The United States’ GDP is expected to grow by more than 2% pa in the three years from 2016 to 2018. Business should pick up in the infrastructure and transportation sector by about 9% in 2016 and this growth should already be visible in the first half of the year with the motorway works (+19%) and bridge constructions (+7%), thanks in part to the Fast Act (Fixing America’s Surface Transportation Act), recently approved by the US government. This Act provides for infrastructure investments of approximately USD305 billion to assist the construction of roads and motorways as well as other transport infrastructure over the next five years. The most recent estimates for the water infrastructure sector indicate a rise in investments over the next few years for the better management of water resources, also given the rather obsolete state of the existing infrastructure networks (source: FMI Construction Overview 2016).
The following table shows the amounts involved in the main contracts in portfolio:
|(Share in millions of Euros)||Residual backlog||Percentage of completion|
|Gerald Desmond Bridge||103.6||49.3%|
|Dugway Storage Tunnel Cleveland||100.4||27.1%|
Lane - Purple Line - Maryland
The Purple Line Transit Partners joint venture, which includes Lane Construction, was selected as the best bidder for the design and construction of the Purple Line transit system worth USD2 billion in March 2016.
More information about the project is provided in the section on the key events of the period.
Lane - I-4 Ulteimat - Florida
In September 2014, the I-4 Mobility Partners joint venture entered into a concession agreement with the Florida Department of Transportation (FDOT) to design, build, finance and operate the USD2.3 billion I-4 Ultimate project. Lane’s share of the consortium is 30%.
The project includes the reconstruction of 21 miles of I-4 from west of Kirkman Road in Orange County to east of SR 434 in Seminole County, including the addition of four lanes.
Gerald Desmond Bridge - Long Beach
The contract, awarded in 2012, consists of the construction of a cable-stayed bridge with the main span of 300 metres and two 150 m-high towers in the harbour of the city of Long Beach (CA). At the reporting date, it was worth USD785 million, of which 30% for the Group.
Dugway Storage Tunnel - Cleveland
This USD153 million contract awarded in November 2014 involves the construction of a 4.5 km-long and 8 m-wide tunnel and six shafts of varying diameter and depth. Salini Impregilo’s share is 100%.
Outlook for 2016
The acquisition of Lane represents another step by Salini Impregilo to expand in the US infrastructure market. The US construction sector will become a core market for the company, contributing more than 20% of its total revenue. With Lane, Salini Impregilo will be able to access a much larger pool of projects, especially in the water, railway and tunnel sectors.
Management accounts presentation of the figures for the first six months of 2016 and 2015 (“work under management”)
For management purposes and in accordance with general practice in the US construction sector, the Group monitors the main figures of Lane Group, adjusting the IFRS balances, prepared for consolidation purposes, to consider the results of the unconsolidated joint ventures, which are consolidated using the proportionate method. These management accounts results (works under management), show the progress made on the contracts managed directly by Lane Industries or through its non-controlling investments in the joint ventures.
The following table shows the key figures for the period compared to the corresponding period of 2015:
|1st half 2016||1st half 2015*|
|(€’000)||Lane Industries Group||Joint ventures not controlled by Lane||Total WUM||Lane Industries Group (unaudited)||Joint ventures not controlled by Lane||Total WUM|
|Gross operating profit (loss)||(6,787)||10,679||3,892||(22,497)||16,344||(6,153)|
|Operating profit (loss)||(14,984)||10,679||(4,306)||(29,926)||16,344||(13,582)|
|Profit (loss) for the period||(5,276)||0||(5,276)||(17,546)||0||(17,546)|
|Profit (loss) for the period attributable to the owners of the parent||(8,318)||0||(8,318)||(20,148)||0||(20,148)|
* The figures for Lane for the first half of 2015 are the consolidated figures prepared under US GAAP.