* Net debt at end-March climbs to 10.5 bln euros
* Hochtief posts Q1 loss on Australian projects
* Analysts see ACS missing debt-reduction target
* ACS shares down 4.6 pct, IBEX up 0.1 pct
(Adds details, background)
By Peter Dinkloh and Tracy Rucinski
FRANKFURT/MADRID, May 8 Spanish builder ACS
might miss its debt reduction target this year as
earnings from its German affiliate disappoint and asset sales
generate insufficient cash, putting pressure on the company to
ACS, which owns 54 percent of German builder Hochtief
, on Tuesday said net debt rose to 10.5 billion euros
($13.7 billion) at the end of March. The company also has an
additional 3.7 billion euros in liabilities in other assets.
Thomson Reuters StarMine, which weights analyst's estimates
according to their track record, forecasts ACS's net debt will
end the year at 9.2 billion euros or 3.4 times forecast earnings
before interest, taxes, depreciation and amortisation (EBITDA).
That's above Chief Executive Florentino Perez's target to
reduce net debt to less than three times EBITDA to reduce
interest payments for loans after it had to accept higher
financing costs, that had already risen by 81 percent from 2010
Disappointing earnings and rising debt at Hochtief
have complicated ACS's financial situation, while a recession in
its Spanish home market makes it hard to sell assets.
The German builder-turned-services company has had to lower
its expectations for 2012 earnings twice this year as its cash
cow, Australian unit Leighton, disappointed.
"We think this (debt) is too high and has to come down to
normalise the financial situation," N+1 Equities analyst Jose
Ocina said on Tuesday after ACS released first-quarter results.
Last month Perez reversed his strategy to gain more control
of Spanish utility Iberdrola and started selling shares in the
power provider to lower liabilities.
That was prompted by a drop in Iberdrola's share price below
4 euros. At that level, some ACS creditors have the right to
take ownership of the shares if the builder does not provide
One of the creditors, Natixis has given up that right in
return for ACS paying higher financing costs on its loan. Perez
now wants to lower these costs by reducing overall debt.
He plans to sell more non-strategic assets after divesting
10 percent in motorway company Abertis, he said in
The builder is also looking for buyers for 750 megawatts of
renewable energy assets, high-tension grids in Brazil,
desalination plants and various motorway assets, sales which
Perez said last month could generate 3 billion euros this year.
Shares in ACS were down 4.6 percent at 13.59 euros at 1344
GMT on Tuesday, while the Spanish blue-chip index IBEX
was up 0.1 percent. Hochtief rose 2 percent, while the STOXX
Europe 600 Construction & Materials index declined 1
Earlier on Tuesday Hochtief reported a first-quarter loss
weighed down by problems with two construction projects in
Meanwhile, Leighton reaffirmed its profit expectations.
($1 = 0.7663 euro)
(Editing by Erica Billingham)