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UPDATE 3-Hochtief hit by Greek toll dodging
November 14, 2011 / 6:52 AM / 6 years ago

UPDATE 3-Hochtief hit by Greek toll dodging

* Says may have to write down some road projects

* Says road consortium in talks with Athens

* Q3 pretax profit more than doubles but misses consensus

* Says will post 2011 loss if airports sale delayed to 2012

* Shares fall 9.6 percent, underperform market (Adds further details, analyst comment)

By Maria Sheahan and Ludwig Burger

FRANKFURT, Nov 14 (Reuters) - German construction group Hochtief revealed it may have to write down the value of its road contracts in Greece due to mass toll dodging.

The news accompanied a gloomy outlook for 2012 and a warning that the group might post a loss this year if it fails to sell its airport business on schedule.

“The economic crisis in Greece and persistent mass toll dodging led to major shortfalls in income development for the toll road projects Maliakos-Kleidi and Elefsina-Patras-Tsakona,” Hochtief said.

Greece has seen a swelling tide of people joining the “I don’t pay” movement this year, a sullen form of civil disobedience that emerged in the debt crisis, in which they refuse to pay transport tickets and tolls.

People have told toll collectors they won’t pay, have got out of their cars to either lift the bar blocking their passage manually or to destroy it.

Hochtief said the consortium that operates the toll roads in Greece was in talks with the southern European country’s government to find a long-term solution.

Hochtief’s third-quarter pretax profit more than doubled to 333 million euros but fell short of the 340 million euro average estimate from analysts in a Reuters poll.

New order volume dropped by more than half due to the delay of major projects and a weakening U.S. dollar.

Hochtief stock was down 9.6 percent by 1157 GMT, while the German mid-cap index was up 1 percent.


Hochtief said it still expected to sell its airports business, but the timetable for an agreement, previously expected to be by the end of this year, might slip.

Chief Executive Frank Stieler told journalists that there was still more than one bidder and there was no indication the sale could fail altogether.

Sources have told Reuters that HNA Group, which is the parent of China’s Hainan Airlines, and France’s Vinci are contenders for the unit, both with offers of almost 1.5 billion euros.

Hochtief, majority-owned by Spain’s ACS, said a delay to the planned sale would lead to a double-digit million euro pretax loss and a net loss of about 100 million euros ($137 million) this year.

Analysts were expecting a pretax profit of 362 million euros and net profit at 338 million, according to the Reuters poll.

Equinet analyst Ingbert Faust said the new guidance implies Hochtief will omit payment of a dividend for 2011 if the airports sale is delayed until next year.

“However, even more disappointing is that management seems to have lost confidence in the sale of the airports in general and also in the underlying operating performance reflected in the reduction of the 2012 guidance,” he said.

The assets up for sale include Hochtief’s stakes in airports in Athens, Budapest, the German cities of Duesseldorf and Hamburg, as well as Sydney and Tirana.

Hochtief also scrapped its 2012 outlook, which had called for pretax profit of about 1 billion euros and a net profit of 500 million, only saying it now saw pretax profit and net profit coming in significantly above the 2010 level.

Hochtief’s Australian unit Leighton Holdings, bruised by heavy losses on its two biggest projects, last week stuck to its outlook but promised to be more selective in taking on new projects.

Hochtief’s parent company ACS and German rival Bilfinger Berger are due to report results later on Monday. ($1=0.728 euros) (Additional reporting by Angeliki Koutantou in Athens; Editing by Chris Wickham, Mike Nesbit and Will Waterman)

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