Half Year 2026 Porr AG Earnings Call
Speaker #1: Hello and a warm welcome to the earnings call of the POAG regarding the H1 figures for 2026. I would like to welcome CEO Karl-Heinz Strauss and CFO Klemens Eiter, who will guide you through the figures in a moment, followed by a Q&A session via audio line and chat.
Speaker #1: And with no further ado, I hand over to Head of Investor Relations, Livia Kaluska.
Speaker #2: Hello, thank you, Mareniek, and also a warm welcome from my side to today's conference call. As always, please find all the relevant materials on our website, www.poa-group.com/ir, and now I'm happy to hand over the call to Mr. Karl-Heinz Strauss.
Speaker #3: Thank you, Lisa. Good afternoon, ladies and gentlemen, and thank you for joining us on today's conference call discussing our half-year results in 2026. Now let us start with a quick overview of today's topics on slide number 3.
Speaker #3: Civil engineering driver in construction. Besides that, building construction is also gaining positive momentum again, especially residential construction has now bought them out and is expected to rise again in the near future.
Speaker #3: Non-residential building construction, like our products for healthcare and industrial clients, is already further along on an expansionary path. Also, in Germany, the turnaround is now clearly visible across all construction sectors.
Speaker #3: In addition, we expect a further push coming from increasing tender activities in October, but more on that later. Looking at order backlog, we again see an increase compared to the same time of the previous year.
Speaker #3: While both countries—Austria and Germany—showed double-digit growth, the overall order intake was impacted by an unfortunate cutoff date. In terms of revenue, the second quarter saw a strong rebound after the harsh winter in Q1.
Speaker #3: As we already have the July figures, we are confident that the speed will pick up further in the upcoming months. Once again, we delivered as promised.
Speaker #3: Not only did our EBITDA rise to 56.3 million euros, pushing the EBIT margin up to 1.9%, but also our earnings per share increased by impressive 34%.
Speaker #3: On our balance sheet, we see the usual seasonal increase in working capital. This time, amplified by the strong winter. In addition, we invested in medium-sized M&A activities and financial assets.
Speaker #3: Last but not least, we are able to give a more clear guidance on this year's results. We expect output and revenue to come in around 2 to 4% above the previous year's figure, and an EBIT margin in relation to revenue of 3.2 to 3.3%.
Speaker #3: Let me now start with a brief discussion of the current market and environment on slide number 4. According to the most recent forecast of Euroconstruct, the construction industry is set to expand further.
Speaker #3: That said, the recovery in residential building construction is picking up momentum, with the highest growth figures forecast for 2027, before reaching a more sustainable level in 2028.
Speaker #3: Here, POAG sees good opportunities with its poor living product portfolio. With our broad competencies and know-how in specialist building construction sectors, like healthcare, data centers, and cleaning rooms, we also expect a further push in non-residential building construction.
Speaker #3: Recently, we saw an additional uptick in orders for educational buildings, proving the positive sentiment in the sector. Nonetheless, infrastructure will continue to be the major growth driver, especially in the Eastern European markets.
Speaker #3: This is supported by the still-ongoing investments in relation to the recovery and resilience facility and the multi-annual EU budget. Please follow me to the right-hand side of this slide for further details on the planned infrastructure investments.
Speaker #3: We see that especially our CEE home markets of Romania, Czech Republic, continue to invest heavily. In Poland, we expect further major order intakes, as we currently show high competencies in tunneling at the CPK Łódź Tunnel construction site.
Speaker #3: Austria, our backbone market, continues to follow the investment plans of its infrastructure operators, Austria Railway Organization and ASFINAG, making it a reliable market. The next big construction site of Europe, Germany, is seen to finally pick up speed.
Speaker #3: With the infrastructure future act planning on approval processes, our accelerated and we expect a strong uplift in tendering and awarding activities in October of this year.
Speaker #3: Now, I already talked about the current and upcoming order intakes. Let us put a figure on that on slide number 5. Shown here on the left side is the order intake of the last 12 months.
Speaker #3: The slide decrease of 5.7 compared to the previous period is primarily due to an unfavorable cutoff date. Last year, we got the major order from Poland on the last days of June, whereas this year we had several big order intakes in July.
