Up and down
May 16, 2011
German builder Hochtief, whose name literally translates as "high deep," has been in a hole of sorts over the past several months.
After struggling unsuccessfully to avoid a hostile takeover by Spanish rival ACS, the company began its new business year with a quarterly loss.
At the operating level, Hochtief suffered a loss of 414.3 million euros in the first quarter, compared to a profit of 152 million euros in the same period a year earlier.
The loss is due in large part to problems at the company's Australian subsidiary, Leighton. The unit has run into problems on several major projects affected by floods and a cyclone in Australia. It has also had a difficult time with the Brisbane Airport Link project.
Bleeding executives
The loss comes as Hochtief loses a number of key executives. Three members of the company's five-strong executive board, including its chief financial officer Burkhard Lohr, have departed.
The executives used an extraordinary termination clause in their contracts after ACS crossed the 30-percent ownership threshold.
In addition to these departures, CEO and executive board member Herbert Lütkestratkötter resigned from the company last week.
Hochtief shareholders approved a new supervisory board consisting of candidates proposed by ACS earlier this month.
More orders, higher share price
On the bright side, Hochtief reported that new orders rose nearly 57 percent to 5.4 billion euros. The builder is currently profiting from a pick-up in activity in Europe, the Americas and its concessions division
Hochtief shares have also gained more than 9 percent since ACS first signaled an interest in acquiring the company.
The Spanish group has already secured more than 43 percent of Hochtief stock. Its declared goal is to acquire just over 50 percent to gain full control.
Hochtief's strong balance sheet and contracts, analysts say, would help ACS compensate for its exposure in Spain's struggling construction sector and relieve pressure from its 8 billion euro debt pile.
Author: John Blau (dpa, Reuters, AFP)
Editor: Sam Edmonds