STRABAG SE INVESTOR PRESENTATION

Transcription

1 STRABAG SE INVESTOR PRESENTATION JULY 2018

2 DISCLAIMER This presentation is made by STRABAG SE (the "Company") solely for use at investor meetings and is furnished to you solely for your information. This presentation speaks as of July The facts and information contained herein might be subject to revision in the future. Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. None of the Company or any of its parents or subsidiaries or any of such person's directors, officers, employees or advisors nor any other person (i) accepts any obligation to update any information contained herein or to adjust it to future events or developments or (ii) makes any representation or warranty, express or implied, as to, and no reliance should be placed on, the accuracy or completeness of the information contained in this presentation. None of the Company or any of its parents or subsidiaries or any of their directors, officers, employees and advisors nor any other person shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising, directly or indirectly, from any use of this presentation. The same applies to information contained in other material made available at the meeting. identified by words such as "believes, "expects, "predicts, "intends, "projects, "plans, "estimates, "aims, "foresees, "anticipates, "targets, and similar expressions. The forward-looking statements, including but not limited to assumptions, opinions and views of the Company or information from third party sources, contained in this presentation are based on current plans, estimates, assumptions and projections and involve uncertainties and risks. Various factors could cause actual future results, performance or events to differ materially from those described in these statements. The Company does not represent or guarantee that the assumptions underlying such forward-looking statements are free from errors nor do they accept any responsibility for the future accuracy of the opinions expressed in this presentation. No obligation is assumed to update any forward-looking statements. By accepting this presentation you acknowledge that you will be solely responsible for your own assessment of the market and of the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company's business. This document is selective in nature and is intended to provide an introduction to, and overview of, the business of the Company. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by the Company as being accurate. This presentation contains forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which the Company operates. These statements generally are 2 Investor Presentation July 2018

3 1 STRABAG AT A GLANCE 2 THE CONSTRUCTION SECTOR WITHIN 3 EVOLVING GLOBAL THEMES THE STRABAG STRATEGY & INVESTMENT PROPOSITION 4 FINANCIAL 5 PERFORMANCE APPENDIX 3 Investor Presentation July 2018

4 1 STRABAG AT A GLANCE

5 STRABAG AT A GLANCE FACTS & FIGURES MARKETS Output volume 2017: 14.6 billion Net income 2017: 292 million 72,900 employees >700 locations in more than 80 countries Highly innovative: Central Technical Division with nearly 1,000 engineers, TPA (Quality & Innovation) with 880 people Equity ratio: >30% Strong brands: STRABAG & ZÜBLIN Investment grade rating by S&P: BBB, outlook stable #1 #2 #3 OUTPUT VOLUME BY REGION (2017) #2 #1 #2 #1 #1 #1 Rest of Europe 9% Rest of world 6% Colombia CEE 22% Austria 16% Germany 47% Sources: Companies Annual Reports; Deutsche Bauindustrie; Časopis Stavitel, OPTEN; Trend Top v Stavebnictve 05/2017; Chile Oman Abu Dhabi Qatar Saudi Arabia 5 Investor Presentation July 2018

6 LARGEST PROJECTS IN PROGRESS NO SPECIFIC EXPOSURE TO ANY LARGE PROJECT COUNTRY PROJECT ORDER BACKLOG IN M AS % OF TOTAL ORDER BACKLOG Singapore Deep Tunnel Sewerage System Chile Alto Maipo power plant Chile Chuquicamata, underground mine Germany Stuttgart 21, underground railway station Germany Daimler building Germany Axel Springer new construction, Berlin Austria Koralm Tunnel, Section Germany Daimler Office V Germany Messe City 1-4, Cologne Hungary Railway line Rakos-Gödöllo As on 31 December 2017 Alto Maipo power plant Axel Springer new construction Image credits: OMA 6 Investor Presentation July 2018

7 FLAGSHIP PROJECTS EXAMPLES TAMINA BRIDGE SWITZERLAND Building of an arch bridge Size: 22 million (=60% share) Project schedule: Project scope: 475 m long arch bridge with a span of 260 m PPP-MOTORWAY N17/N18 IRELAND Financing, planning, building and operating Size: 330 million Project schedule: Project scope: 57 km motorway, 25-year operating period BRENNER BASE TUNNEL AUSTRIA Building of a twin-tube rail tunnel between Tulfes Pfons Size: 380 million (=51% share) Project schedule: Project scope: 38 km twin-tube rail tunnel, exploratory and rescue tunnel OFFICE & PRODUCTION BUILDINGS FOR SIEMENS Construction of new office and production buildings in Zug, Switzerland Size: ~ 100 million Project schedule: Project scope: General contractor, BIM.5D applied Picture: Thomas Böhm, Tiroler Tageszeitung Picture: Siemens Schweiz AG 7 Investor Presentation July 2018

8 FLAGSHIP PROJECTS INTERNATIONAL ROHTANG PASS HIGHWAY TUNNEL INDIA Size: 197 million (=60% share) Project schedule: Project scope: Construction of an 8.9 km long two-lane road tunnel with integrated emergency tunnel beneath the roadway via the NATM tunnelling method MAR1 CONCESSION COLOMBIA Size: 893 million (37.5% share) Project schedule: Project scope: 176 km national road (38 km 4-lane national road 71 km rehabilitation of 2-lane natinal road and operation and maintenance of 72 km national road), construction includes a 4.6 km tunnel and 67 bridges with a total length of 7.3 km JV 5TH LINE WATER SUPPLY JERUSALEM Size: 165 million Project schedule: Project scope: 12.9 km TBM tunnel, Ein Karem exit shaft (22 m deep), Soreq adit (1.4 km > NATM), complete tunnel with steel tube + Kesalon connecting route (320 m) + Ein Karem connecting route (10 m) > ca km steel hydraulics construction, commissioning AFRICA S HIGHEST BRIDGE SOUTH AFRICA Size: 106 million (50% share) Project schedule: Project scope: Construction of a 1,132 m long bridge over the river Mtentu near the town of Flagstaff 8 Investor Presentation July 2018

