Mota-Engil wants turnover above €3.8 billion by 2026

Mota-Engil, Portugal’s largest construction group, aims to triple its turnover by 2026, foreseeing a “balanced contribution” from each of Europe, Africa and Latin America, with a target for annual turnover of more than €3.8 billion, according to a strategic plan released on Monday.

According to the document, which was released via Portugal’s securities markets regulator, the CMVM, the group aims to achieve “levels of turnover exceeding 3,800 million euros, “the implementation of the new management model of the group will be relevant, which will promote greater efficiency, as well as the deepening of cooperation” between Mota-Engil and its new major shareholder, CCCC (China Communications Construction Company), which holds a stake of 32.4%, “in the various strategic axes to which the group proposes in the next five years.”

Mota-Engil last year had a turnover of €2.429 billion, 17% down on 2019. In the first half of 2021, it invoiced €1.138 billion.

The group has defined as a priority faster growth in the environmental, concessions and engineering industrial services segments, to make it possible for non-construction business to account for 55% of EBITDA (earnings before interest, taxes, depreciation and amortization) by 2026, while engineering and construction would reduce their contribution to 45%.

In this context, the group has the stated aim of creating an Environment Unit with a global vocation, concentrating the entire portfolio in this area, with an ambition to grow by 30% over five years, increasing the EBITDA margin of the business from 24% to 30% by 2026, the document states.

At the same time, the strengthening of the Industrial Engineering Services segment, which is seen being one of the biggest growth drivers for the group in the coming years, is to be supported by the solid pipeline and extensive experience in Africa, with the goal for 2026 turnover of €425 million in this segment (up from €129 million in 2020) and EBITDA margins of 33%.

Mota-Engil proposes to increase the average size of the markets – tripling the average value of invoicing per market – with a balanced contribution from the regions of Europe, Africa and Latin America, to raise the consolidated EBITDA margin to 18%, and to improve profitability in order to achieve a net margin of 3% in the group’s result.

Sustainability is another priority, with the five-year plan having, “for the first time, established quantitative objectives” that “will allow measuring the fulfilment of ambition with sustainable development objectives,” the report states.

At the same time, the group wants to continue the efficiency and cost control programme in order to achieve “a representative reduction of 50 million euros per year in 2026 when compared to 2020, as well as an optimisation of CAPEX [capital expenditure] intensity that is intended to ensure, despite growth in non-construction business.”

The group also foresees, between 2022 and 2026, “the investment of 25 million euros in innovation to evolve current businesses and create new sustainable business models.”

Regarding debt, Mota-Engil defines as targets the improvement of the ratio of net debt to EBITDA, the optimisation of debt maturity and a reduction in the average cost of debt.

The Mota family remains the group’s main shareholder, with 40% of the shares, through FM – Sociedade de Controlo, SGPS, SA.