Speaker #3: Nonetheless, we again managed a double-digit increase in both. Of our biggest home markets, Austria and Germany, and in addition to that, the previously mentioned increase in building construction is also clearly visible here with each share of new orders amounting to around 36%.
Speaker #3: In July and August, we received several new important orders, especially from Germany. Deutsche Bundeswehr signed a 3-year framework agreement worth 270 million euros for the construction of new parks, with the first order called expected in the next days.
Speaker #3: In addition to that, we already signed 3 new building projects worth 100 million euros in total, and are about to sign in a high margin industrial building construction contract of another 100 million euros, with a well-known grocery store chain in Germany.
Speaker #3: Further building construction projects totaling about 200 million euros are expected in the next few weeks. In parallel, POAR was able to gain infrastructure projects in Poland after the cutoff date with a volume of 180 million euros.
Speaker #3: Besides that, the tendering activity in our home markets continues to be strong. Regarding the already mentioned pipeline in Germany, starting in October 2026, we expect to participate in infrastructure tenders worth 1.5 billion euros.
Speaker #3: In Poland, we are currently negotiating projects for a total volume of 400 to 500 million euros, the same is true for a major road construction project of 550 million euros in Romania, which is ready to be signed as soon as the new government picks up the work.
Speaker #3: You see, market activity is strong. Still, our focus is on selective order intake. Cherry-picking is the key word here. This can clearly be seen in our order intakes of the second quarter of 2026 on slide number 6.
Speaker #3: On the far right side, you see only major building construction projects. All of them are located in high-margin sectors further improving our order book.
Speaker #3: With a value of more than 100 million euros, POAR won the contract to building clean rooms of fab for micro in Erfurt. As one of the very few clean room providers in Europe, we benefit from our high competencies here and the unique track record.
Speaker #3: Another industrial construction contract are the structural works we are providing for Swift and Apple in Munich. Here, POAR is able to apply its expertise as a strong partner for major industrial players.
Speaker #3: The HMS 51 Holzmarktstraße 51 and apartment building Seestätter contracts are both residential construction projects. Also, the first is termed a mixed-use complex. This is something we see on an increasing basis and expect to come in more frequently.
Speaker #3: In Poland, we were awarded a contract for a munition storage RO emphasizing also the increasing need for military infrastructure. If you now follow me to slide number 7, you will see the results of this quarter's order intakes.
Speaker #3: Nearly all operational segments contributed to the growth of 4.4% in our order backlog. Only infrastructure international saw a reduction due to continuously working off.
Speaker #3: The existing orders while showing a high capacity utilization. With the additional contracts won in July and August, we would not only surpass the 1 billion mark again, but also show a double-digit increase compared to last year.
Speaker #3: Coming to our B&L figures, please follow me to slide number 8. Compared to the first quarter of this year, Q2 saw an improving development in revenue.
Speaker #3: This is set to further accelerate in the second half of 2026. Our top line continues to be solid. Despite the strong winter. In some markets, we had snow until April.
Speaker #3: This particularly impacted building construction, which was held back by 2.6 compared to last year's period. In contrast to that, civil engineering, which is more independent of the weather conditions, increased by 7.2%.
Speaker #3: Another topic here is the higher share of joint ventures. This is not only reduced revenue as they are accounted for and separate line in the B&L, but also increased the income of companies accounted for using the equity method.
Speaker #3: Having said that, this leads me directly to brief glance at the input cost and wirement on slide number 9. True to be told, material and energy costs are rising.
Speaker #3: However, our hedging work and consequent cost management continue to pay off. With gas and electricity fixed up until 2030, and diesel consumption regularly monitored, we are confident for the ongoing geopolitical uncertainties.
Speaker #3: Please follow me to the next slide, number 10, to see that the war-driven material cost increases are well controlled. Cost of materials and purchased services declined by 59 million euros and contributed 1.25% to the EBIT margin development.
Speaker #3: OPEX remained stable. Despite an expected increase in personal expenses, driven by collective bargaining agreements, we were able to further expand our EBIT by 15.6% to 56.3 million euros.
Speaker #3: Also, due to the profit increase in our operating construction JVs. The EBIT margin stood at 1.9%. Another increase of 28 basis points. Please be aware here of 2-1-off effects weighing each other up.