9 BUSINESS SEGMENT CONTRIBUTION 2017 North + West South + East International + Special Divisions Regions/Areas Germany, Poland, Benelux, Scandinavia, Ground Engineering 47% of output volume 29% of output volume Austria, Switzerland, Hungary, Czech Republic, Slovakia, Adriatic, Rest of Europe, Environmental Engineering, Russia 23% of output volume International, Tunnelling, Services, Real Estate Development, Infrastructure Development, Construction Materials Output volume ( m) 6,843 4,242 3,404 Order backlog ( m) 8,138 4,505 3,944 EBIT ( m) EBIT margin (%) Employees 23,366 17,916 25,618 4 th, non-operating segment Others, output volume 1%, not shown 9 Investor Presentation July 2018

10 KEY FINANCIALS ( m) % Output volume 14,621 13,491 8 Revenue 13,509 12,400 9 EBITDA EBITDA adjusted EBIT EBIT adjusted Net income after minorities Cash flow from operating activities 1, Cash flow from investing activities Balance sheet total 11,054 10,378 7 Group equity 3,398 3,265 4 Equity ratio 30.7% 31.5% Net debt (+)/cash (-) -1, Δ% was calculated with original, not rounded figures therefore, rounding differences may occur. 1 Adjusted for a non-operating profit in the amount of million. 10 Investor Presentation July 2018

11 COMPREHENSIVE COUNTRY NETWORK INTEGRATED MODEL TAKES ADVANTAGE OF local management skills market knowledge cost and efficiency synergies risk diversification COMPREHENSIVE COUNTRY NETWORK ENABLES STRABAG TO make more use of technology and machinery follow clients around the world Only countries with a minimum annual output volume and a minimum order backlog of 1 million are considered. 11 Investor Presentation July 2018

12 2 THE CONSTRUCTION SECTOR WITHIN EVOLVING GLOBAL THEMES

13 FIVE EUROPEAN TRENDS: (1) URBANISATION/DEMOGRAPHICS GERMANY: DAILY TRAFFIC LOAD 2030F Vehicles (thousands/day) > <10 By % of the global population will live in cities (today: 54%) an increase of the urban population by 2.5 billion. Higher need for infrastructure McKinsey: USD 57 trillion infrastructure investment needed by 2030 to keep up with global economy, 4% annual growth rate for construction companies Significant need for rehabilitation and extension of the German transportation network within the next ten years 2.6 billion of additional investments p.a. necessary over 15 years according to Daehre Commission 2012 Investments into German federal roads 2018e: 13.9 billion / A-roads: 7.2 billion Bundesverkehrswegeplan 2030 : German investment plan with total sum of 270 billion (focused on infrastructure in the Western part) Sources: BMVI, Verkehrsverflechtungsprognose 2030 Netzumlegungen, August 2015, Bundeshaushalt Einzelplan 12, Bundesverkehrswegeplan; Report of the Daehre Commission in December 2012; ma/policies/brief/eu/index_en.htm; Voices on Infrastructure, Global Infrastructure Initiative by McKinsey & Company 13 Investor Presentation July 2018

14 EXAMPLE: MOTORWAY DENSITY IN DIFFERENT MARKETS 45 km motorway / 1,000 km 2 0 Slovenia Germany Croatia Austria Hungary Czech Republic Slovakia Bulgaria Poland Romania Source: Eurostat Investor Presentation July 2018

15 FIVE EUROPEAN TRENDS: (2) ENERGY/SUSTAINABILITY Investment of USD 48 trillion needed to just meet the world s energy needs by 2035, according to McKinsey 1 Kyoto Protocol: Current commitment period ; 37 countries with binding emissions reduction targets (mostly in Europe) EU: Greenhouse gas emissions to be cut by 20% until 2020 (vs. 1990), planned reduction of 80 95% by 2050 Construction sector responsible for 30% of all greenhouse gas emissions measures to reduce emissions could bring this share down to 25% by Clients increasingly ask for energy-efficient solutions, environmentally friendly products and a sustainable business conduct of suppliers. Own building materials network provides a high barrier to entry for other market participants, as the permits for building new mixing plants are not granted easily due to environmental concerns. A2 Poland 1 Voices on Infrastructure, Global Infrastructure Initiative by McKinsey & Company, October DIW Berlin 15 Investor Presentation July 2018

16 FIVE EUROPEAN TRENDS: (3) FINANCIAL ENVIRONMENT Historically low interest rates and highly volatile financial environment make real estate an attractive investment alternative for some investor groups Low financing costs facilitate investment into real estate STRABAG Real Estate Development Tanzende Türme, Hamburg 16 Investor Presentation July 2018

