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“Progress, our greatest work”
Milan
April 26th, 2012
Impregilo 2012-16E
Strategic Plan
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1
Agenda
Growth opportunities for an integrated player
in the construction / concession business
A set of strategic options for a solid
profitable growth
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2
Main market trends
Infrastructure debt financing is becoming more
selective
Global construction is a steady growth market
Players are internationalizing, but maintaining a
strong domestic backbone
Pressure on price is increasing, but not in complex
projects
Concessions are growing worldwide as main project
financing model
5
1
2
4
3
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3
5.0%
4.0%
5.5%
7.7%
5.4%
5.0%
Global construction, a steady growth market, was jolted by the recent
recession but is expected to have solid growth in current decade
1 Italian market adjusted to include €40-60 billion infrastructure plan
SOURCE: Global Insight; McKinsey
Real capex, USD trillion, CAGR % p.a.
1.1
1.2
1.7
3.0
15
7.5
0.8
1.1
1.1
1.7
2.9
14
+5%-4%
+6%
+4%
2020
9.4
1.1
1.3
1.4
2.0
3.57.1
0.7
1.0
1.0
1.5
2.8
13
6.7
0.7
0.9
1.0
1.5
1.9
3.3
17
8.3
0.9
1.2
1.2
1.8
3.2
16
7.9
0.9
19
9.0
1.1
1.3
1.3
1.9
3.4
18
8.7
1.0
1.2
1.3
2.7
12
6.3
0.6
0.9
0.9
1.4
2.6
11
6.0
0.6
0.8
0.9
1.3
2.5
10
5.7
0.6
0.8
0.8
1.1
2.3
09
5.5
0.5
0.8
0.8
1.1
2.2
08
5.8
0.5
0.8
0.8
1.2
2.5
07
5.9
0.5
0.8
0.8
1.1
2.7
06
5.7
0.5
0.7
0.7
1.0
2.7
05
5.4
0.4
0.7
0.7
0.9
2.7
04
5.1
0.4
0.7
0.6
0.8
2.6
03
4.8
0.4
0.7
0.6
0.8
2.4
02
4.6
0.4
0.6
0.6
0.7
2.2
01
4.5
0.4
0.6
0.7
0.7
2.1
2000
4.5
0.4
0.6
0.7
0.6
2.2
1
Transportation
Real Estate Social Infrastructure
Utilities
Oil & Gas and Process Industries 2011-20E
CAGR
Global construction1 market
Plan horizon +4%
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4
2016E, Real capex, USD billion
SOURCE: Global Insight; EIU; S&P; Moody‟s; Fitch; Bloomberg; World Bank Group; Corruption Perceptions Index 2011; Interviews; McKinsey
13 80 40 90 34 33 62 347 864 588 813
16 15 72 27 36 131 85 139 95 338 760
Oil & Gas
and
Process
Industries
Real Estate
Social Infra-
structure
Transpor-
tation
Utilities
Africa India Australia Russia Middle
East
Latin
America
Eastern
Europe
Rest of
Asia
North
America
Western
Europe
China
6 23 15 25 42 16 68 158 245 394 105
9 23 32 29 29 18 31 107 106 104 361
173 194 200 220 236 318 926 1,441 1,715 67 2,265
3,043
1,731
1,111
878
24 32 35 30 80 39 71 176 130 291 227 1,158
7,921
79
17
Italy3
14
30
165
24
Entry
Barriers
Int’l com-
petition
Low-cost
competition
Asian
players
Low-cost
competition
Asian
players
Size not
Relevant
Chinese
players
7.8% 12.4%5.6%2.4%4.3%8.3%8.1%14.1%6.0%8.7%5.1%2.7%
Risk
profile2
1 Including only Impregilo current business segments (utilities, social infrastructure and transportation)
2 Risk assessment based on the following dimensions: GDP and population outlook, inflation outlook, FX volatility, country rating, ease of doing business and corruption index
3 Italian market adjusted to include €40-60 billion infrastructure plan
6.7%
Out of Impregilo current business mix / Opportunistic approach
Entry
Barriers
Local
players
2011-16E
CAGR1
Mid Low riskHigh
“Green spots”
Revenue pool at 2016E highlights specific “green spots”, which
represent Impregilo focus in the Strategic Plan horizon1
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5
“Infrastructure
is not yet an
investable
asset class‟‟
PPPs and concessions are expected to continue to grow
worldwide as sources for infrastructure funding
100
Until ~1995 1995-2015 2015-2025
60
100
4060
100
40
PPP
Owned by Government
Worldwide infrastructure industry1 finance structure