Speaker #3: First, we had extraordinary gain from the sale of business premises on and at equity company of 6.4 million euros. And second, we had to depreciate 7.4 million euros in connection with the expected sale of our PWW group in Serbia.
Speaker #3: That said, we also managed to improve our result for the period by 23.9%, while our EPS grew by 34% to 71 cent per share.
Speaker #3: Coming to our balance sheet, let me start with our equity on slide number 11. Due to the weaker business in first half year in European construction and dividend payment, equity decreased slightly by 1.8% compared to the end of last year.
Speaker #3: In relation to June of last year, POAR again managed to absolutely increase its equity position by 92 million euros, or 10.8%, while maintaining a stable equity ratio of 20%.
Speaker #3: In terms of debt, we have several factors to discuss on slide number 12. As of the end of the period, our net debt stood at 461 million euros, with around 220 million euros being bound by IFRS 16 long-term office rentals.
Speaker #3: A major part of the increase of 159 million euros compared to last year comes from the investment in medium-sized M&A UBM hybrid capital and an increase in CAPEX.
Speaker #3: But let me discuss the issues in detail. In the first half of 2026, POAR took the opportunity to acquire a majority stake in RATB Group.
Speaker #3: This dry lining specialist complements the strong portfolio for system residential construction in Austria and Germany. They provide heating and cooling systems, making it a valuable addition to our POAR living product line.
Speaker #3: Speaking of POAR living, I want to continue with our investment in UBM hybrid capital. This is paying a substantial interest of 9% per anno, while providing us with a skilled distribution partner in residential construction.
Speaker #3: Last but not least, half year 2026 saw clear increase in CAPEX. 20 million euro of this is attributable to a tunnel boring machine in Poland.
Speaker #3: This kind of machinery is usually bought either on a leasing base or in an ad equity company which is why they are normally not on our balance sheet.
Speaker #3: For the full year, we therefore expect an increased CAPEX ratio of 4.5%. Our cash flow is also strongly impacted by the long-lasting winter this year.
Speaker #3: The seasonally negative cash flow from operations was further impacted by the late start of the construction season, which also led to a delay in billing and set off a longer cash conversion cycle.
Speaker #3: This can be seen in the cash flow from operations of minus 258 million euros, nonetheless, we expect a clearly positive figure here for the full year.
Speaker #3: This directly leads me to my last slide for the day. Our outlook. We are convinced of the continued growth of the construction industry. Due to long-term investment programs of public infrastructure operators demand for civil engineering, especially for roads, railways, tunnels, and bridges, is unbroken.
Speaker #3: As is the need for modernization in all of our home markets. In Germany in particular, the infrastructure package is about to finally hit into the market in October.
Speaker #3: We expect the first wave of tenders to have a volume of around 1.5 billion euros. Building construction has already gained momentum. We already won several large building projects in industrial, public, and residential building, even more to come and to be signed.
Speaker #3: And with our new colleagues at POAR Healthcare, we are optimally positioned for further growth in the field of smart hospitals. Due to the long winter, output and revenue generation started the late this year.
Speaker #3: However, based on the strong order backlog, they are now in full swing. On the basis of this, we expect an increase in output and revenue of 2 to 4%, as well as an EBIT margin of around 3 to 3.2 to 3.3% for 2026.
Speaker #3: The target by 2030 is an EBIT margin of 3.5 to 4%. And with that, I want to thank you for your attention. So far, we would like to open the call for your questions.
Speaker #1: Thank you very much for the presentation. Please gentlemen, now it's your turn. We are opening the Q&A session. If you would like to ask your questions in person via the audio line, please click on the raise hand button.
Speaker #1: And if you are dialing in by phone, please press star key 9 to raise your hand and star key 6 to unmute yourself. And additionally, you are also welcome to post your questions in our chat.
Speaker #1: And we will read them out for you. And as I can see, there are already some raised hands. Philip Kaisa, I will allow you to unmute yourself.
Speaker #1: And you should be able to ask your question.
Speaker #3: Hello everyone. Can you hear me?
Speaker #1: We can hear you.
Speaker #3: Perfect. Yeah. Thanks for the presentation and thanks for taking my question just a couple of from my point. Just starting with the composition of the earnings improvement.