17 FIVE EUROPEAN TRENDS: (4) CEE SET FOR GROWTH AGAIN GROWTH IN KEY MARKETS F 35% CEE TO OUTPERFORM WESTERN EUROPE 10% 0% f 2019f 2020f 0% Western Europe Czech Republic GDP Slovakia Poland Hungary Construction market -10% Constr. Western Europe Constr. Eastern Europe % of output volume 2017 Output volume ( m) Market share (%) CZECH REP. SLOVAKIA POLAND HUNGARY CEE represents 22% of output volume in 2017 Number of unemployed people in CEE 1 expected to decrease from 2.1 million (2015) to 1.5 million in 2019 EU cohesion fund regime : Among others, Czech Republic, Hungary, Poland and Slovakia eligible 63.4 billion in total to be allocated for trans-european transport networks and environmental projects Sources: Euroconstruct Report, Winter 2017; 1 Czech Republic, Hungary, Poland, Slovakia 17 Investor Presentation July 2018

18 FIVE EUROPEAN TRENDS: (5) DIGITALISATION CONSTRUCTION SECTOR LAGGING BEHIND REGARDING PRODUCTIVITY GAINS 1 4% 27% 34% Construction industry Producing industry Manufacturing industry <6% Less than 6% of construction companies use digital instruments for planning holistically. 93% of players in the construction sector agree that digitalisation will effect all their processes. Source: Digitalisierung der Bauwirtschaft, Roland Berger, Figures for Germany 18 Investor Presentation July 2018

19 CONSTRUCTION SEGMENTS HAVE THEIR OWN BUSINESS MODELS AND CYCLES CONSTRUCTION SUBSEGMENTS GERMANY 10% STRABAG CLIENT STRUCTURE Private 38% 0% e 2018e Public 62% -10% Residential Other building construction Civil CONSTRUCTION OUTPUT BY COUNTRIES 10% 0% e 2018e Public client: The price is mostly the dominant criterion. Private client: Often opts for the best offer, not necessarily the lowest. -10% Germany Austria Eastern Europe Source: Euroconstruct 19 Investor Presentation July 2018

20 SELECTION CRITERIA IN CONSTRUCTION Clients selection criteria Price Financial strength Technology & Innovation References Experience and Know-how of employees Construction materials supply 20 Investor Presentation July 2018

21 3 THE STRABAG STRATEGY & INVESTMENT PROPOSITION

22 A EUROPEAN-BASED TECHNOLOGY GROUP FOR CONSTRUCTION SERVICES STRABAG is a European-based technology group for construction services, a leader in innovation and financial strength. We create added value for our clients by integrating the most diverse services and assuming responsibility for them: We bring together people, materials and machinery at the right place and at the right time in order to realise even complex construction projects on schedule, of quality and at the best price. STRABAG takes an agreed scope of responsibility and part of the risk, thereby relieving the client e.g. of the risk of delays and cost overruns. Professional and market experience as well as financial strength needed to create added value Helps clients meet their goals (time, quality, lower costs) Technology/Innovation: Differentiation through superior technology and innovative solutions 22 Investor Presentation July 2018

23 SIX STRATEGIC FIELDS 23 Investor Presentation July 2018

24 THE STRABAG INVESTMENT PROPOSITION (1) Margin Upside Strategic priority: Strengthening risk and opportunity management Strategic priority: Implementing efficiency-rising measures proposed by task force (2) Flexible Business Model, Selective Diversity Strategic priority: Showing flexibility Strategic priority: Staying diversified Strategic priority: Offering top technology and sustainability (3) Financial Strength Strategic priority: Maintaining financial strength (4) Attractive Dividends on a reliable level 24 Investor Presentation July 2018

25 (1) MARGIN UPSIDE: TARGETS MID-TERM TARGET OF 3% EBIT MARGIN 1 4% 3.3% 3.2% 3% FOCUS ON MARGIN, NOT ON TOP LINE 7% 8% 8% 5 % 5% 2.1% 2.3% 2.6% -3 0% % 3% -3% 0% % -6% Comprehensive risk management Forecast for output volume 2018 at least 15.0 billion (+3%) adjusted for a non-operating profit in the amount of million. 25 Investor Presentation July 2018

26 (1) MARGIN UPSIDE: RISK MANAGEMENT RISK MANAGEMENT INSTRUMENTS Four-eyes-principle Internal price committees (including a STRABAG SE board member when project volume 70 m) Internal Audits Organisational structure with central divisions Management information system: We have developed a management information system that helps us to ensure that the same standards apply in all regions where STRABAG is active. This means: clear criteria for the assessment of new projects, a standardised process for the submission of bids and control systems serve as filters to avoid loss-bringing projects. Thomas Birtel, CEO TYPES OF CONTRACTS Joint Venture with the client Cost + fee Guaranteed maximum price Lump-sum Unit pricing COMPOSITION OF THE ORDER BACKLOG 14% Total of the ten largest projects in the order backlog 12,443 Construction sites per year 26 Investor Presentation July 2018

27 (2) FLEXIBLE BUSINESS MODEL, SELECTIVE DIVERSITY: RESILIENCE IN A VOLATILE INDUSTRY OUTPUT VOLUME ( M) ORDER BACKLOG ( M) 20, , ,573 14,290 13,566 13,491 14,621 13,470 14,403 13,135 14,816 16, EBITDA ( M) AND EBITDA MARGIN (%) 1 EBIT ( M) AND EBIT MARGIN (%) 1 1, , % 6.2% 5.8% 5.6% 6.2% % 2.3% % % % adjusted for a non-operating profit in the amount of million. 27 Investor Presentation July 2018

