* Hochtief cancels 10 pct of treasury shares
* Share cancellation to increase ACS stake to 55 pct
* Hochtief sees 2014 adj net profit of 225-250 mln euros
* Raises dividend to 1.50 euros/share vs 1.00 euro last year
(Adds analysts' and spokesman comments)
By Marilyn Gerlach and Matthias Inverardi
ESSEN, Germany, Feb 27 Spain' ACS is
set to gain more control at Hochtief after the German
builder announced plans to cancel some shares, and analysts
expect ACS to increase its stake again in the future as it seeks
to become a global player.
Hochtief raised its dividend and reported
better-than-expected annual results on Thursday, thanks to a
restructuring that saw debts cut and cash flow increase. It also
forecast a bigger-than-expected rise in profits for 2014.
ACS took control of Germany's biggest builder in 2011, and
directly owns around 49 percent of its shares. Hochtief has
since launched a wide-ranging transformation that includes cost
cuts and the sale of airports and other non-core assets, which
brought proceeds of 1.8 billion euros ($2.5 billion) last year.
Hochtief said it would cancel about 10 percent of treasury
shares and would pay shareholders a 50 percent increase in
dividends to 1.50 euros per share, exceeding analyst estimates
for 1.32 euros.
A spokesman for Hochtief, which launched a 260-million-euro
share buyback last year, said the cancellation of shares would
result in ACS increasing its stake to around 55 percent.
Analysts also said they expected Hochtief to further boost
its stake in Australia's biggest builder Leighton after raising
it to 58.77 percent early this year. Leighton contributed about
90 percent of group pretax profit in 2012.
"ACS has increased its stake in Hochtief. Well done for ACS.
They have not used their own money to do this," Bankhaus-Lampe
analyst Marc Gabriel told Reuters.
"I would expect Hochtief would further use the cash (from
divesting the non-core assets) to buy back its own shares and
(shares) in Leighton. ACS is trying to become a global player in
construction," he said.
Another analyst, who declined to be identified, said he
believed ACS's next move would be to increase its shares in
Hochtief to 75 percent. "That's the next logical step. I think
the end game is to swallow Hochtief. They already have the
majority at the AGM," the analyst said.
Leighton is in Hochtief's Asia-Pacific division, which saw
pretax profit rise by over a fifth to 499.8 million euros
despite a weaker Australian dollar that reduced the value of new
orders, work done and sales last year compared with 2012.
Hochtief Europe, where the bulk of restructuring is taking
place, posted a 1.18 percent increase in pretax profit to 63
million euros. Hochtief said it would cut about 800-1,000 jobs
at Hochtief Solutions in Germany.
Chief Executive Marcelino Fernandes Verdes said on Thursday
Hochtief was in talks with investors regarding the future of
Hochtief Solutions service units Format and HTP, as well as its
property management business.
Hochtief forecast all divisions would improve profit margins
in 2014, although the value of new orders and work done would
fall due partly to exchange rate effects.
It saw its underlying net profit rising to between 225
million and 250 million euros ($307.5-341.7 million) this year.
The average forecast of analysts in a Reuters poll was 217
It achieved its 2013 targets, with underlying net profit
more than doubling to 207.5 million, beating the forecast of 181
Hochtief cut net debt by 750 million euros to 194.4 million
as of end-December 2013 from a year earlier.
Shares in Hochtief rose midmorning but at 1143 GMT, they
were down 0.1 percent, still outperforming a 1.5 percent decline
in Frankfurt's blue-chip index.
Hochtief shares have risen 18 percent in the past six
months, compared to German rival Bilfinger's 22
percent and the 19 percent of STOXX Europe 600 construction and
materials sector index.
($1 = 0.7317 euros)
(Editing by Victoria Bryan and Pravin Char)