UPDATE 1-Spain's ACS posts drop in first-quarter core profit

Thu May 8, 2014 1:11pm EDT

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MADRID May 8 (Reuters) - Spanish construction and services firm ACS reported a 14.5 percent drop in first-quarter core earnings on Thursday, hit by the depreciation of the Australian and U.S. dollars against the euro.

At constant exchange rates, earnings before interest, tax, depreciation and amortisation (EBITDA) would have grown by 5.4 percent, the company said.

The firm's construction sales in Spain continued to fall, down 14 percent, despite the country emerging from recession last year.

ACS has greatly reduced its exposure to Spain after taking a controlling stake in German builder Hochtief which in turn is seeking to tighten its hold on majority-owned Australian builder Leighton.

Spain's battered construction stocks, which lost around 80 percent of their value during a prolonged economic downturn, are benefiting from renewed interest as investors look to profit from an incipient Spanish recovery.

Like peers FCC and Sacyr, ACS's shares have risen strongly over the past 12 months and are up 25 percent so far in 2014, outpacing the Spanish blue-chip index .

The firm's stake in Hochtief recently rose to around 55 percent, from around 49 percent, when the German builder cancelled 10 percent of its treasury stock. Spain now represents just 18 percent of sales, the company said.

ACS reported sales in line with expectations at 8.8 billion euros, down 3.4 percent on the year-ago period, also due to negative exchange rate effects. Net profit rose 20 percent, buoyed by an increase in the value of financial instruments on its books.

Net debt stood at 4.6 billion euros at the end of March, down 18 percent from the year-ago figure. The company is due to hold a conference call for analysts on Friday at 1030 GMT. (Reporting By Sonya Dowsett; Editing by Elisabeth O'Leary and Pravin Char)

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