28 (2) FLEXIBLE BUSINESS MODEL, SELECTIVE DIVERSITY: SUBCONTRACTING AND PORTFOLIO MIX SUBCONTR. BUILDING & CIVIL ENGINEERING SUBC. TRANSPORTATION INFRASTRUCTURE Subcontractors 59% Own 41% Subcontractors 29% Own 71% DIVERSIFIED PORTFOLIO BALANCES CYCLICAL/PROJECT-DRIVEN NATURE OF CONSTRUCTION Diversifying geographically Top market positions in stable home markets Offer services along the entire construction value chain International & Tunneling 9% Construction Materials 6% Services 9% Project development & Concessions 2% Transportation Infrastructure 37% Building Construction & Civil Engineering 37% 28 Investor Presentation July 2018

29 (2) FLEXIBLE BUSINESS MODEL, SELECTIVE DIVERSITY: OWN DENSE CONSTRUCTION MATERIALS NETWORK STRABAG FACILITIES 1 Asphalt mixing plants Concrete mixing plants Total quarries and gravel pits Cement mixing plants 5 3 Production of 3.9 million m³ of concrete, 15.8 million tons of asphalt and 1.2 million tons of cement in 2017 Sales revenue of 585 million in 2017 OWN COVERAGE OF MATERIAL NEEDS (%) 100% 0% 78% 78% 28% 26% 28% 24% 17% 18% Asphalt Concrete Cement Stone/Gravel HIGHLIGHTS Hedge against price fluctuations, securing supply Existing quarries as effective entry barriers lack of permits for new sites 30% in joint venture (at equity-consolidated since Q3/2011) with LafargeHolcim secures access to cement in Central and Eastern Europe Further optimisation of raw materials network and increased self-sufficiency except in asphalt 1 December Includes active facilities from joint ventures and associates 3 Thereof four in JV with LafargeHolcim (STRABAG share 30%) and one in another investment (STRABAG share 25.6%) 29 Investor Presentation July 2018

30 (2) FLEXIBLE BUSINESS MODEL, SELECTIVE DIVERSITY: STEADY INCOME THROUGH CONCESSION BUSINESS NUMBER OF STRABAG S PPP 1 PROJECTS SELECTED PPP PROJECTS Vocational schools, Germany Motorway A8, Germany PPP STRATEGY Focus on infrastructure and large public buildings PPP/BOT 1 in home markets, Eastern Europe and increasingly in selected international markets (insufficient legal framework in some countries) Importance as public procurement method due to cost advantages High barriers to entry due to necessary PPP expertise and financial strength 1 Public-Private Partnership/Build-Operate-Transfer TOTAL SELECTED PPP PROJECTS COUNTRY PROJECT COST ( M) % SHARE CONCESSION UNTIL STATUS PL A2 Section II 1, Operation HU M5 Motorway 1, Operation HU M6 Motorway Operation COL MAR In progress GER GER Schools, Mülheim Ministries, Potsdam Operation Operation 30 Investor Presentation July 2018

31 (2) FLEXIBLE BUSINESS MODEL, SELECTIVE DIVERSITY: PROPERTY & FACILITY SERVICES TARGET MARKETS KEY ACCOUNTS KEY FACTS 2017 Output 2017: 1.1 billion ~ 10,000 employees (FTE) Broad range of customers: Airbus, Audi, Commerzbank, Deutsche Bahn, DFS, Hahn- Gruppe, ESPRIT, IMMOFINANZ, Jungheinrich, Nordex, ORSAY, RWE, Telefónica Deutschland, Vodafone, WealthCap, etc. Active in Germany, Austria, Hungary, Poland, Czech Republic, Slovakia #4 market position in German facility management ( Lünendonk 2017 ranking) Consolidated in the International + Special Divisions segment DFS Deutsche Flugsicherung Headquarters Frankfurt, Germany City Tower, Praha, Czech Republic Commerzbank Tower, Frankfurt, Germany 31 Investor Presentation July 2018

32 (2) OFFERING TECHNOLOGY AND SUSTAINABILITY: BIM.5D COULD BE A REVOLUTION IN CONSTRUCTION 3D MODEL: DEFINING THE TO BE BUILT 4D TIME: WHEN ARE WORKS EXECUTED? 5D PROCESS: MATERIALS, ORDERS ADVANTAGES OF BIM.5D Single data pool as an answer to specialisation and growing number of companies involved Risk management: Inconsistencies detected earlier Clients get a clearer picture of the impacts resulting from alterations, renovations, additions Budget and time overruns minimized 32 Investor Presentation July 2018

33 (2) OFFERING TECHNOLOGY AND SUSTAINABILITY: INTELLIGENT PROCESS ENGINEERING BIM.5D ALSO APPLICABLE FOR TRANSPORTATION INFRASTRUCTURE PROJECTS Isometrics of a combined traffic & bridge construction model 3D visualisation Topographic mapping via drones and other innovative hard- & software Model-based quantity take-off during tender stage and quantity on-site controlling in execution phase Model-linked 4D time tables Integrated logistics concepts and simulations Model-based machine control on-site 33 Investor Presentation July 2018

34 (2) OFFERING TECHNOLOGY AND SUSTAINABILITY: CASE STUDY CENTRAL TECHNICAL DIVISION/TPA STRABAG AND PEERS: R&D/TECHNICAL DIVISION STAFF HEADCOUNT 1 2, Number of employees Central Technical Division organisation in charge of planning and execution of R&D projects TPA Central Technical Division Focus on building construction and civil engineering 24 locations 0 STRABAG Peers TPA organisation focused on optimising technical processes, workplace safety and quality 4% 1.1 % 3.2 % % of total headcount % % 0.6 % 0.2 % 0.2 % 0.1 % 0.1 % Focus on transportation infrastructure STRABAG s competence centre for quality management and construction R&D 130 locations 0% STRABAG Peers Total R&D spending: ~ million p.a. 1 Analysis carried out by STRABAG R&D department in Investor Presentation July 2018

