MADRID (Reuters) - Spanish construction group OHL (OHL.MC) saw net profit almost wiped out in the first half, after a big hit on a Canadian hospital contract, and said it was open to more asset sales to get back to profitability.
OHL, which builds everything from motorways and gas pipelines to hospitals and hotels, posted a 94 percent drop in first-half net profit to 3 million euros ($3.4 million), and while its working capital improved, it remained in the red.
To shore up its finances it is selling assets such as a stake in Spanish toll road operator Abertis ABE.MC and this week said it was in talks to take its OHL Mexico unit private.
OHL halved its stake in Abertis in late June, when it raised around 894 million euros to pay down debt and secure finances for its concessions business.
Enrique Weickert, OHL Chief Financial Officer, said that while the tie-up with Abertis hadn’t delivered the results hoped for, there were no plans to cut its stake any further for now.
“We were expecting to have some kind of synergy... after almost four years from that entrance we are happy with the stake, because it has been very profitable, but the reality is that we have not any kind of synergy with Abertis,” he said.
Tomas Garcia Madrid, OHL Chief Executive, said under no circumstances would the parent company invest more money in OHL Mexico, in which it has a 56-percent stake.
“In the future, we would consider selling from 56 percent to 50 percent, but we are not going to sell in the short term and we will always maintain a majority,” he said.
Garcia Madrid said the company was looking at the possibility of selling all or part of its stake in its Mayakoba hotel business in Mexico, as part of its efforts to cut losses on “legacy projects.”
The project behind the drop in net income, the CHUM hospital in Montreal, produced a loss of 108 million euros in the first half of the year, OHL said.
Garcia Madrid told analysts it could drain cashflow from both 2016 and 2017 before stabilizing, along with a number of legacy projects that may generate additional losses.
The company said earnings before interest, tax, depreciation and amortization (EBITDA) had dropped 10.5 percent on the period to 385 million euros, because of currency fluctuations.
OHL’s working capital, a measure of financial health for building companies, was negative to the tune of 215 million euros at the end of June, though that was better than the -356 million euros registered three months earlier.
Reporting by Andres Gonzalez and Amanda Cooper; Editing by Julien Toyer and Alexander Smith