SOURCE: Public Works Financing; InfraJournal; McKinsey MGI
1 Excluding privatized infrastructures
Percent
“Infrastructure
is a suitable
asset class‟‟
“Infrastructure
is a solid
asset class‟‟
2
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6
~3x
~3x
~20%Trans-
portation
Social
infra-
structure
Utilities
2012-16E
~13.8
~3.8
~4.9
~5.1
USD trillion
2012-16E global
infrastructure needs in
Impregilo sectors
A strong demand for
infrastructure is expected
worldwide
SOURCE: Global Insight; IFM; Financing and Investing in Infrastructure; U.S. National Council of PPPs; ATRS; Government studies; McKinsey
2
% GDP
General gross
Government debt
(end-2011)
Public funding is highly
constrained, especially in
mature economies
82
82
103
120
230
26
66
68
23
10
Mature economies
Growing economies
Japan
Italy
US
Germany
UK
India
Brazil
China
PPP model has proved
deliver effectiveness and
service quality+ +
Frequency of
projects
meeting
budgets
Reduction of
project
overall cost
Frequency of
projects
meeting time
schedules
Vis-à-vis traditional project
PPP model will efficiently close the funding gap between global
demand for infrastructure and Public finance constraints
Australia
Russia
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7
Main E&C companies have diversified their business mix toward
concession business, also in order to enhance rating grade
SOURCE: Annual reports; Company presentations; Press clippings
2006 2007 2008 2009 2010
XX Revenues from concession
business, EUR billion
2011
The general contractor / concession model is also
being adopted by selected concession players
~14~15~15~14~15~16
~34~31~17~14~12~10
~16~15~14~14~15~14
~20~22~18~12~6~10
Incidence of concession business on total revenues
4.3 4.6 4.8 4.9 5.1 5.3
0.3 0.4 0.5 0.7 1.5 1.6
1.5 1.8 1.9 1.9 2.0 2.1
0.9 0.6 1.5 2.3 2.7 2.7
Percent
2
SELECTED EUROPEAN
COMPARABLES
1 For 2011 LTM figures ended Sep 2011
1
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8
All main players have undertaken an internationalization
path, but maintain a solid domestic backbone
SOURCE: Annual reports; Company presentations
~55~53~50~52~54~57
Percent
Share of domestic revenues on construction business
~55~55~56~57~59~62
~37~40~47~56~63~67
~35~45~47~50~59
~89
2011100908072006
SELECTED EUROPEAN
COMPARABLES
3
In 2011 Impregilo domestic revenues
accounted for ~20% of total revenues
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9
Italian market is expected to benefit from a €40-60 bln investment plan
to fill the current infrastructure gap with other European economies
SOURCE: Press search; Eurostat; World Metro Database
… also given the current infrastructure gap vis-à-vis major European countries
Km per million inhabitants
59
110
157
176
305
399
412
500
808
864
3
6
6
8
11
Motorway1 Rail road1 Subway2
1 2009 data
2 2011 data
In Italy the attention on infrastructures as a way to boost economy is high…
… by the end of 2012 between
40-60 billion of infrastructure projects
(that have already been planned) will
be “in the pipeline”
Corrado Passera
Italian Economic Development Minister
Il Sole 24 Ore - Feb 2012
… the Government will look at means
to […] build further infrastructures for
the Country
Mario Monti
Italian Prime Minister
Dow Jones Business News - Jan 2012
Infrastructure project pipeline
in the range EUR 40-60 billion, mainly
through PPP/concession model
3
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10
The E&C market experienced an increasing price pressure
in the past years
SOURCE: Annual reports; Company presentations
1 Transportation and infrastructure division, for 2011 9M figures
ROS of construction business
~4.5~4.5~4.6~4.9-0.4
- ∆ 2008-11 p.p.