35 (2) OFFERING TECHNOLOGY AND SUSTAINABILITY: EXAMPLE ON NON FINANCIAL TARGETS WOMEN TARGET: GROW SHARE OF WOMEN IN TOTAL EMPLOYMENT AND MANAGEMENT EACH YEAR 16% 13.6% 13.8% 13.9% 14.9% 14.9% 8.6% 8.5% 8.7% 8.4% 9.0% 0% Women as % of staff Women as % of management 35 Investor Presentation July 2018

36 (3) FINANCIAL STRENGTH AS COMPETITIVE ADVANTAGE RATING EQUITY RATIO STRABAG SE is one of the few European construction companies with an official corporate credit rating. S&P raised STRABAG SE investment grade rating from BBB- to BBB, stable outlook, in June 2015; confirmed in July 2017 stable margins in an otherwise cyclical market environment strong market positions renewed infrastructure spending in Germany and CEE vertical integration that provides barriers to entry and strategic access to raw materials Rating as a competitive advantage: 200 million bond issued with a coupon of 1.625%, Target: maintain investment grade credit rating High equity ratio of 31% despite share buyback (sector average 23%) Target: maintain equity ratio of 25% NET CASH Net cash of 1,335 million end of Investor Presentation July 2018

37 (3) FINANCIAL STRENGTH: DIVERSIFIED FINANCING DEBT REPAYMENT PROFILE ( M) Bonds Bonded loan DIVERSIFIED MEANS OF FINANCING Cash and surety credit lines (31 December 2017): 7.7 billion (thereof cash credit lines of 0.4 billion) Bond issue: 200 million, %, billion syndicated surety loan (by 2023) 400 million syndicated cash credit line (by 2023) CORPORATE BONDS TERM INTEREST VOLUME ISIN % 100 m AT0000A0V7D % 200 m AT0000A109Z % 200 m AT0000A1C Investor Presentation July 2018

38 (4) ATTRACTIVE DIVIDENDS: CONSISTENT PAYOUT RATIO NET INCOME A.M. ( M) AND MARGIN (%) DIVIDEND ( ) AND PAYOUT RATIO (%) 350 0% 2 100% % 2.1% % % 1.0% 0.9% % 40% 43% 48% 35% % EARNINGS PER SHARE ( ) DIVIDEND ( ) AND PAYOUT RATIO (%) 3 0% Investor Presentation July 2018

39 (4) ATTRACTIVE DIVIDENDS: TOTAL SHAREHOLDER RETURN % Ø dividend yield: 2.9 % Dividend policy: % of net income after minorities distributed as a dividend 2.8% 2.8% 2.9% 42.7% 29.7% 3.0% 2.1% 4.1% -2.8% -14.7% 3.8% 1%% -14.7% -20% Return from share price -14.7% Return from dividends 39 Investor Presentation July 2018

40 4 FINANCIAL PERFORMANCE

41 3M/18: OUTPUT VOLUME ROSE BY 7% OUTPUT VOLUME ( M) ,000 14,621 Driven especially by German transportation infrastructure business 7% 2,600 2, M/18 3M/ ORDER BACKLOG ( M) 10% 20, ,669 16,113 16,592 Large orders in the group s largest markets, i.e. Hungary, Poland and Germany 0 3M/18 3M/ Investor Presentation July 2018

42 3M/18: OPERATING EARNINGS SLIGHTLY IMPROVED EBITDA ( M) ,000 2% 835 First quarter not decisive First half of the year typically has a negative effect on results, which is overcompensated by results in the second half of the year M/18 3M/ EBIT ( M) 1, Depreciation and amortisation down by 4% 448 3% M/18 3M/ Investor Presentation July 2018

43 3M/18: EFFECTS FROM NET INTEREST INCOME AND MINORITIES COMPENSATE FOR EACH OTHER NET INCOME AFTER MINORITIES ( M) 500 EARNINGS PER SHARE ( ) % M/18 3M/ % M/18 3M/ Net interest income at -3 million (after -14 million in 3M/17), negative FX differences in 3M/17 Income tax in positive territory Minority shareholders did not help bear a loss as it was the case in 3M/17 Earnings per share unchanged 43 Investor Presentation July 2018

44 3M/18: HIGH EQUITY RATIO AND NET CASH POSITION ASSETS (1) LIABILITIES AND EQUITY (1) ( m) 3M/ Intangible assets PP&E & Investment property 1,948 1,942 Equity-accounted investments Other investments Receivables from concession arrangements Other financial assets Deferred taxes Non-current assets 4,121 4,096 Inventories 700 1,138 Trade receivables & other financial assets 3,318 2,996 Receivables from concession arrangements Cash and cash equivalents 2,468 2,790 Current assets 6,520 6,958 Total Assets 10,641 11,054 (1) Rounding differences might occur. ( m) 3M/ Share capital Capital reserves 2,315 2,315 Retained earnings Non-controlling interests Equity 3,312 3,398 Provisions 1,150 1,160 Financial liabilities Other financial liabilities Deferred taxes Non-current liabilities 2,114 2,145 Provisions Financial liabilities Trade payables 3,290 3,402 Other current liabilities Current liabilities 5,215 5,511 Equity & Liabilities 10,641 11, Investor Presentation July 2018

45 3M/18: CFO NEARLY UNCHANGED, HIGHER CFI AND CFF OUTFLOWS ( m) 3M/18 % 3M/17 Cash beginning of period 2, ,998 Cash flow from earnings Working Capital Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Net change in cash FX changes -5 n.m. 11 Change restricted cash Cash end of period 2, ,758 Rounding differences might occur 45 Investor Presentation July 2018