Speaker #3: So EBITDA rose by 17.7 million also driven by equity contribution as well as you mentioned one of effect and also by higher operating income.
Speaker #3: So just a couple one on that topic. Could you repeat you already mentioned it, but could you repeat what caused the one-off gain? I understood it is sale of an ad equity company.
Speaker #2: We've been selling some business premises in a GV. And our part of the gain there is the 6.4 million. And that's included in the income from ad equities.
Speaker #3: Okay.
Speaker #2: That, of course, caused that's also included in the increase of EBITDA. On the other side, we are expected to sell the PWW Group and had a depreciation of 7.4 million.
Speaker #2: That's included in depreciation. So if you take both of them as a one-off, the total impact of the result is 1 million negative. But the gain is included in EBITDA and the depreciation is included a little bit further down in depreciation line.
Speaker #2: It's the clear for you now?
Speaker #3: Yes. Thanks a lot for the clarification. That helps. And is it possible to quantify the recurring ad equity run rate for the second half of this year?
Speaker #3: Do you plan any further sales?
Speaker #2: Well, not really. So there are our guidance is in general, our expected earnings and result from the business.
Speaker #3: Okay. Perfect. And then coming to the increase in other operating income. Could you set some light what drove the increase and how much of this recurs in the next quarters?
Speaker #2: Well, I think in total, if you look at our earnings and EBIT development, I think the most remarkable development is the decrease in cost of materials and purchased services of 1.25% contributing to the positive EBIT development.
Speaker #2: So I think this is the most remarkable point. Also, I think remarkable with regards to the general development that we see on the market.
Speaker #2: We see in general energy and materials going up, but we've always been saying that we are pretty well hedging and managing the situation and that most contributed to the EBIT development.
Speaker #2: On the other side, we see increases in personal expenses. We know about the negotiations with workers' councils. So that's expected increases. And besides that, I think the most obvious line of increase is income from the GVs.
Speaker #2: We're half of it was now coming from the increase coming from that sale of that business premises. And the rest is increased share in business in so-called Argon joint ventures operating joint ventures.
Speaker #2: And these are sustainable. In other operating income, we got a small increase that's also related to this GVs as these are costs that we put forward to these operating GVs.
Speaker #2: So summing it up, yes, this developments are sustainable as they're reflecting the increased number of operating GVs we're seeing.
Speaker #3: Okay. So that would also be the kind of going forward increase the share in GVs so that, yeah, the ad equity component will further rise, which is kind of part of your general business.
Speaker #2: Well, I think that's the speciality in construction, especially in our region in Austria and Germany. That you do part of your business together with other companies in the field.
Speaker #2: And under IFRS, we are not allowed to account for that. Using pro-rata share. But we need to show that in one line as result as earnings from GVs.
Speaker #2: And that's why on the other side, revenue is missing there. As no revenue is can be accounted for, it's only the single line earnings but they are important in our business here.
Speaker #3: Okay. Thanks a lot for the clarification. Speaking of material and cost of materials and decline there, you already mentioned it, the improved cost ratio.
Speaker #3: Just for my understanding, given that gas and power are broadly fixed and also gas is secured by hedges, even beyond 2028. How much of the materials improvement is kind of pure lower weight of subcontractor heavy building construction rather than procurement?
Speaker #3: And will that ratio then increase when kind of building construction volumes return?
Speaker #2: Well, what we see in general is that we are I mean, the line item is including both cost of materials and purchased services and subcontractors.
Speaker #2: And actually, we still see some pressure on market prices. And in this position here, you can see that we're pretty well able to forward price pressure from the markets to our subcontractors.
Speaker #2: And that's seen in the end probably half of the secret here of the increase in earnings. On the other side, pretty well managing the material situation.
Speaker #3: Okay. So even if the building construction volume would return, then there's no sharp increase in this ratio to expect it.
Speaker #2: Well, then actually, I would expect that the prices would also increase as the pressure on the prices is not that high anymore when the volume is higher.
Speaker #2: And maybe the ratio is going a little bit a little bit up, but the prices will also go up. So I don't think that we expect some downside from that.
Speaker #2: Actually, as we got some surplus on the purchased services, I would expect to have that positive expect on impact, sorry, on our earnings.
