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Spain's ACS posts loss on Iberdrola charge

Source: Reuters - Fri 31st Aug 2012
Spain's ACS posts loss on Iberdrola charge

Spanish builder ACS wrote down part of its stake in power firm Iberdrola, pushing the group to a first-half loss as it returns to its construction roots after an ill-fated attempt to diversify and dodge the country's recession.

ACS posted a €1.23 billion loss in the first-half after booking a €962 million impairment charge against the declining value of its stake of about 15 % in Iberdrola, bought at the height of Spain's construction boom in a bid to diversify earnings and provide shelter from a downturn.

But as Spain suffers its 2nd recession in a few years, with no end to a construction bust in sight, the company is relying on its recently consolidated investment in German affiliate Hochtief to boost earnings.

In the 6 months to June, ACS's earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 76% to €1.58 billion, beating the maximum analyst forecast of €54 billion, thanks to the consolidation of Hochtief.

"The Iberdrola impairment doesn't make for a pretty picture at the bottom line but the market may reward the progress on the operating level," said Juan Rodriguez Rey, strategist at Banco Sabadell.

ACS is now valuing its Iberdrola stake at €3.7, down from €7.1 previously, but still above the €3.09 level where the power firm was trading on Friday.

Net debt fell 13% to €8.58 billion at June 30 from a year ago, ACS said, helped by the sale of 3.7% of Iberdrola in April that marked a shift in the company's previous strategy of gaining more control over the utility.

ACS's shares were trading 1% lower at €15.48 at the open, compared with an 0.22% rise on Spain's blue chip index.

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