46 3M/18 NORTH + WEST: HIGH ORDER BACKLOG IN GERMANY KEY INDICATORS ( m) 3M/18 Δ% 3M/17 Output volume 1, ,087 Revenue 1, ,022 Order backlog 8, ,652 EBIT EBIT margin % Employees 22, ,253 SHARE OF GROUP OUTPUT VOLUME 48% of group output volume BC&CE: Building construction & civil engineering; TI: Transportation Infrastructures COMMENTS Output volume increased by 14% high order backlog in Germany and good weather Weather in Germany and Poland has contrary effects on EBIT Growth in orders (13%) driven by Poland, Germany and Benelux Outlook: Output volume 2018 expected to slightly surpass last year s record German BC&CE should continue to contribute positively to output volume and earnings despite capacity bottleneck Excellent start in 2018 for TI; labour remains a limiting factor Poland: capacity shortage led to double-digit percent price increases last year, but high order backlog enables greater project selection 46 Investor Presentation July 2018

47 3M/18 SOUTH + EAST: HIGH BACKLOG LEADS TO LARGER WINTER LOSS KEY INDICATORS ( m) 3M/18 Δ% 3M/17 Output volume Revenue Order backlog 5, ,148 EBIT EBIT margin % Employees 16, ,933 SHARE OF GROUP OUTPUT VOLUME 25% of group output volume TI: Transportation Infrastructures COMMENTS Output volume nearly unchanged EBIT more negative: increased staff in response to high volume of orders, but output volume failed to grow due to weather conditions Order backlog plus 22%, mainly driven by TI projects in Hungary Outlook: Output volume expected to continue to grow with attractive margins in 2018 Situation in Austria remains positive Falling margins in Czech Republic and Slovakia High order backlog in Hungary is a challenge Russian market feels the impact of US sanctions, but STRABAG not directly affected 47 Investor Presentation July 2018

48 3M/18 INTERNATIONAL + SPECIAL DIVISIONS EXPECTS EARNINGS IMPROVEMENT KEY INDICATORS ( m) 3M/18 Δ% 3M/17 Output volume Revenue Order backlog 3, ,306 EBIT EBIT margin % Employees 25, ,543 SHARE OF GROUP OUTPUT VOLUME 27% of group output volume COMMENTS Output volume up by 5% due to large projects in the Americas Sale of real estate developments and the absence of burden from large international projects benefitted earnings Order backlog fell by 8%: negative effect from Italy already last year Outlook: Output volume 2018 should be comparable to 2017 Real estate development and existing publicprivate partnerships should continue to make very positive earnings contributions Short-term opportunities for tunnelling in UK, Norway and South-East-Europe Property & facility services concluded agreement with competitor in April 2018 for the transfer of personnel after 1 July Investor Presentation July 2018

49 HIGHLY SEASONAL BUSINESS QUARTERLY DEVELOPMENT OF OUTPUT VOLUME AND EBIT ( M) 4,500 3,436 3,932 3,854 3,736 4,051 4,034 3,420 3,884 3, % 3,828 4,129 4, % 6.1% EBIT margin 1 2,344 2, % 4.9% 3.2% 2, % 5.4% 2, % 5.5% 2, % -, % -7.0% -7.6% -6.8% -6.5% -5.9% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Output volume EBIT 1 EBIT/revenue 49 Investor Presentation July 2018

50 OUTPUT VOLUME INCREASED IN NUMEROUS MARKETS OUTPUT VOLUME ( M) 20, % 14,621 13, Output volume rose by 8% to 14.6 billion Especially strong increase in German transportation infrastructure and Austrian building construction German share in group output volume continually rising Upward trend also in CEE core markets OUTPUT VOLUME 2017 BY REGION Rest of Europe 9% CEE 22% Rest of world 6% Germany 47% Austria 16% 50 Investor Presentation July 2018

51 SEVERAL LARGE CONTRACTS LED TO RECORD ORDER BACKLOG ORDER BACKLOG ( M) ,000 16, % Several large orders from diverse fields and markets: 0 14, Transportation infrastructure in Hungary and Poland Building construction and civil engineering in Germany Tunnelling in Singapore ORDER BACKLOG 2017 BY REGION Rest of world 11% Rest of Europe 10% Germany 42% CEE 25% Austria 12% 51 Investor Presentation July 2018

52 EBIT HIGHER DESPITE POSITIVE ONE-OFF IN 2016, EBIT MARGIN AT 3.3% TARGET OF 3.0% SOLIDLY ACHIEVED EBITDA ( M) AND EBITDA MARGIN (%) 1, % % 6.9% EBITDA 2016 clean of non-operating non-recurring item: 827 million, EBITDA margin 6.7% Earnings improvements in several markets, e.g. Germany Recognition of a receivable from a concession project EBIT ( M) AND EBIT MARGIN (%) 1, % % 3.4% EBIT clean of non-operating non-recurring item: 397 million, EBIT margin 3.2% Extraordinary depreciation allowances significantly reduced All three operative segments contrbuted to earnings improvement 52 Investor Presentation July 2018

53 EARNINGS PER SHARE STABLE NET INCOME A. MINORITIES ( M) & MARGIN (%) 0% EARNINGS PER SHARE ( ) 3 0% % 2.2% Net interest income strongly worsened due to absence of positive foreign currency effects Effective tax rate at 30.6% slightly improved (2016: 33.0%) Earnings owed to minority shareholders increased from 4 million to 13 million, as in 2016 minority shareholders, which still existed at that time, helped to carry winter losses Squeeze-out at STRABAG AG, Germany, only completed on 29 December Investor Presentation July 2018

