UPDATE 2-Strabag slashes dividend after profit collapse

Tue Apr 30, 2013 9:32am EDT

Related Topics

* Keeps outlook, cuts dividend by two-thirds

* CEO has no plans to cut stake after stepping down

* Company admits mistakes

* Shares rise 2.3 pct (Adds comments from outgoing and incoming CEOs, details on CEO stake, shares)

By Georgina Prodhan and Angelika Gruber

VIENNA, April 30 (Reuters) - Austrian construction group Strabag chopped its 2012 dividend by two thirds and said a profit collapse was due to its own mistakes as well as austerity measures hurting the sector.

Central and eastern Europe's biggest builder by market share reported its first drop in operating profit in 27 years after taking hits for uncollected payments, participation in loss-making projects and over-ambitious acquisitions.

"Acquisitions that were too hasty, too little considered, or poorly researched. That was the starting point for most of the flops," outgoing Chief Executive Hans Peter Haselsteiner said.

"The worst mistakes come about because one doesn't want to recognise the earlier ones," said Haselsteiner, who is stepping down a year early in June, adding his decision had nothing to do with the disappointing results.

After two profit warnings last year, Strabag kept its 2013 outlook for stable output and a leap in operating profit.

Haselsteiner, who will stay with the company in a non-executive role to drive through an efficiency programme, said he had no plans to cut his family's 28.9 percent stake in the company in the short or medium term.

Incoming CEO Thomas Birtel, a 17-year Strabag veteran, said the company was returning to its roots after flirting with becoming a more services-oriented company.

"Strabag will remain a construction company," Birtel said. "We will keep this focus."

Haselsteiner said, though, that Strabag was still interested in buying the services business of German rival Hochtief , which would complement its German construction activities.

Strabag has also suffered from public spending cuts in euro zone countries pushing through austerity measures, and the end of a construction boom in Poland that led companies in many cases to bid too cheaply for large contracts.

Spanish builder FCC wrote down 1.1 billion euros of losses last month, much of which was linked to construction activities in central and eastern Europe.

Strabag shares rose 2.3 percent to 17.23 euros by 1327 GMT, outperforming the European construction market.

The contractor beat its own and market expectations for the fourth quarter with earnings before interest and tax (EBIT) that rose 62 percent to 206 million euros and net profit up 57 percent to 130 million euros.

Its 2012 dividend of 0.20 euros ($0.26) per share, down from 0.60 euros in 2011, matched the lowest forecast in a Reuters poll of analysts whose estimates averaged 0.27 euros.

Strabag had already reported 2012 output and order backlog figures in February.

($1 = 0.7634 euros) (Reporting by Georgina Prodhan; Editing by Mark Potter and Louise Heavens)

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