Speaker #3: Perfect. Understood. Very, very helpful. Going back to your balance sheet or the working capital you already mentioned it during the presentation, operating cash flow minus 200, 58 driven by a working capital build.
Speaker #3: How much of this will release in HQ and what net base net debt do you expect for the year end?
Speaker #2: Well, our target for the year end is to be net debt free meaning in total having a total cash balance in the end. Where the IFRS 16 liabilities of about 230 million are already included.
Speaker #2: And if you put that down in an operating cash flow, expectation it would mean that we would be we expect to be able to produce a sufficient operating cash flow and returning working capital and receivables.
Speaker #2: So actually, as we've been saying, we've been impacted on working capital side also by the long winter. Actually, we had some snow that has been falling again in April after the first quarter.
Speaker #2: And in building construction, actually, we ran at full speed at that time. And that also means not only some downside for revenue and output, but also on working capital as we are only able to invoice our services after we've provided them.
Speaker #2: So we have some latency and we expect to recover that and expect some normal cash flow operating cash flow and development for the end of the year.
Speaker #3: Okay. The net debt free target is already including the IFRS 16? Okay. Perfect. Thanks a lot. And speaking of, yeah, harsh winter and late invoicing, also your receivables rose.
Speaker #3: Compared to last year. Is it possible to quantify how much of that build is pure late invoicing and will unwind mechanically during the second half of this year?
Speaker #2: Well, I think it's hard to put that really down to that effect. And I think talking about the outlook, I think it's more material that we think that temporarily affect and we will be able to recover to a normal cash flow and working capital development over the whole year.
Speaker #2: And actually, I mean, we always see if you look at our cash flow, and working capital you always see some effect during the especially during the summer month until autumn, until September.
Speaker #2: Our operating cash flow has always been negative in the first half year. It's a little bit in excess, but we've been showing that we're able to turn that in the second half to a significantly positive operating cash flow figure.
Speaker #3: Perfect. Understood. And my last one, and then I'll go back and the Q is on your revenue and the revenue side of your guidance.
Speaker #3: You quantified the guidance and now expecting full year revenue growth of between 2 and 4%, which implies an increase of roughly 5 to 10 after the minus slight minus in the after the first half of the year.
Speaker #3: And could you explain what drives the catch-up? Is it just the catch-up effect of the late season backlog conversion? Any insight would be very helpful.
Speaker #2: Yeah. Well, if you look at the and our business segments, you see that in building construction, we had a decrease in revenue, of I think 2.6% so far.
Speaker #2: So you directly see the impact of the long winter as we have a decrease in that part. On the other side, and we are now catching that up.
Speaker #2: So by the end of the year, we are sure that we turn this in at least into a black zero. On the other side, in civil engineering, which is not that much impacted, as you always have longer winter and the starting couldn't be earlier.
Speaker #2: We have an increase of 7.2%. And this is showing that's driven by our backlog. And that's where you see that growth is also coming to our revenues.
Speaker #2: When we are not impacted by some special conditions like the weather in the first half year. And if you put that together, the positive development in infrastructure and the temporarily negative effect in building construction, expected to recover for the end of the year you get to our expectation of an increase in total.
Speaker #2: That's not a very high level of increase, but an increase of we've been saying now to 4%.
Speaker #3: Perfect. Very helpful. Thanks a lot. For the information, I'll go back in the Q.
Speaker #1: Thank you very much. The next reason hand is from Andreas Wolf. You should be able to unmute yourself and ask your question.
Speaker #3: Yeah. Hi. It's Andreas from Bernbeck. Can you hear me well?
Speaker #2: Yes. Hi, Andreas.
Speaker #3: Yeah. Great. I have also a couple of questions, but not that many. So the first one is on the order intake. Could you comment on the order funnel that you have for the remainder of the year?
Speaker #3: I'm just curious how the order incoming orders might develop during H2. You've already commented on July and August. The second related to that is when do you expect the public sector tenders in Germany to translate into orders?
Speaker #3: I would assume that will be next year. And then we've already talked about the that the cold had an impact in Q2. Because everyone was probably looking at the heat towards the end of the quarter.
