* Q1 pretax 123.3 mln eur vs Rtrs poll avg 107 mln eur
* Sells airports for 1.1 bln eur to Canadian pension manager
* Ups 2013 pretax profit outlook to as much as 680 mln eur
* Says shift of company to infrastructure to take 2-3 years
* Shares rise 5.3 pct to highest in 22 months
(Rewrites first paragraph, adds CEO comment, details on
strategy, shareholders, results)
By Peter Dinkloh
ESSEN, Germany, May 7 Germany's Hochtief AG
has agreed the 1.1 billion euros ($1.4 billion) sale
of its airports division, ending a lengthy quest for a buyer and
giving fresh impetus to a strategy rethink led by its CEO
appointed just six months ago.
The Essen-based group, controlled by Spain's ACS
and which appointed Marcelino Fernandez Verdes as chief
executive in November, said it was raising its earnings targets
on the back of its exit from less profitable, capital-intensive
Driven by relief over the end of more than three years of
unsuccessful attempts to divest the unit, Hochtief shares jumped
more than 5 percent, hitting their highest level since July
2011, compared with a 1.6 rise in the European construction
Verdes, a 58-year old former ACS manager, is leading a drive
to shed airports and real estate development businesses, aiming
to cut the company's debt - which stood at 944 million euros at
the end of December, the last figures available - while making
it a leading global infrastructure provider.
It sold the airports unit to Canada's Public Sector Pension
Investment Board. The division has holdings in airports in
Budapest, Duesseldorf, Hamburg, Sydney and Tirana. It also sold
Athens Airport as part of the transaction, even though it had
previously taken that hub out of the bundle, citing economic
troubles in Greece.
Hochtief had halted the sale early last year when it was
unable to fetch a price of 1.5 billion euros ($2 billion), but
later revived its efforts.
"The fact that the airport assets are going to be disposed
completely after such a long time is positive news and should
outweigh possible discussions on the pricing," said DZ-Bank
analyst Marc Nettelbeck.
Verdes also aims to leave behind large and risky
construction projects that led to billions of euros of
writedowns and aims to reduce the size of projects and better
manage risks, he told Hochtief's annual shareholders' meeting.
"We have to put an end to nasty surprises like profit
warnings," Verdes told the 591 investors present, representing
81 percent of Hochtief's share capital. "Infrastructure is our
Posting first-quarter earnings above expectations, the group
also raised its earnings outlook for this year, saying it
expected earnings before tax to rise to as much as 680 million
euros in 2013, compared with 656 million predicted previously.
The group's strategic shift, which also includes
strengthening its Australian mining unit Leighton and
building power plants such as offshore windmills, will take at
least two years, Verdes said.
Hochtief's strategy contrasts with that of peer Bilfinger SE
, which is focusing on servicing buildings, power
stations and industrial plants, and managed to achieve a higher
profitability than Hochtief at the services unit.
Bilfinger generated an EBITA margin of 4.7 percent at its
building and facility services unit, compared with a pretax
profit margin of 2.7 percent at Hochtief.
The Mannheim, southern Germany-based competitor expects
orders for maintenance to be more stable than construction
projects, which hinge on the overall state of the economy, a
strategy that Hochtief also pursued until Verdes became CEO.
Bilfinger is sticking with that strategy as builders
struggle in the face of weak economic growth and sluggish
construction activity across Europe, with several announcing
writedowns, restructuring plans and job cuts.
Government spending cuts and tightening private sector
budgets in Europe have held back a recovery in construction
markets in the region, in contrast to the United States, which
is seeing signs of improvement.
Some shareholders therefore questioned Verdes' strategy.
"Are you part of the solution or are you part of the
problem?," asked Marc Tuengler of the DSW association of
But for now Verdes' strategy is paying off and Hochtief
swung to a first-quarter net income of 43.5 million euros from a
loss of 34.8 million a year before, compared with a forecast
Hochtief shares were up 6.1 percent at 56.65 euros by 1036
GMT, while ACS was up 6 percent at 21.075 euros.
($1 = 0.7659 euros)
(Additional reporting by Ludwig Burger in Frankfurt; Editing by