Hochtief H1 profit rises 18%, hits top end of 2025 guidance

Hochtief reported strong H1 2025 results, with operational net profit increasing 18% to €355 million and revenue climbing 25.4% to €18.37 billion, reaching the upper limit of its full-year guidance. The company secured €26.1 billion in new orders, boosting its backlog to €69 billion, and maintained its full-year operational net profit forecast of €680-€730 million. Despite a negative net operating cash flow for the period, attributed to seasonal effects, Hochtief confirmed a 19% increase in its FY2024 dividend.

Analysis

Hochtief reported a robust first half for 2025, with operational net profit rising 18% to €355 million, positioning the company at the upper limit of its full-year guidance. Revenue growth was significant, climbing 25.4% to €18.37 billion, driven by strong performance across key subsidiaries. The company's future revenue visibility is supported by a 22.5% year-over-year increase in new orders to €26.1 billion, expanding the total order backlog to €69 billion. A key driver of this performance was the US-based Turner division, which saw revenue jump 41% and operational profit before tax surge 59%. However, the overall picture is nuanced by weaker performance at the Australian CIMIC division, where operational net profit was stable despite a 26% revenue increase, and its order backlog declined by 6%. A notable point of concern is the group's cash flow, with a negative net operating cash flow of €177 million for the half, which the company attributes to seasonal effects and capital allocation. This contributed to an increase in net debt to €1.41 billion. Despite this, management expressed confidence by reaffirming its full-year profit forecast and confirming a 19% dividend increase for fiscal 2024.

Key Decisions for Investors

• Investors should weigh the strong operational profit growth and record new orders against the negative H1 net operating cash flow and rising net debt, which warrant close monitoring in upcoming quarters.
• The significant outperformance of the Turner subsidiary in the US contrasts with the flat profitability and declining backlog at CIMIC in Australia; portfolio managers should assess the concentration risk and growth drivers within the group's segments.
• The confirmed 19% dividend increase and reaffirmed full-year guidance signal management's confidence, suggesting that current holders may find the capital return policy attractive despite short-term cash flow pressures.