~6.9~4.8~6.0~5.6
~2.3
~6.0~6.2~6.2
~0
201110
~3.2
09
~2.8
2008
~2.51
+1.3
-2.5
-3.9
~3.2~3.6~3.9~4.2-1.0
4
SELECTED EUROPEAN
COMPARABLESPercent
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11
~7~6
~5
~4
Eastern
Europe
USALatamItaly
Complex projects, focus of Impregilo, are still dominated by the same
specialists, with a limited numbers of players
Complex
projects
Average numbers of bidders on selected tender bids
Unit
▪ In complex projects the importance of contractor reliability on work quality and time delivery takes priority over price
▪ As a consequence, average number of bidders is highly reduced vs. “standard” project
4
IMPREGILO SELECTED TENDER BIDS
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12
Amount during the entire
project lifecycle
Financial debt is becoming more selective and “reserved” to players
with healthy financial structure and successful track record …
SOURCE: Press search
5
Guarantees as percentage
of project initial amount
… and present the capital strength
necessary to obtain financial guarantees
needed during project execution
Perfor-
mance
Guarantee
Advance
Payment
Guarantee
Retention
Money
Guarantee
A €1 bln project requires average
guarantees for €150-200 mln
during the entire construction phase
0
5
10
15
20
0
5
10
15
20
0
5
10
15
20
0
20
Begin of
construction
End of
construction
Access to financial debt has become more
complex and available only for companies
which meet selective criteria …
Selection
criteria Description
Financial
health
Solid
business
case
▪ … as well as on project financial
fundamentals (particularly for
concessions) and risk assessment
Success-
full track
record
▪ Consequently, a successful track
record play a key role in
accessing the financing market of
infrastructure
+
+
“Banks are lending less money and are more
selective about the sponsor they work with”
M. Burghardt AXA Private Equity, 2010
▪ Banks place more emphasis on
partners financial health, also
necessary to meet the strong level
of financial guarantees required
for project execution …
Project
guarantees
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13
Net financial debt / shareholder equity
… in a sector which is going through a de-leveraging process
SOURCE: Annual reports; Company presentations
2011
0x
10
0.8x
09
0.9x
2008
1.0x
0.4x0.2x0.3x0.6x
0.9x1.0x1.3x1.7x
-1.3
-0.2
-0.8
2.6x2.2x2.9x3.9x
-1.0
Δ 2008-11
SELECTED EUROPEAN
COMPARABLES
5
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14
Agenda
Growth opportunities for an integrated player
in the construction / concession business
A set of strategic options for a solid
profitable growth
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15
20082007
%
2012201120102009
In the last period Impregilo went through 2 phases,
with the most recent being a relevant road block for growth
SOURCE: Bloomberg; Press clippings
Impregilo faces multiple issues regarding the Campania project, with an important cash absorption, preventing the Group from exploiting other business opportunities and freezing the valorization of the plant business
Free-up of strategic options and acceleration of the growth plan
Impregilo experiences solid growth backed by a strong capital reinforcement
1 2 3
Explosion
of sub-prime
crisis
FTSE MIB
Impregilo
2012 – Relevant re-shuffle of Impregilo shareholding structure
2010 – The SupremeCourt orders therelease of assetsprecautionary seized
10
0
2007 – Urban solid
waste Campania penal
proceeding and
assets seizure
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16
Plants
(Fisia Italimpianti and
Fisia Babcock)
Valorization, also
through equity
partnershipRationale
Consolidation
Constructions Concessions
Group focus on “core business”
activities (construction and
concessions)
Consolidation limited to core
business activities
Non “core
business”“Core business”
Impregilo business perimeter comprises construction and
concessions as “core business”
Detailed
next
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17
Org
an
iza
tio
nal e
mp
ow
erm
en
t
2012-16E strategic plan is based on selected options
responding to current market trends
To fully exploit the 5 current market trends, Impregilo strategic plan will leverage on:
“Protection” of
Group
profitability
▪ Optimization of average project margin through:
– On-site costs reduction through the enhancement of “lean construction” best
practices
– Further procurement rationalization, both at on-site and at central level
Acceleration
of international
growth
▪ Increase penetration in selected geographies with:
– “Limited” country risk profile
– Sizable market of technically complex projects
– Strong growth rate, “outperforming” market average
Consolidation of
leadership in Italy
▪ Leverage the Italian infrastructure plan to rebalance the revenue mix towards
domestic market, through both projects already assigned to Impregilo and projects to
be tendered
Enforcement of
concession
portfolio