Speaker #3: So my question is whether there's been an impact of hot weather in Q3 that we might be aware or should be aware of. The next question is related to Capex.
Speaker #3: We've seen Capex going up. And what is your Capex expectation for the remainder of the year? And should we expect higher Capex if the increase in orders related to the federal budget in Germany materializes next year or the year after?
Speaker #3: That's basically it from my side. Thank you.
Speaker #2: Well, first, to the order intake, as you've been saying, we already won several contracts, especially in building construction in Germany. I think also from a quality side, it's very important that we have signed the contracts for new soldier barracks worth 270 million in Germany with the Deutsche Bundeswehr.
Speaker #2: So you see that that's also part of the big bazooka of the big investments planned to come to the market. And that will save us stable revenues of 90 million over the next three years.
Speaker #2: Besides that, we see industrial clients, which are important as contract there are high margin, but also in other building construction about 100 million that we already signed.
Speaker #2: And on the infrastructure side, we see now, as we've been saying and expected, that tenders are coming up. And there are about 1.5 billion new tenders and contracts where we are going to be taking part in the tenders for renovation of trains and so on.
Speaker #2: So we think that public spend here is gaining momentum. And they're coming up. And I think that's somehow a little bit the shift in the quarters before.
Speaker #2: We saw the big pipelines in the eastern European countries, which are still there. Especially in Poland, also Romania coming up. We expect but we think that Germany now starts to kick in.
Speaker #2: We had a very good order intake in Austria so far, as well. And taking that all together, we are optimistic for a second half of 2026 for order intake.
Speaker #2: Regarding the weather, I think if you remember, I think I was in Hamburg in April, and there was still snow there in the city.
Speaker #2: So it was really remarkable. And at that time, building construction is usually at full speed, but had to be stopped. So we had some unfortunately some negative effect.
Speaker #2: Looking forward now during the summer, we got our first results also for July and we see that we are totally on line we don't see a negative impact now.
Speaker #2: We see us developing along what we're guiding now. And to the last question, Capex, there's also some special effects we see in the development in the first half year.
Speaker #2: I think we've been pointing out that we've been acquiring tunnel boring machine for the big contract in Poland. And that for we had an increase in equipment Capex of 20 million euro.
Speaker #2: And we've been acquiring RHDB and for intangibles intellectual property we had Capex here between 15 and 20 million euros. And if you take that off of our total investments of 172, then you get to a normalized let me say normalized figure of about 130 to 35 million, which equals about 4.3% of our output.
Speaker #2: That means also this figure is somehow influenced by special investments here. And going forward, we expect a normalized development. And that's where we are guiding Capex in total for the year with about 4.5% of our output.
Speaker #3: Thank you. Just to clarify, so the October tenders might translate into orders already this year?
Speaker #2: Actually, that's not what I said. It's not in our hands. It's not in our hand for the timeline when they finish. But I think the important message from the quality side is that there are precise tenders now.
Speaker #2: And there are big or projects in the size of two to 300 million, which are interest very interesting for us. Coming up on the market.
Speaker #2: And I think that's the difference to the developments we saw so far.
Speaker #3: Okay. Thank you.
Speaker #1: Thank you very much. Before I take the next risen hand, a quick reminder on how the Q&A works. If you would like to ask your questions in person via audio line, please click on the raise hand button.
Speaker #1: If you're dialed in by phone, please press start tonight to raise your hand and start the 6 to unmute yourself. And of course, you're also welcome to post your questions in our chat.
Speaker #1: And the next risen hand is from Stefan Schaf. I will allow you to unmute yourself now. You should be able to place your question.
Speaker #4: Good afternoon, gentlemen. I have one question about the Austrian business. In Austria, the EBIT was more or less unchanged at 43 million. And you mentioned in your half-year report that there was one million write-off.
Speaker #4: Otherwise, you could make the EBIT above the level from last year. Perhaps you can tell us what was the one million write-off here in Austria?
Speaker #2: Well, hello Stefan. Both one of effects that I explained before the gain from the sale of the business premises of 6.4 million in the GV and the depreciation for the expected sale of the BWW group, both are contribute to the Austrian segment.
Speaker #2: And the one million is the difference between the plus 6.4 and the minus 7.4. So that's actually the reason there.