54 GROUP INCOME STATEMENT 2017 ( m) Δ% Output volume 14, , Revenue 13, , Changes in inventories/own work capitalised n.m. Other operating income Construction materials, consumables and services used -8, , Personnel cost -3, , Other operating expenses Share of profit or loss of associates Net income from investments EBITDA EBITDA adjusted Δ% was calculated with original, not rounded figures therefore, rounding differences might occur. 1 Adjusted for a non-operating profit in the amount of million. 54 Investor Presentation July 2018

55 GROUP INCOME STATEMENT 2017 (CONT.) ( m) Δ% EBITDA Margin (%) Margin adjusted (%) Depreciation and amortisation EBIT EBIT adjusted Margin (%) Margin adjusted (%) Net interest income Income tax expense Net income Attributable to minority interest Attributable to equity holders of the parent Earnings per share ( ) Δ% was calculated with original, not rounded figures therefore, rounding differences might occur. 1 Adjusted for a non-operating profit in the amount of million. 55 Investor Presentation July 2018

56 HIGHEST DIVIDEND SINCE IPO PROPOSED: 1.30 PER SHARE (PROPOSED) DIVIDEND ( ) AND PAYOUT RATIO (%) 2 100% Dividend per share of 1.30 proposed (+37%) 41% 40% 43% 35% 48% Payout ratio of 48% at higher end of predetermined payout range of 30 50% of net income after minorities % STRABAG has distributed a dividend within the predetermined payout range every year since the IPO in Investor Presentation July 2018

57 HIGH EQUITY RATIO AND NET CASH POSITION ASSETS ( m) Intangible assets PP&E & investment property 1,942 1,936 Associated companies Other financial assets Concession receivables Trade and other receivables Deferred taxes Non-current assets 4,096 4,130 Inventories 1,138 1,183 Trade and other receivables 2,996 3,031 Concession receivables Cash and cash equivalents 2,790 2,003 Current assets 6,958 6,248 Total assets 11,054 10,378 LIABILITIES AND EQUITY ( m) Share capital Capital reserves 2,315 2,315 Retained earnings Non-controlling interests Equity 3,398 3,265 Provisions 1,161 1,112 Financial liabilities 883 1,224 Trade payables & other liab Deferred taxes Non-current liabilities 2,145 2,420 Provisions Financial liabilities Trade payables 3,402 2,818 Other current liabilities Current liabilities 5,511 4,693 Equity & Liabilities 11,054 10,378 Rounding differences might occur. 57 Investor Presentation July 2018

58 NET CASH POSITION EXPANDED AND HIGH EQUITY RATIO MAINTAINED NET DEBT (+)/NET CASH (-) ( M) EQUITY RATIO (%) , % 30.6% 31.0% 31.5% 30.7% 0 -,74 -, , ,094-1, Equity ratio remains at 31%; target: 25% Net cash position at untypically high level Uncharacteristically high advance payments in the fourth quarter 2017 Normalisation expected over 2018 S&P confirmed corporate credit rating of BBB (outlook: stable) in July Investor Presentation July 2018

59 CASH AND CASH EQUIVALENTS OF 2.8 BILLION ( m) 2017 % 2016 Cash beginning of period 1, ,727 Cash flow from earnings Working Capital 711 n.m Cash flow from operating activities 1, Cash flow from investing activities Cash flow from financing activities Net change in cash 777 n.m FX changes Change restricted cash 5 n.m. 0 Cash end of period 2, ,998 Rounding differences might occur. 59 Investor Presentation July 2018

60 CASH AT 2.8 BILLION CASH DEVELOPMENT ( M) COMMENTS 4, Unusually strong working capital reduction 1, ,790 Lower investments in property, plant and equipment 1,345 0 Cash CFO CFI CFF Currency Restricted Cash translation cash CFO: Cash flow from operating activities CFF: Cash flow from financing activities CFI: Cash flow from investing activities (net CAPEX) 60 Investor Presentation July 2018

61 EXTRAORDINARILY HIGH CASH INFLOW IN Q4/2017 WORKING CAPITAL PATTERN: CASH OUTFLOWS IN Q1 3; INFLOWS IN Q4 ( M) ,300 1,001 1, , Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q COMMENTS Working capital outflows generally occur over the first nine months of the year due to business seasonality Unusually high improvement of working capital in Q4/2015 and Q4/2017 due to uncharacteristically high advance payments reversal in 2018 expected 61 Investor Presentation July 2018

62 FCF OF OVER 1 BILLION IN 2017 Δ WORKING CAPITAL ( M) CFO VS. CFI ( M) CFI VS. DEPRECIATION ( M) 1, ,345 1, , Exceptionally high FCF in 2015 and 2017 Purchase of PP&E at 458 million (2016: 412 million), thereof ~ 250 million maintenance CAPEX 2017 depreciation includes goodwill impairment of 2 million (2016: 5 million) Extraordinary depreciation allowances significantly reduced in Investor Presentation July 2018

