to the targeted construction output of EUR 16.6 billion for 2021, a figure that is well supported by the order backlog. We also expect to generate an EBIT margin of at least 4% on a long-term basis as the business model is proving to be robust under the current conditions. Net capital expenditures, which means the cash flow from investing activities, should not exceed EUR 550 million in the current year. Ladies and gentlemen, this was it as, with regard to our comments on the first half year's figures of 2022 for STRABAG, and now I'm very glad to answer your questions. Thank you for your attention.
Ladies and gentlemen, at this time, we'll begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question comes from the line of Markus Remis from RBI. Please go ahead.
Yeah. Good morning, Dr. Birtel. Couple of questions, please. The first one relates to the topic of cost inflation. I mean, Porr yesterday commented that they're seeing kind of the peak in terms of costs with, yeah, steel, for instance, and so on coming back again. I mean, the question would be to which extent or how quickly that will feed into your cost basis and to which extent there might be some sort of windfall profits should we see this decline continuing, then probably materializing into 2023. And related to that, I guess personal cost inflation will be a hot topic for next year.
If you could maybe share your personal view and your expectations with regards to potential outcome in the collective bargaining process and Germany, Austria, and also where you expect personnel costs to end up in Eastern Europe, where inflation is even higher than in Western Europe?
Well, thank you, Mr. Remis. With regard to the cost inflation, I already commented that in certain aspects, for instance, structured steel, we also think that so far a certain peak is being reached. Although it is always difficult to make a prediction for the rest of the year because that depends on frame conditions which we do not exactly know and which we can't exactly predict, for instance, regarding the conflict in Ukraine and side effects of that. If we could assume that the current frame conditions remain more or less stable, we believe that also the cost inflation would come to a sort of stabilization, which, of course, makes it easier for us to come to reliable cost estimations and calculations.
I do, however, not believe that we will be seeing considerable windfall profits out of this because, as I pointed also out before, earlier in my comments, of course, we also have a certain extent of old contracts where we have fixed prices and where we have to swallow the cost increases ourselves. All in all, I think under the line, we are well advised to stick with our guidance, which means we will meet our expectations, and if the frame conditions remain stable, the 4% will be reachable, but no major windfall profits, which would bring us in the direction of the previous year's margin. That is not foreseeable.
When it comes to personnel cost, of course, given the current environment, we have to again expect considerable increases in the countries where we have collective bargaining, which is, of course, above all Germany, but also Austria. In the major part of Eastern Europe, we don't have that system of collective bargaining and respective contracts, and we have the general, let's say, the market mechanisms in place, which currently lead again to considerable increases in wages and salaries because we see a combination of sparsity of skilled labor available in basically all the markets. Still, as I mentioned before, a strong demand for construction services. Of course, such combination gives power to the negotiating parties, either trade unions or individuals. That will lead again to considerable price increases.
We will have to take care that we make proper cost estimates which include that increases, appropriately. Of course, that we further increase our productivity and efficiency, which is again, driving us in the direction of digitalization, but also of industrialization of construction processes.
All right. I think the last time, on the earnings call, we also kind of handled the topic of price clauses, kind of contracts that are linked to indices. Can you remind us of kind of which share of the business is covered by such agreements where you essentially then have a kind of a cost plus structure?
Well, cost plus is just one contract model which you can apply in order to cope with the situation. The more, let's say, usual way in public business is unit pricing, which means that certain services and materials are priced at a unit. There we have, in the first place, fixed prices, but then there are price escalation clauses.
Mm-hmm.
Which are applied as from a certain threshold of price inflation onwards. Which means that you have to first swallow the inflation cost at your own risk till the threshold is reached, and only above the threshold, you can negotiate price escalations with your public customers. As I pointed out before, there's one country making a positive difference. This is Romania, where you have a legal claim, where you do not have the necessity to negotiate. In basically all the other countries you have to negotiate. This is the basic model on the public side. With regard to private customers, in former days, of course, the turnkey lump sum contract model was the usual one.
In the meantime we have changed to contracts with price escalation clauses or to cost plus fee pricing models. Another contract model would be a GMP model, which means there is a guaranteed maximum price, but underneath that maximum, you apply, for instance, the cost plus model. Given the fact that private contracts are individual contracts, of course, you negotiate it each time you negotiate it from scratch because you restart from the beginning with a new customer and a new contract. It's a new game, of course. That will be coined by the market situation.
As long as demand is as strong as it currently is, we have good chances to come to contract models which allow us to successfully convey the price increases to the markets.
Mm-hmm. Can you give us an idea how much of your current backlog is covered by kind of these contract types where you basically have a very kind of straightforward opportunity to pass this on these higher costs?