▪ Enforcement of concessions activities, leveraging the distinctive combination of
solid financial position and technical capabilities, in order to:
– Stabilize Group cash flows
– Create value through divestment of “mature”/fully valorized concessions
– Reinvest freed up capital in new “high potential” concessions
Capital
strengthen
▪ Active and efficient management of the invested capital, also through the
selection of equity partners to valorize non-core activities
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18
To successful implement the strategic plan, Impregilo
will empower the current organization
Leverage on a
partnership
approach to boost
international growth
Leverage on
knowledge
management to
allow all best
practices sharing
Reinforce people
management
processes to
attract, motivate,
train and retain
talents
Strengthen “hubs-
model” footprint
to efficiently cover
all consolidated and
target geographies
Enhance “lean
construction” best
practices across all
Impregilo projects
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19
Top-line growth in the plan horizon relies on increasing penetration in selected
emerging geographies and maintaining current share in consolidated ones
EUR billion
1 Corporate and other adjustments (including non core assets)
2016E “core
business”
>3.5
Other1Concession
business
Domestic
market
Consoli-
dated
geogra-
phies
Target
geogra-
phies
2011A
~2.1
Construction business
Impregilo 2011-16E revenues evolution breakdown
Penetration increase
in fast-growing
selected economies
Domestic growth largely
guaranteed by backlog
Maintain market
share and grow
with the market
Improvement of current
concession portfolio
revenues generation
Strong contribution from
realization of infrastructures
under concession
1 2 3 4
CORE BUSINESS
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20
~15%~30%
~40%
~60%
2016E
100%
~40%
15E
100%
~60%
14E
100%
~70%
13E
100%
~85%
2012E
100%
~95%
~5%
~70% of 2012-16E cumulated revenues are granted
by current backlog
Revenues breakdown by backlog 2011A and new orders 2012-16E
Backlog 2011A
New orders 2012-16E
2012-16E
100%
~70%
~30%
Cumulated revenues
CORE BUSINESS
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21
The enhancement of “lean construction” best practices will allow Impregilo
to sustain its high profitability in an era of strong price competitive pressure
EUR billion
2016E
~X 2
∆ Ebit
from project
costs
optimization
∆ Ebit
from increased
price competi-
tion
∆ Ebit
from revenues
growth
2011A
1771
Ebit evolution breakdown
Savings on
total on-site
construction
costs
Potential
reduction of
construction
profitability
1 2011A „pro-forma‟ EBIT adjusted for Corporate (-50.0 EUR mln) non-recurring items
CORE BUSINESS
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22
ROS ROI1 D/E Backlog
Strategic plan key ratios and portfolio figures
2016E
>9
2011A
~82
2016E
>15
2011A
~102
2016E
~0.3x
2011A
~0.4x
Percent Percent
1 Calculated as EBIT / Net invested capital (excl. green-field concessions, with cumulated net investments of ~600 EUR mln)
2 2011A „pro-forma‟ EBIT adjusted for Corporate (-50 EUR mln) non-recurring items
2016E
~40
2011A
~25
EUR billion
>2 billion of Investments in the plan horizon
CORE BUSINESS
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DISCLAIMER
Certain statements contained in this presentation may be statements of future expectations andother forward-looking statements or trend information that are based on management's currentviews and assumptions and involve known and unknown risks and uncertainties.
Actual results, performance or events may differ materially from those in such statements.
In case of any discrepancy between the presentation and the Balance Sheet, the Balance Sheetshould be considered to contain the complete and correct information. The slides only contain asummary of certain elements of the Balance Sheet.
This presentation is not intended for potential investors and do not constitute or form part of anyoffer to sell or issue, or invitation to purchase, or any solicitation of any offer to purchase orsubscribe for any Impregilo securities, nor shall they form the basis of, or be relied on in connectionwith any contract or commitment to purchase Impregilo securities.
This presentation is not being issued in the United States of America and should not be distributedto United States persons or publications with a general circulation in the United States. Thesematerials are not an offer to sell or issue Impregilo securities in the United States. Impregilosecurities have not been registered under the U.S. Securities Act of 1933, as amended (the“Securities Act”), and may not be sold or issued in the United States absent registration or anexemption from registration under the Securities Act.
The distribution of these materials in other jurisdictions may be restricted by law, and persons intowhose possession these materials come should inform themselves about, and abide by, any suchrestriction.