Builder Hochtief issues profit warning

August 23, 2001 Posted: 1350 GMT

FRANKFURT, (Reuters) - Germany's biggest builder Hochtief AG on Thursday posted a first-half operating loss on the back of weak construction markets and said 2001 profits would be considerably below last year's level.

The company reported an operating loss of 36.7 million euros ($33.82 million) against a profit of 66.5 million a year earlier.

The profit warning sent Hochtief's share price down more than 12 percent, close to its year-low of 19.25 euros. By 1010 GMT, the stock was down 12.8 percent at 19.31 euros in active trade with more than 140,000 shares changing hands.

At the same time, the German mid-cap index MDAX was up 0.15 percent.

Hochtief shares have lost around 30 percent from the year high of 28.25 euros reached in February.

Hochtief, majority-owned by German utility company RWE AG, said it expected to end the year in profit assuming markets did not deteriorate but said the result would be "considerably" below the previous year's level.

It also said group profits would continue to be burdened by the negative environment on the German construction market as well as restructuring costs.

Analysts said the profit warning had shocked investors, while lower-than-expected results added to negative sentiment.

"The profit warning was very surprising," said Christiane Nestroy, construction analyst at HypoVereinsbank in Munich.

"The negative result for the half year was also strongly under our expectations -- we were expecting positive numbers," she said, adding she would significantly reduce her earnings estimates for the full year.

Hochtief said external sales in the period rose 31.2 percent to 5.97 billion euros, mainly boosted by its international activities and the first-time consolidation of Australian engineering contractor and builder Leighton Holding Ltd.

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Leighton contributed 1.4 billion euros to Hochtief's first-half group sales, it said.

Group construction output rose to 13 billion euros from 5.7 billion euros a year earlier, while new order intake doubled to 14.1 billion euros from seven billion euros last time.

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