63 NORTH + WEST BENEFITS FROM GERMANY KEY INDICATORS ( m) 2017 Δ% 2016 Output volume 6, ,175 Revenue 6, ,802 Order backlog 8, ,030 EBIT EBIT margin % Employees 23, ,233 SHARE OF GROUP OUTPUT VOLUME 47% of group output volume COMMENTS Output volume 11% higher EBIT rose due to stronger project earnings Order backlog (+16%) driven again to new record level by Germany and Poland Outlook: Order backlog hints at higher output volume in 2018 Germany: Positive outlook for building construction and civil engineering as well as for transportation infrastructure Capacities increasingly scarce Poland: especially positive in rail construction, higher activity in building construction and civil engineering Scandinavia: Lasting upward trend 63 Investor Presentation July 2018

64 SOUTH + EAST: STRONG AT A HIGH LEVEL KEY INDICATORS ( m) 2017 Δ% 2016 Output volume 4, ,001 Revenue 4, ,889 Order backlog 4, ,483 EBIT EBIT margin % Employees 17, ,758 SHARE OF GROUP OUTPUT VOLUME COMMENTS Output volume increased by 6%, driven by Austria, Hungary and Slovakia EBIT 5% higher due to improvements in several countries Order backlog soared (+29%) Outlook: Increase in output volume expected for 2018 Furher dynamic building construction in the greater Vienna region and fierce competition in Austrian transportation infrastructure business Subcontractor prices rising above all in Slovakia, Czech Republic and Hungary 29% of group output volume 64 Investor Presentation July 2018

65 INTERNATIONAL + SPECIAL DIVISIONS: EARNINGS PLUS AFTER NUMBER OF CONTRARY EFFECTS KEY INDICATORS Output volume down especially due to Italy ( m) 2017 Δ% 2016 EBIT hardly changed in absolute terms number of contrary effects Output related volume to large projects 3, ,155 Revenue Order backlog coined by tunnelling 3,029 project for Chilean 13copper mine2,681 Outlook: Order backlog 3, ,295 Output volume 2017 should increase slightly EBIT Property and facility services business as well as real estate development contribute positively to earnings EBIT margin % Very competitive market for tunnelling and concession projects Employees 25, ,027 SHARE OF GROUP OUTPUT VOLUME 23% of group output volume COMMENTS Output volume rose by 8% due to large projects in Austria, Germany and Americas EBIT +28%: recognition of a receivable from a concession project, settlement agreement in Middle East, burden again stemming from project Alto Maipo, Chile Order backlog down by 8%: reduction of Italian project Pedemontana Outlook: Output volume 2018 should increase slightly Real estate development continues to contribute positively to earnings Property and facility services business: Agreement with future service provider of Deutsche Telekom regarding transition of employees concluded 65 Investor Presentation July 2018

66 5 APPENDIX

67 OUTPUT VOLUME BY COUNTRY ( m) CAGR 1 (%) Germany 5,789 6,080 6,256 6,270 6,960 5 Austria 1,982 2,058 2,003 2,099 2,333 4 Poland Czech Republic Hungary Slovakia Americas Switzerland Middle east Benelux Other European Countries Romania Sweden Denmark Russia Croatia Serbia Asia Italy Slovenia Africa Bulgaria Total 13,530 13,566 14,290 13,491 14, CAGR over period Investor Presentation July 2018

68 STRABAG MARKET SHARE DATA 2016 ( M) CONSTRUCTION OUTPUT STRABAG OUTPUT MARKET SHARE (%) Germany 310,809 6, Austria 34,948 2, Poland 44, Czech Republic 16, Hungary 7, Russia 113, Slovakia 4, Romania 46, Croatia 2, Slovenia 2, Serbia 2, Bulgaria 6, Switzerland 63, Benelux 114, Sweden 40, Italy 164, <0.1 Denmark 30, Sources: Euroconstruct Summer 2017, EECFA Country Reports Summer 2017, company data 68 Investor Presentation July 2018

69 MARKET LEADING POSITIONS IN CENTRAL AND EASTERN EUROPEAN COUNTRIES WESTERN EUROPE GERMANY Output volume/revenue 2016 ( m) 1. STRABAG 6, Vinci 2, Goldbeck 1, Zech Group 1, Max Bögl 1,238 AUSTRIA Output volume/revenue 2016 ( m) 1. STRABAG 2, Porr 2, Swietelsky 1, Habau 1, Rhomberg Gruppe POLAND EASTERN EUROPE CZECH REPUBLIC HUNGARY Output volume/revenue 2016 ( m) 1. Budimex 1, Skanska STRABAG Polimex-Mostostal PBG 449 Output volume/revenue 2016 ( m) 1. Metrostav STRABAG Skanska Eurovia Swietelsky 225 Output volume/revenue 2016 ( m) 1. STRABAG Market KÉSZ Swietelsky Duna aszfalt 180 Sources: Companies Annual Reports; Deutsche Bauindustrie; Časopis Stavitel, OPTEN 1 Habau and Rhomberg Gruppe listed with total revenue. 69 Investor Presentation July 2018

70 MARKET LEADING POSITION IN CENTRAL AND EASTERN EUROPEAN COUNTRIES (CONT.) SLOVENIA Output volume/revenue 2016 ( m) SLOVAKIA Output volume/revenue 2016 ( m) 1. Kolektor Koling + CPG Pomgrad CGP STRABAG Gorenjska STRABAG Eurovia Goldbeck Vahostav SAG 94 CROATIA Output volume/revenue 2016 ( m) 1. Kamgrad STRABAG Tehnika GP Krk ZM 60 ROMANIA Output volume/revenue 2016 ( m) 1. STRABAG Bog'Art Porr Hidroconstructia Construcii Erbasu 83 Sources: Trend Top v Stavebnictve 05/ Investor Presentation July 2018

71 OWN BUILDING MATERIALS NETWORK 71 Investor Presentation July 2018