Hochtief Aktiengesellschaft · XETR:HOT
Hochtief Aktiengesellschaft — HOCHTIEF Europe — Investor Presentation (December 2003)
36 slides from Hochtief Aktiengesellschaft's investor presentation, Dec 4, 2003
Slide 1: HOCHTIEF Europe: Business overview, strategy
HOCHTIEF Europe Business overview, strategy Dr. Friedel Abel 1
Slide 2: Overview
Overview • Market Development in Europe • Client Structure • HTE in the Market • Structure • Risk Management System • Cost Reduction Program • HTE today • Subsidiaries and Associates • Personnel 2
Slide 3: Market Development: Investment Clocks
Market Development Investment Clocks 2003 2003 2005 2005 UK, Spain, Slovakia Poland, Hungary, Estonia, Latvia, Lithuania Sweden, Russia Estonia Lithuania, Latvia, Ukraine, Serbia Romania, Hungary Italy, Norway Belgium Czech Republic Finland Russia Croatia, Spain Serbia, Czech Republic Slovakia, UK G
Slide 4: Portfolio Eastern European Markets
Market Development Portfolio Eastern European Markets good EE LV BG Bulgaria LT SLO CR HU BY Belarus PL CR Czech Republic EE Estonia HU Hungary Economic situation BG LT Lithuania LV Latvia average RF PL Poland RF Russian Federation RO Romania SK Slovakia RO SLO Slovenia poor UA, BY SK UA Ukraine poo
Slide 5: Building Rehabilitation
Market Development Building Rehabilitation Building rehabilitation is growing steadily in importance. 100 • Annual construction output non- 80 residential building approx. EUR 6 billion; 60 of which approx. EUR 3bn in 40 commercial segment 20 • Majority of buildings in Germany over 25 years old 0 19
Slide 6: Market Development: Tunneling
Market Development Tunneling Germany 25.000 25,000 Demand in the tunneling Excavated volume 103m3 segment will rise by approx. 20,000 20.000 12 percent up to 2010. 15,000 15.000 Other target countries with 10,000 growth: 10.000 Austria, Switzerland, Poland, 5,000 5.000 Czech Republic, UK 0 2000 2010
Slide 7: Trading of CO2 emissions rights – power plants
Market Situation Trading of CO2 emissions rights – power plants • The aim of the Kyoto Protocol is to reduce emissions of greenhouse gases below 1990 levels up to 2008/2012 by the percentage stated in the following table Potential target markets Target by 2012 Country (compared with 1990) • In Europ
Slide 8: Segments: Inner-city shopping centers
Market Developments Segments Schleswig- Holstein 12 16 0 16 0 - Inner-city shopping centers 4 Hamburg Mecklenburg-Western Pommerania 6 3 26 Bremen 23 Fast-growing major cities: 2 10 Berlin, Hamburg, Stuttgart, Berlin Lower Saxony 25 51 24 Bremen and Munich 0 41 1 Brandenburg Saxony-Anhalt 17 - Shopp
Slide 9: Product/Market Segment Portfolio Germany
Market Development Product/Market Segment Portfolio Germany 10 Market volume in EUR m 8 6 Damping Growth Change in construction volume 4 in % p.a. (1998 -2002) 2 Logistics 3,721 Leisure/sport 1,368 Technology 0 Office buildings Automotive 6,806 1,400 -2 Healthcare* Education* 2,444 1,578 -4 Decline
Slide 10: Healthcare Buildings: Hospital operators
Market Situation Healthcare Buildings Hospital operators 2000 Hospital operators 2010-2020 Private operators 7% Non-profit Non-profit operators Private operators 38% operators 37% 44% Public operators 55% Public operators 19% Source: Oppenheim Research § Increase in private operators from 7% in 2000
Slide 11: Healthcare Buildings: Demand for care places
Market Development Healthcare Buildings Number of over 95 year-olds in Germany Mio. Number of people requiring care in Germany 300.000 300,000 5 4 200,000 200.000 3 2 100,000 100.000 1 0 0 1987 1989 1991 1993 1995 1997 2000 2005 2009 2013 2017 2020 1999 2010 2020 2050 Source: Bundesinstitut für Bevö
Slide 12: Segments: Construction of cinemas
Market Developments Segments - Construction of cinemas Newly opened multiplex cinemas in Germany (1990 - 2002) 30 20 Exit market Identify market 10 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Identify opportunities – and use them 12
Slide 13: Client Structure – past
Client Structure – past - Client responsible for all services - Client owner-occupied buildings Building Purchasing department Catering Security Cleaning Rehabilitation Planner Mainte- New Energy nance building manage-- ment Goal: Mostly, individual contract awards 13
Slide 14: Client Structure – present and future
Client Structure – present and future User Investment, property, CM / GC leasing company Building PPP models → Owner FM Planner, project manager Goals: Achieve and secure returns - ideal for PreFair 14
Slide 15: Client Structures – Market Trends
Client Structures – Market Trends • Clients focusing on core business • Internationalization of clients • Scaling back of building and purchasing departments • Buildings owned by investment companies • Secure returns through - Deadline compliance - Quality - Budget certainty • Privatization models i
Slide 16: HTE in the Market
HTE in the Market • Withdrawal from wide-scale operations – closure of branches and offices • Introduction of a key account management system • Systematic creation of centers of excellence for product market segments • In selected countries only • Use of all HT units 16
Slide 17: Business Development Pillars - external
HTE in the Market Business Development Pillars - external Regions Clients Products International Hamburg Deutsche Bahn Tunnels Luxembourg Düsseldorf ECE Sports facilities Austria Munich Volkswagen Shopping Switzerland centers Frankfurt CommerzLeasing Poland Healthcare • • Czech Logistics Republic •
Slide 18: Business Development Pillars - internal
HTE in the Market Business Development Pillars - internal Europe Division HTD Asia Pacific Americas HTA HTP Leighton Turner Infrastructure • Real estate Concor Aecon • Infrastructure • Infrastructure • Infrastructure 18
