Reuters: Hot Stocks: UPDATE 2-Strabag warns on profit as Poland weighs

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UPDATE 2-Strabag warns on profit as Poland weighs Nov 30th 2012, 09:01 Fri Nov 30, 2012 4:01am EST * Q3 EBIT down 12 pct to 168 mln euros, misses expectations * 2012 target for 200 mln euros EBIT now "ambitious" * Shares down 1.8 percent (Adds details, background, shares) VIENNA, Nov 30 (Reuters) - Strabag said its full-year operating profit target, which the Austrian construction group cut in July, was "extraordinarily ambitious" because Polish clients were being slow in paying bills. Emerging Europe's biggest builder reported a 12 percent drop in quarterly operating earnings, saying on Friday it was struggling to get paid for large projects completed during a construction boom in Poland that has now ended. "In Poland, business is being hindered by price battles, delays involving the acceptance of unforeseen additional costs by public-sector clients, and the risk of insolvent subcontractors," Strabag said. Chief executive Hans Peter Haselsteiner said while he was committed to keeping 2012 output stable, "we believe the forecasted goal of earnings before interest and taxes of about 200 million euros ($260 million) to be extraordinarily ambitious". Earnings before interest and tax (EBIT) fell to 168 million euros in the third quarter, compared with an average forecast for 184 million in a Reuters poll. That led to nine-month EBIT of 1.7 million euros.. Output fell 2 percent to 4.07 billion euros, in line with expectations, but sales fell 5 percent to a worse-than-expected 3.59 billion as trade receivables rose a quarter to 3.23 billion. "Strabag does not expect larger contract awards from the public sector until the turn of the year 2013/2014," it said. Poland, where Strabag is the market leader, accounted for 12 percent of the company's output last year. Dozens of Polish construction firms have run into trouble after a business bonanza ahead of the Euro 2012 soccer tournament turned sour, leaving builders deeply in debt. Poland's two largest listed builders - PBG and Polimex - posted big first-half losses. In Germany, Strabag's biggest market, output rose and the company won contracts including a 700 million euro project to build 15 colleges in Hamburg over 30 years, helping lift total order backlog 4 percent to 14.6 billion euros. In its home market, Strabag said there was a stable positive trend in orders. "Several projects will be tendered in Austria and Germany in the short to medium term, but the prices in the home markets are in part at a ruinously low level," it said. Strabag were down 1.8 percent by 0900 GMT, underperforming a 0.3 percent higher European construction index. ($1 = 0.7705 euro) (Reporting by Georgina Prodhan; Editing by Dan Lalor) Link this Share this Digg this Email Reprints

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