Speaker #4: Okay. I see. And I could see coming to Germany, I could see that you could double your EBIT. Even with a lower level of revenues, what do you expect for Germany for the margin development and the second half of the year and also for 2027, 2028 will we have the same good trend to continue?
Speaker #2: Well, as we've been always saying, we expect Germany to develop. I mean, last year we had a margin of 2.5% in the for the total year.
Speaker #2: I think we're on the right way in the end. As you are questioning for the midterm future, we believe that we will be also able to deliver margins something about 3% plus in the upcoming years.
Speaker #2: But I think it shows that we're on the right way.
Speaker #4: Okay. Okay. Great. If we come to the poor living, to the affordable housing projects, UBM called in the call today that there is the first pilot project to be launched or just started in Vienna.
Speaker #4: It's about 90 apartments. You have a volume in your mind, an output volume in your mind, let's say for the next two or three years for the affordable housing segment in Germany and Austria.
Speaker #2: We start our first projects for poor living now in close to Vienna with some apartments. And then together with UBM, the next one, what you mentioned, but in line, we will really start our marketing and starting construction poor living in Austria it will be more than 100 million within this next year.
Speaker #2: Because we introduced this product to a lot of developers and a lot of companies of cities in Austria, Germany, around. And they are just looking at the first project, how it's really is, because we have done one project, but this is in a hall because not to areas.
Speaker #2: So the finish, but now we start our first project there is under we have a film there and everything. But we have a lot of projects in the pipeline.
Speaker #2: And a lot of cities, communities and all the subsidized residences, construction business is waiting to see how the first project is really starting. But it will be a lot other than on one side poor for their clients.
Speaker #2: And together with UBM, we go on our own projects for in Germany and Austria.
Speaker #4: Yeah. Yeah. There will be a big excess in demand one million apartments missing in Germany. And I think a big number also in Austria.
Speaker #4: Another question is about Poland. Poland has seen a steep hike in revenues more than 20%, also more than 20% in production output. But the EBIT was just up a little bit from 11 to 11.5 million.
Speaker #4: Perhaps you can say a bit more here.
Speaker #2: Well, I think we are now half of the year and the EBIT margin is at 2.4%. I'm not really not worried about that. We see Poland developing along very good.
Speaker #2: And we're pretty sure that at the end of the year, we will see a figure beyond 3% in the EBIT margin. Yeah. We're very happy with Poland.
Speaker #2: I think nothing to worry there.
Speaker #4: Okay. Thank you.
Speaker #2: Thank you, Stefan.
Speaker #1: Thank you very much. So there is a further risen hand from Markus Remi I will ask you to unmute yourself and you should be able to speak and ask your question.
Speaker #5: Good afternoon. I hope you can hear me well. I would have a few more questions, please. I'll have them one by one. Firstly related to the EBIT guidance.
Speaker #5: When I look at what is implied for the second half, it gets me to around 7% output growth, talking about the consensus expectations and 7% EBIT growth.
Speaker #5: So essentially, there is no margin expansion based in your guidance, at least it seems from the numbers. Can you help us understand kind of the assumptions you've made to arrive at this level?
Speaker #2: Hello, Markus. Well, I think our forecast and expectation now showing total margin for the full year of 2.3.2 to 3.3%. Actually, what we see now in our forecast and I think compared to the result last year, that's and the conditions, I think that's a remarkable increase.
Speaker #2: Actually, we came out very good for the half year now based on the good management of our materials and purchased services. But for the full year, we expect that full rolling out of this positive effects can be a little bit challenging.
Speaker #2: And I think totaling up the guidance is a good reflection of our development.
Speaker #5: Okay. Thank you for that. Then on sorry. Just a clarification on your leverage target. You said net debt three, but just to get it straight, does it mean that break even or around break even liquidity or do you think you will end the year with a reasonable net cash position?
Speaker #2: Well, Markus, you know that actually for a precise figure, we are depending on the payment behavior of public clients, especially in December. And it's very hard at that point to give a precise forecast.
Speaker #2: As I said before, our target is to be net cash, including IPRES 16, IPRES 16 liabilities. And I think at that point of the year, we have no clearer visibility.
