Working capital

Working capital increased by €518.6 million from €278.3 million to €796.8 million.

The main changes in the individual items making up net working capital are summarised below:

  • inventories increased by €16.9 million to €285.0 million due to the combined effect of the consolidation of Lane, partly offset by the consumption of materials for the Group’s main contracts;
  • contract work in progress increased to €2,148.8 million at the reporting date (€1,775.8 million) and includes foreign contracts (€1,731.4 million) and Italian contracts (€417.4 million). The €373.0 million increase is the sum of €17.8 million for the Italian contracts and €355.3 million for the foreign contracts. It reflects production progress calculated using the most recent estimates of the ongoing projects’ profitability. The rise in contract work in progress is due to the high speed/capacity Milan - Genoa railway section in Italy and to the contracts in Qatar (€120.0 million), Australia (€54.2 million) and Denmark (€84.6 million) abroad. The variation also includes €38.9 million for Lane. The caption also includes railway works in Venezuela (€255.6 million);
  • progress payments and advances on contract work in progress include both advances and negative work in progress (i.e., invoiced advances in excess of the cumulative value of the works built) and amount to €1,884.1 million, up €21.3 million on 31 December 2015. This increase is mainly the result of:
    • the €72.2 million reduction in contractual advances, mainly due to their use as a result of continuation of the related works;
    • the €93.6 million increase in negative work in progress, mostly due to Lane’s contracts.
  • current loans and receivables, which increased by €519.9 million. The item includes amounts of €1,909.0 million with third parties and of €154.1 million with unconsolidated group companies and other related parties. The latter balance decreased by €9.0 million, mainly as a result of collections from unconsolidated Italian consortia while loans and receivables with third parties increased by €528.9 million, including €194.4 million for Lane in addition to the rise in amounts due from Ethiopian customers. The item comprises receivables from Venezuelan customers for railway contracts of €240.6 million, mostly denominated in hard currency (Euros and US dollars);
  • current liabilities, which increased by €437.3 million and include liabilities with third parties of €1,942.2 million (€1,501.7 million) and unconsolidated group companies and other related parties of €125.6 million (€128.8 million). The rise in liabilities with third party suppliers mostly refers to the Ethiopian contracts while the increase related to Lane amounts to €118.5 million;
  • other assets increased by €57.5 million while other liabilities decreased by €9.9 million.