Slide 19: HTE in the Market
HTE in the Market Segment specialist Centre of excellence Europe-wide International marketing infrastructure projects - Market Segment Group Branches with product Branches in your Product specialist with MIP or segment region HT sister company - Central market development - Distributed responsibilit
Slide 20: New Civil orders in 2002 by product market segment
HTE in the Market New Civil orders in 2002 by product market segment Airports 5% é Motorways 16% é Rail 2% é Bridges 2% Tunnels 48% é Port installations 14% é Sewage plants 5% Piping and sewers 3% Other 5% New Civil orders 100% 20
Slide 21: New Building orders in 2002 by product market segment
HTE in the Market New Building orders in 2002 by product market segment Office and commercial buildings 51% ê Sports facilities 4% é Automotive 1% é Industrial buildings 14% Logistics 2% é Shopping centers 6% é Healthcare 2% é Other 21% New Building orders 100% 21
Slide 22: Structure: HOCHTIEF Construction AG
Structure HOCHTIEF Construction AG Operational Level Northwest East Southwest Southeast Streif Infrastructure Infrastructure Central/ Market Baulogistik Europe International Eastern Segment Europe Group Düsseldorf Berlin Frankfurt Munich Construction Frankfurt Civil Major Intl. HT Polska Sports faci
Slide 23: Risk Management System
Risk Management System • Project losses are avoided through an extensive, consistent risk management system Contract Review Committee Bid audits Contract reviews Credit checks Selection of partner companies Country risks Execution audits Acceptance audits 23
Slide 24: Risk Management System: success rates 2002
Risk Management System Projects > EUR 5m, success rates 2002 EUR million Building Average CV Civil Average CV Number Value Number Value RFQs 218 6,760 31.0 205 9,580 46.7 Bid preparation 183 5,650 30.9 186 9,310 50.1 New orders 61 1,309 21.5 17 636 37.4 as % of bid preparation 23% 7% 24
Slide 25: Cost Reduction Program
Cost Reduction Program • Personnel reduction from 2001 to present, approx. 1,700 • Reduction of personnel costs - Flexible working hours - Systematic introduction of performance-oriented remuneration - Budgeting for bonuses • Reduction of indirect costs - Company cars - Travel - Office space managem
Slide 26: HTE – Today
HTE – Today • Construction company involved in CM/GC/core and shell work in Europe • Production: reduced vertical integration - 72% by subcontractors - partly own core and shell work - construction logistics by STREIF • Mainly price-based competition without qualification procedures; dramatic negati
Slide 27: “PreFair” Business Model
HTE – Today “PreFair” Business Model Design, specifications, Engi- Construction Idea approvals neering, final drawings Preconstruction Phase Construction Phase Time gain Tender Design competition Construction Traditional process 27
Slide 28: “PreFair” Model
HTE – Today “PreFair” Model Decision point Cost controllability Preconstruction Phase Construction Phase Preconstruction GMP contract contract or Budget contract Design or To date: Scheduling Partner selection Cost plus fee contract 19 contracts Budget calculation EUR 700m Risk profile or Contract f
Slide 29: “PreFair” Model: Advantages
HTE – Today “PreFair” Model Advantages for Advantages the client for HOCHTIEF Budget certainty Client relationship Deadline Risk management Quality Business cost reduction Savings potential Corporate culture Operating costs 29
Slide 30: HTE – Today
HTE – Today • High technological expertise – particularly in civil engineering - Further improve skills in facades and technical building services. - Introduce market-oriented research and development in building construction, and strengthen in civil engineering. - Strengthen our engineering departm
Slide 31: HTE – Today
HTE – Today • Core competence “Project management” has improved significantly - pick the right team- • Management system more centralist - risk management system - proximity of management to operations - central information systems • Inter-management relations - more open - more communicative - more
Slide 32: HTE – Today
HTE – Today • Improved relations with important partner companies - through strategic alliances - open communication - Partnerforum - Subcontractor management to coordinate partner companies • Return on work done positive for the first time in 2003 Goal: Return on work done > 2.5 % 32
Slide 33: Subsidiaries and Associates
Subsidiaries and Associates • HT UK is asserting itself in an attractive infrastructure market • Successful positioning of HT VSB in the Czech building market Collaboration in civil market • Building market in Poland will recover 2005 at the earliest Collaboration in civil market • DURST has success
Slide 34: Subsidiaries and Associates
Subsidiaries and Associates • Competition has stiffened in the Luxembourg building market. Attractive infrastructure projects are being pursued. • STREIF Baulogistik is feeling the impact of the domestic building market. STREIF offers flexible support for project execution. • In Moscow, we are only
Slide 35: Order Backlog Analysis
Order Backlog Analysis Order backlog, domestic and international 31.12.2001 30.09.2003 Inland: 1.709 70% 1.678 58% Order backlog, domestic and international Order backlog, domestic and international Ausland: 728 30% 1.193 42% Gesamt: 2.437 100% 2.872 100% 30 % 42 % domestic domestic international in
Slide 36: Personnel Situation
Personnel Situation HTE is providing 30 extra training places Actual Actual Actual 1) 31.12.2001 31.12.2002 30.9.2003 Salary earners 4,556 4,420 5,460 (4,256) Wage earners 3,222 2,586 3,787 (2,369) Total excl. apprentices/interns 7,778 7,006 9,247 (6,625) 1) Figures in brackets exclusive of CEE. 36
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