Operating profit

The performance of the operating activities in 2014, both in absolute terms and on a comparable basis compared with the previous year, was not affected by unusual occurrences extraneous to the production cycle, with the exception of the different consolidation time frame of the former Impregilo Group in 2013 (9 months). Given this situation, the operating profitability achieved in the period subject of this Report reflects in a substantially consistent fashion the evolution of the production activities described in the comments to "Revenue". The profitability for the period, amounting to 6.2% (4.3% in 2013) was adversely affected by the reversal of the effects of the Purchase Price Allocation, amounting to €18 million of amortization, without which it would have been 6.6%.

In terms of the different types of operating expenses, comparison with 2013 revealed the following main changes:

  • the increase in service costs, including subcontractors and other operating expenses, amounting to €604.3 million, is in line with the change in production;
  • the decrease in provisions and impairment losses totals €23.0 million. Specifically, this includes the release of write-down provisions made in previous years on receivables due from clients in the Venezuela area, amounting to €5.7 million, as well as the release of the €9.1 million provision for risks and charges relating to the receivable with Todini Finanziaria S.p.A. which is now certain to be collected, partially offset by the €3.4 million provision made on the Metro 6 contract in Chile relating to fines in delivery of the works. The item also includes writedowns of approximately €5.5 million for bad debts with foreign clients and subcontractors incurred on the Italian office by the Kazakhstan and Uganda branches, and the writedown of the receivable worth €3.7 million deemed to be doubtful by the Nepal branch.
  • Lastly, the increase in amortization and depreciation expense mainly reflects the reversal attributable to the financial year of the higher values assigned to some intangible assets of the former Impregilo upon acquisition of control by the former Salini.

The costs of central corporate structures and other general expenses for the period under review in this Report amounted to approx. €142.9 million in total and are currently allocated to the "Italy" segment.