SHARE
COPY LINK

BUSINESS

Record profits for German construction giant Hochtief

Germany’s biggest construction company, Hochtief, said Wednesday that sales this year should surpass the record reached in 2007 and that net profit would also be higher than the previous year.

Record profits for German construction giant Hochtief
A Hochtief crane. Photo: dpa

Hochtief confirmed the 2007 net profit figure of €140.7 million first released in February, and said sales had grown by 6.4 percent to €16.45 billion.

This year, “Hochtief anticipates that it will even surpass its record set in 2007,” a statement said.

Chairman Herbert Luetkestratkoetter was quoted as saying that “we now span the whole project life cycle and are raising profitability as a result.” The group took on a real estate unit last year to add to existing property management and development activities, along with an energy contracting division which it bought from the power group Vattenfall.

All of the group’s divisions contributed to the 2007 results, with the exception of its European unit, which generated a pretax loss of €149.4 million last year, owing mainly to “unexpectedly drastic price rises on construction materials and subcontracting.”

In Asia, Hochtief expanded via its Australian-based Leighton subsidiary, which acquired a 45 percent stake in Al Habtoor Engineering in the Gulf. The new Al Habtoor Leighton Group has launched a joint venture in the United Arab Emirates with a unit of the Abu Dhabi Tourism Authority to provide construction management services for projects there.

Hochtief said it would propose an 18 percent increase in its dividend payment to €1.30, which would mean “a record dividend distribution of €91 million.”

ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

READ ALSO:

With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

SHOW COMMENTS