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Spanish Construction Giant FCC Finally Returns To Profit

Dña Esther Alcocer Koplowitz_JGA 2014 2


Esther Koplowitz’s Fomento de Construcciones y Contratas (FCC) has reported Euros 6.2 million in net income for its first fiscal quarter ending March 31st 2015. What a difference a year makes.

After what seemed like endless trading difficulties, prolonged restructuring, divestments and deconsolidation and closures of lossmaking activities, Spanish international engineering and construction company FCC has finally returned to profit where it counts the most – at the net income line – in the first quarter of 2015.

With interests in water, waste management, construction and cement all over the world, trading conditions themselves actually only improved a little: total consolidated revenues were Euros 1.48 billion in Q1 2015 compared to Euros 1.44 billion in the same period in 2014. Earnings before interest and taxes (EBIT) were Euros 70.9 million for the 2015 first quarter compared to Euros 69.5 million a year ago, also positive but not by much. While these totals hardly changed, the mix certainly did, however.

Water and environmental services did rather better in 2015 and construction and cement performed a bit worse (despite, finally, a rising trend in cement sales which had been in continuous contraction for several years).

However, the net income of Euros 6.2 million achieved for the 2015 first quarter was much better than the Euros 31 million loss recorded for the same period last year, something to be very much welcomed by the company’s long-suffering constituencies. This substantial change for the better came entirely from the reduced financial charges resulting from a much improved FCC balance sheet. The improvement comes from major divestments of non-core assets in prior periods, and also from the successful major rights offering accomplished at the end of 2014, which yielded almost Euros 1 billion.

As a result of the rights offering Mexican billionaire Carlos Slim became the company’s largest shareholder, with a 25.6% of the shares. The daughter of the original group founder, Esther Koplowitz, remains the second largest shareholder at 22.4%, held through her own holding company. It was recently also announced that Esther Koplowitz has now refinanced her holdings in FCC for a further five years.

This action, plus a continued slow but steady improvement in FCC’s trading conditions, could now permit the possibility of an improved overall outlook for the stock for the first time in some while. Bill Gates holds a 5.7% interest in the company through investment funds associated with him.

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