Well, basically, it is the majority of our contracts because, as you probably recall, the majority is public customers.
Yeah.
We also saw a sort of, let's say, rising importance of private customers to us because to a huge extent, our increased order backlog was driven by big infrastructure projects, and these are public contracts, of course.
I have to come back to this, how should I say, painful topic of cartel case in Austria with the review of the antitrust decision that was requested by the Federal Competition Authority. I mean
Right.
We got the news, but maybe you can shed some light from your point of view. I mean, timing is always difficult in these.
Mm-hmm.
In these cases. Is there anything you can share with us apart from what has been made public in the press?
Yes. Probably I could update you with regard to the process. We have been asked by the Cartel Court to reply on what the Cartel Authority had included in their application. We did that in due course. Our response is now also in the hands of the Cartel Court, and it's now again the Cartel Court which has to make a decision in due course. As you pointed out before, we cannot predict how fast they are. We take the position and we stick to that position that we don't see any reason for the application of the Cartel Authority.
Right. It's probably fair to assume that it won't take as long as kind of for the initial ruling.
Well, it's difficult to predict because it's in the hands of the court, and we don't have any, let's say, any means to judge how fast they will work, how huge their workload is in other aspects. That's really difficult to predict.
Mm-hmm. All right. Okay. A final question, just regarding, say, the general competitive landscape and in the wake of the much higher material cost, do you see kind of contractors that have to file for bankruptcy? Is there anything in a noteworthy magnitude that
No, not so. No. We see customers who postpone their projects or who even abandon their projects. Of course, there are, if you may put it that way, there are marginal customers who in the past realized a huge leverage because they had huge credit lines for very low interest rates. Of course, such customers now have to think their projects over. So far, this is not really constraining our market because there are enough other projects which come into our broad order backlog. On the customer side, yes, I don't see bankruptcy so far, but I do see projects being postponed or abandoned.
On the contractor side, also on the subcontractor side, so far, we don't have a noticeable tendency in that direction, no. Not yet.
Okay. Very clear. Thank you very much.
Thank you, Mr. Remis.
As a reminder, if you would like to ask a question, please press star followed by one. The next question is from the line of Torsten Sauter from Kepler Cheuvreux. Please go ahead.
Yes. Good morning, all. Actually, I have a couple of questions. We have to deal with the fact that the share is now trading below the mandatory offer price. Maybe could you give us an update on the matter, please? Yeah, firstly, is there a reason why your shares should trade below the offer price? Secondly-
I address myself.
Yeah, I mean, it's a good answer actually, because I was puzzled. I have a couple of kind of, you know, detailed questions. I mean, like, okay, the first question obviously is the why. The second being I understand Rasperia, they have filed lawsuits in Klagenfurt looking to annul the share buyback authorization. I wonder what this means for Strabag's participation in the offer. Finally, is there any chance to see, you know, amendments to the offer? For example, is the offer off the table in case Mr. Deripaska gets his rights back or is no longer sanctioned? Thank you.
Yes. I think there is a very clear answer to that. There is a condition also in the offer as far as we know that, if Mr. Deripaska in the offer period would regain his rights because he is not sanctioned anymore, the offer wouldn't be valid anymore. That's a very clear position of the syndicate partners as far as we are informed, although we do not expect that to happen. It is at least a very clear legal position of the syndicate partners.
With regard to the share price, it's a very good question, but I believe there's no reasonable answer because it's too obvious that you could easily make a nice arbitrage via buying shares now below the offering price and then selling them to the guaranteed offer price to the syndicate partners, respectively to Strabag. I don't believe that there is a reasonable answer to that. I believe that that might be a temporary effect. I was astonished myself, I have to admit that, and my colleagues here with Strabag as well.
With regard to the lawsuits, it is true that Rasperia has filed 2 lawsuits in the meantime with regard to various decisions being taken, firstly by the extraordinary general meeting on the fifth of May, and secondly by the ordinary annual general meeting on the twenty-fourth of June. As long as the courts have not finally decided on those lawsuits, these decisions are valid and will be executed. Hence, for the time being, it's a theoretical question. We believe that we have very serious legal grounds to not expect an outcome of these lawsuits in favor of Mr. Deripaska, respectively Rasperia.
We do not believe in a favorable outcome for them.
Thank you.
Thank you, Mr. Sauter.
As a reminder, for questions, please press star followed by one. There are no more questions at this time. I hand back to Thomas Birtel for closing comments.
Well, thank you very much, ladies and gentlemen, again for your interest in our first half-year's figures 2021. I'm then very much looking forward to talking to you the next time. Thank you. Bye-bye from Vienna.