â€¢ Significant growth in operating earnings
â€¢ New orders six percent lower due to exchange-rate factors
â€¢ Turner posts record new orders of more than USD 4 billion
â€¢ Leighton wins EUR 710-million contract in Australia
Our operating earnings in the first half of 2002 increased to EUR 101 million (H1 2001: EUR â€“37 million). This positive performance was generated mainly by the rigorous restructuring measures implemented in the Construction division, which boosted its own operating earnings by EUR 98 million. The Development division lifted its operating earnings by EUR 44 million to EUR 58 million.
The main contributory factor was the tax-free sale of our stake in Monachia GrundstÃ¼cks-AG; this raised EUR 157 million, about two thirds of which was set aside to strengthen reserves and as a general risk provision. The setback in operating earnings from the International division is primarily due to HOCHTIEFâ€™s pro rata share of the loss reported by our associated company Ballast Nedam N.V. (consolidated at equity) for the 2001 fiscal year.
Consolidated net income echoed the healthy trend in operating earnings, and jumped forward EUR 134 million to reach EUR 81 million. The turnaround in earnings was achieved even though HOCHTIEFâ€™s consolidated external sales held the previous yearâ€™s first-half level of EUR 5.96 billion.
The increased sales posted by Leighton Holdings Limited (+EUR 247 million) and also by HOCHTIEF Development and HOCHTIEF International (+EUR 132 million combined) were contrasted by a reduction in external sales at HOCHTIEF Americas and HOCHTIEF Construction.
Although the figure for the Americas division was EUR 291 million lower at EUR 3.15 billion, this was mainly due to the increased proportion of profitable construction management business handled by our subsidiary The Turner Corporation, in which only the management fee and not the value of the construction work itself appears in the sales and orders records.
As budgeted, the external sales of HOCHTIEF Construction AG fell by 14.9 percent to EUR 758 million. Mainly because of exchange-rate movements, new orders in the first half of 2002 were six percent lower year on year. Factoring out this effect, new orders expressed in local currencies grew by 4.6 percent. In euro terms, orders in Germany fell 5.4 percent while those in other countries fell 6.1 percent.
Capital expenditure was EUR 285 million in the first half, exceeding the prior-year period by EUR 68 million.
Looking ahead: We anticipate that Turner and Leighton will continue to produce equally good results and that the structural adjustments at HOCHTIEF Construction will yield benefits as budgeted. We therefore expect to achieve improved consolidated earnings in the current financial year, barring any major changes in the overall
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