Hochtief has posted a larger-than-expected loss for 2011, after cost overruns at Australian subsidiary Leighton Holdings and special termination rights exercised by board members after Hochtief was taken over by ACS took their toll on the German infrastructure developer.
In a statement, Hochtief reported a full-year net loss of €160 million – €60 million more than previously expected – thanks to significant losses affecting two of Leighton’s multi-billion dollar public-private partnership (PPP) projects: the Victorian Desalination Plant in Melbourne, and a 6.7-kilometre road link to Brisbane Airport. The projects have been hit by floods, cost overruns and other complications during construction.
This meant that, “despite a good solid operation performance, Hochtief was not able to completely compensate the losses from Leighton,” the company said in a statement.
Another drag on the firm’s balance sheet came from the circa €35 million it spent on executive compensation, after several of its senior members exercised special termination rights in connection with a takeover from Spanish infrastructure group ACS.
Throughout last year, a number of board members – including former chief executive Herbert Lütkestratkötter, ex-chief financial officer Burkhard Lohr and then head of concessions Peter Noé, among others – tendered their resignations. In its statement, Hochtief said that executive compensation had increased by about €19 million more than expected.
Still, the German firm is optimistic that it has left its problems behind and is looking forward to a good 2012, buoyed by a strong order book.
“We thus complete a year in which we have handled many changes and burdens of the past,” commented chief executive Frank Stieler. “This is reflected in the financial statements. At the same time, Hochtief has proven its excellent market position by a very high volume of new orders in the fourth quarter,” Stieler added.