Speaker #5: Okay. Stay with the interrupt message in Germany just to also clarify the remarks that you've made, kind of this 1.5 billion that you gave on the presentation.
Speaker #5: Is that I was going to say, is it possible for you to trace these projects to the famous infra Bazooka or is it just a, I wouldn't say a coincidence, but is it kind of a accumulation of all of that are now kicking in?
Speaker #2: No, these are special projects that are for investments in train network and so on. And they're actually exactly what the market has been waiting for.
Speaker #2: And this 1.5 billion are I think it's about six concrete projects that where we will be running for.
Speaker #5: Okay. Okay. Understood. Yeah. On the PWW growth disclosal, is that now fully adjusted? And is there also kind of a meaningful de-consolidation effect when it comes to P&L in terms of?
Speaker #5: Sorry if I wasn't quite clear the question was actually if it's now fully.
Speaker #2: See, all effects in the P&L from expected de-consolidation are included in that depreciation. So there will be no further effects on P&L. And the output level is actually yeah.
Speaker #2: So it's a low double-digit million euro figure. So it will not have a significant impact on our revenue side.
Speaker #5: Okay. Thank you. And there are yeah. Again, a couple of related party transactions with OBM and we saw that also already in 2020, five of them did the math correct.
Speaker #5: It was not 12 million in the first half. Can you elaborate on the strategic question now? Because the companies that where you gave about stakes is more office building, as far as I can see here.
Speaker #5: So not necessarily the kind of the living or residential angle that one would assume. So what's kind of the payback on these transactions, please?
Speaker #2: Well, I think in general, the important part is that the hybrid capital for UVM and I think as we signed that hybrid capital, we already said that UVM has always been a partner for POR, a partner in development and distribution.
Speaker #2: And going forward, in general, there is a big pipeline I think Stefan also referred to that. And in former days, UVM was selling our office buildings and our hotels.
Speaker #2: And now I think market is developing towards this affordable housing there, which is POR living in our house. And that's the business rationale behind that decision.
Speaker #2: And on a financial level, I mean, we get interest of 9% for the capital there. So I think it also pays off from a financial perspective.
Speaker #5: Yeah. The 9% return on the hybrid is fully understood. And that's a great tip on the group level. But what is the payback that you get on the real estate transactions that you're doing like Vienna office, Amsterdam office, Berlin office?
Speaker #2: Well, actually, that's been a this is an office park where we are our head office in Poland is located in that park. And actually, it's concentrating the shares in the park in our hands.
Speaker #2: Yeah. So actually, that's a rationale behind that. And the transaction price in total was something about.
Speaker #5: 6.2 million.
Speaker #2: 10 million in total. Of investments.
Speaker #5: Okay. And the hybrid capital did I get it right that you include that in your capex figure? This 4.5% of output.
Speaker #2: No. No, no, no, no. We didn't actually in it's included in cash flow from investments. And that's why commented on the development of cash flow from investments.
Speaker #2: But it's not included in capex. What I said that one of items in capex are the tunnel boring machine and the intellectual property intangibles that we've been acquiring from RHDB.
Speaker #2: It's not the UVM hybrid capital.
Speaker #5: Yeah. Okay. And is it fair to assume that you're remarked that you made recently that it would be kind of capex output below 4% return to this level as of next year?
Speaker #2: Well, for this year, I explained before that we expect 4.5. We don't see that we need that level of 4.5 going forward. So we think that our general development will be around 4%, which is the general guideline for us in the business.
Speaker #5: Okay. Thank you. Okay. Thank you very much.
Speaker #2: Okay. Thank you, Marcus.
Speaker #1: Thank you very much. This is the last call for the questions, whether you would like to raise your hand or place them in the chat box.
Speaker #1: And since there seem to be no further questions, with this, we come to the end of today's earnings call. Thank you very much for your interest in and your dynamic participation of today's call.
Speaker #1: A big thank you also to Mr. Aita for your presentation and your time. Should you have any further questions at a later date, please feel free to contact Isabella Steiner of Investor Relations.
Speaker #1: I wish you all a successful day and hand back over to you, Mr. Aita, for your closing remarks.
Speaker #2: Thank you very much for joining the conference. This for the half year results in 2026. And I hope you hear you healthy in the next call for our third quarter result in 2026.
