Hochtief to sell non-core assets

The German infrastructure group will sell its facilities management services in addition to a potential divestment of its airports unit and the ongoing sale of Leighton’s telecom assets.

German infrastructure group Hochtief announced a new strategy yesterday that it hopes will help it cut debt and boost profitability, partly through the divestment of non-core assets. 

The “strategic and structural realignment”, as Hochtief calls it, will focus the company around four core businesses – energy, transportation, social and urban infrastructure and mining – and has been prompted by lower-than-expected earnings. 

“When it came down to it, our self-perception has been better than our performance in many areas,” commented Marcelino Fernandez Verdes, Hochtief’s chairman of the executive board, appointed late last year. “I want to restore Hochtief to its former strength. We will expand in the right businesses, work more efficiently and, with professional risk management, put an end to nasty surprises,” he added. 

In order to do that, Hochtief will look at the divestment of non-core assets, including its facilities and energy management unit – which it says “generates stable returns but no longer fits the group’s strategic focus” – its airports division, and Australian subsidiary Leighton’s telecommunications assets. The latter sale is already ongoing, with Canada’s Ontario Teachers’ Pension Plan in line to buy a 70 percent stake in the assets, which are valued at A$885 million (€682 million; $913 million). 

Hochtief has twice tried to sell its airports business, but has canned the sale both times when it didn’t get the price it was looking for, which is said to be in the region of €1.6 billion. A spokesman from the company confirmed a third sales process is underway, but said the company is taking its time with the sale, with a two-year horizon to complete it. 

The German firm owns a number of minority stakes in Athens (26.7 percent), Dusseldorf (20 percent), Hamburg (34.8 percent), Sydney (5.6 percent), Tirana (47 percent) and Budapest (49.6 percent) airports. 

Despite the below-expectation earnings, Hochtief posted record new orders last year totalling €31.49 billion – a 24 percent increase – with profit back in the black at €564.4 million, pre-taxes, compared to 2011’s loss of €127 million.