Major Spanish construction companies bill 80% of their work abroad

Spain is a breeding ground for global construction companies, but it ceased to be their first destination decades ago. Major Spanish companies in the industry (ACS, Acciona, FCC, Sacyr, Ferrovial, OHLA and Grupo San Jose) have directed their efforts abroad: Only 19.79% of its accumulated turnover in 2022 corresponds to the country of origin (EUR 13,903.99 million out of a total of 70,270.6 million). It should be noted that the case of the Del Pino family’s construction company is not unique, as the transfer of Ferrovial to the Netherlands has actually been completed and no shareholder has requested reimbursement of its investment in it. As with Ferrovial, 80% of the turnover of major Spanish construction companies comes from their overseas business. Their internationalization dates back to the 1970s and was highlighted by the subsequent real estate crisis in 2008. Adding to this phenomenon is the fact that these companies are not located in Spain, so they tend to turn to franchise business in other countries. stability and profitability than the construction business itself.

Although Spanish construction companies have prestige in the world, Fade in the face of Asian companies and some European companies. China ranks in the top six in the world rankings. Of course, with the country’s government-owned companies, with revenues ranging from $293,194 million billed by the China State Construction Engineering Corp in 2021 to $69,601 million recorded by the Power Construction Corp of China in 2021. Vinci still outperforms ACS with a turnover of $58,437 million.

The world’s largest Spanish construction company, hot waterIt ranks 12th and achieved a turnover of 33,615 million euros in 2022, of which 3,025.35 million were in Spain. His favorite destination is the United States, where he collects 56% of his sales., followed by Australia (19%). Other countries where Florentino Pérez has a company are Canada (6%) and Germany (3%). In Spain, 9% of total sales are concentrated, amounting to 3,025.35 million Euros. However, 4% of construction and 11% of concessions take place on Spanish territory. It stands out only in the service sector, where it collects 89% of sales, because 11% comes from other European countries. ACS uses its subsidiaries Abertis and Iridium to manage concessions that increase its EBITDA like those in France, Mexico or Chile. In the case of Abertis, it is the company that manages the Autopista Central and AP-7 Tarragona-France concession in Santiago de Chile.

railwayAiming to expand its international trade by moving its head office to the Netherlands, It has only 18% of its sales in Spain., approximately 1,359.18 million euros, out of 7,551 million achieved in 2022. As with ACS, most of its income comes from the United States and Canada (36%), followed by the United Kingdom (21%), Poland (11%), and other countries around the world. Its subsidiary Cintra is primarily responsible for generating revenue from franchises from North America. Some of the most relevant assets are the four British airports (Heatrow, Glasgow, Aberdeen and Southampton) or the LBJ Highway in Dallas (Texas).

In the case of Acciona is the second contributor to Spain’s turnover (17%) far behind the first, Australia (34%). Headed by José Manuel Entrecanales, the company invoiced 1,903.15 million euros, up from 11,195 million euros recorded in 2022. business mainly comes from Latin America. Only 308 million of Sacyr’s total turnover, which amounted to 5 billion 852 million Euros last year, belongs to Spain. Currently, its portfolio consists of 80% concessions, 14% infrastructure and 6% services, and indeed EBITDA is following the same trend (58%, 34% and 8%, respectively). And the country represents 29.4% of OHLA’s turnover, about €958.35 million out of a total of 3,259.7 million, though the rest of its revenue comes from other European countries, North America and Latin America. Its concessions include the A-30 Highway in Canada or the Álvaro Cunqueiro Hospital in Vigo.

The remaining two companies have more business in the Spanish market than abroad. This situation FCC with 55.4% of its revenue from Spain (€4,268.96 million of a total of 7,705.7 million), followed by the United Kingdom (13.6%), the Americas (9.9%) and the Middle East and Africa (4.7%) At the same time, the company focused on the environment segment. Construction accounts for only 9.4% of its water income with 45.2% of its income, followed by 26.7%. Grupo San Jose chose to bet in the Spanish market, where it accounts for 84% of the order book. (EUR 2,081 million) and construction, which accounts for 88.7% of its activity. In the UK, FCC Concesiones is the company responsible for the management of the Barcelona metro lines and the Mersey Bridge, while Grupo San Jose owns the concession of the Louvre Abu Dhabi and the 5-Star Resort in Cape Verde, among others.

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Ovidio Turrado, partner responsible for KPMG Infrastructure in Spain, explains that the fact that the Spanish market represents a small portion of the total bill invoiced by construction companies is “more a result of their growth outside of Spain than leaving the country.” Foreign exits of these companies dating back to the second half of the 1970s for two reasons. first 73 oil crisisaffected the world economy, as well as the Spanish economy. In the construction sector, the price of Cristalería Española (now a member of the Saint Gobain group) or Inmobiliaria Vallehermoso (today Sacyr) fell by 73.8% and 71.9%, respectively. With Transition and the advent of democracyLike the brake on the National Road Plan, there has been a significant drop in public works contracts in Spain.

In this context, “the strongest companies have seen an aggressive reduction in their bills,” says Carlos Fernández, technical director of Cype, a company specializing in construction software development. Therefore, many companies in the sector such as Dragados, where Fernández worked at that time, started to design buildings in countries such as Iraq. Typsa, another of the companies forced to internationalize in the 70s, complains that “they were very difficult years when it was impossible to survive in Spain”, “unfortunately it has disrupted a large part of the business fabric of the country”. This phenomenon intensified in the 1990s. “Until the late 2000s, international revenues did not exceed local revenues,” says Javier González, Kearney’s Transport and Infrastructure partner.

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The new century coincides with the acceleration of the franchise trade, especially after the 2008 financial crisis. “Building companies saw in concessions a way to diversify their revenues and reduce reliance on the construction of public works,” says Fernández. In other words, they provide stability and predictability, greater profitability than the construction work itself, and therefore less economic risk. “The concession business has huge margins and has also allowed Spanish construction companies to enter mature markets like the United States or Australia,” says Miguel Prieto, the company’s deputy director of Arup specializing in sustainable development.

Although Spain continues to be a target for large construction companies, the market “Does not provide the number of new infrastructure projects needed to sustain revenue figures from these companies,” adds Prieto. The government is considering allocating 46.205 million for investments, with some items for public works, which is approaching 14,521 million, these figures are not enough to protect the templates and equipment of these companies. “The problem is that activities in Spain have dropped significantly over the last 15 years, so the business of these companies is beyond our borders,” insists González, particularly in markets such as North America, Latin America or Australia, where there are construction and concessions, “more so than in our country.” it should be more.”