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By Giulia Morpurgo and Luca Casiraghi
(Bloomberg) -- Italian builder Webuild SpA plans to end the
year with a solid cash position and credit lines intact, its
Chief Financial Officer told Bloomberg in a bid reassure
investors over its finances as costs surge.
Massimo Ferrari said that requests for cost revisions in
construction projects amounted to “business as usual” for the
industry during a period of soaring labor and raw-material
costs. The company’s bonds hit record lows last week amid
concern over some of its contracts.
“We are aiming to close the year with minimum, if not zero,
of revolver lines drawn and a positive net cash position,” he
said Friday. “With all counterparts there is a dialog to see how
to cover these extra costs,” he said about price revisions,
adding that “in the vast majority of cases, you find an
agreement.”
Ferrari said that Webuild clients usually have
“contingencies for these extra costs” and that Webuild’s
guidance remains intact.
Largely Unworkable
Webuild’s Asia-Pacific director said last week that
infrastructure construction contracts signed before the pandemic
have become largely unworkable due to surging costs of labor and
materials, supply-chain blockages and difficulties in securing
manpower.
Ferrari rejected media reports that Webuild’s consortium
has asked the Australian government for an extra A$2.2 billion
($1.4 billion) to complete construction of hydro-power station.
“We are going ahead with the Snowy project in full agreement
with the customer,” the CFO said.
“As with any project, the evaluation of potential extra
costs -- documented and certified -- depends on the relationship
between contractor and client, which in this case is excellent,”
he said.
The company held a call with investors and analysts on
Wednesday, during which management said it might contemplate a
bond buyback, according to a research note by Bestinver
Securities. A day later, it announced through a press release
that Chief Executive Officer Pietro Salini had bought €1 million
($976,000) of Webuild’s bonds.
“We will evaluate a buy-back at the end of the year, once
we have closed 2022 or at the start of 2023,” said Ferrari. “Now
we have other priorities, such as commitments related to
tenders. We won’t do a buyback to speculate, to buy at 80 when
the issue price was 100.”
In the meantime, the company is to continue on its share
buy-back program, launched earlier this year. It could be
implemented no later than Oct. 30, and could entail as much as
10% of shares outstanding.
Webuild has a backlog of €38 billion, almost half of which
is related to Italy’s National Recovery and Reconstruction Plan
(NRRP), to be financed with European Union funds. The CFO said,
however, that despite this program, the country’s builders are
still facing economic headwinds.
“You have to also be realistic, in this period corporate
crises also emerge,” said Ferrari. “There are companies blowing
up, because of their size, because of entrepreneur-centered
ownership which occasionally can slip.”
By Giulia Morpurgo and Luca Casiraghi
(Bloomberg) -- Italian builder Webuild SpA plans to end the
year with a solid cash position and credit lines intact, its
Chief Financial Officer told Bloomberg in a bid reassure
investors over its finances as costs surge.
Massimo Ferrari said that requests for cost revisions in
construction projects amounted to “business as usual” for the
industry during a period of soaring labor and raw-material
costs. The company’s bonds hit record lows last week amid
concern over some of its contracts.
“We are aiming to close the year with minimum, if not zero,
of revolver lines drawn and a positive net cash position,” he
said Friday. “With all counterparts there is a dialog to see how
to cover these extra costs,” he said about price revisions,
adding that “in the vast majority of cases, you find an
agreement.”
Ferrari said that Webuild clients usually have
“contingencies for these extra costs” and that Webuild’s
guidance remains intact.
Largely Unworkable
Webuild’s Asia-Pacific director said last week that
infrastructure construction contracts signed before the pandemic
have become largely unworkable due to surging costs of labor and
materials, supply-chain blockages and difficulties in securing
manpower.
Ferrari rejected media reports that Webuild’s consortium
has asked the Australian government for an extra A$2.2 billion
($1.4 billion) to complete construction of hydro-power station.
“We are going ahead with the Snowy project in full agreement
with the customer,” the CFO said.
“As with any project, the evaluation of potential extra
costs -- documented and certified -- depends on the relationship
between contractor and client, which in this case is excellent,”
he said.
The company held a call with investors and analysts on
Wednesday, during which management said it might contemplate a
bond buyback, according to a research note by Bestinver
Securities. A day later, it announced through a press release
that Chief Executive Officer Pietro Salini had bought €1 million
($976,000) of Webuild’s bonds.
“We will evaluate a buy-back at the end of the year, once
we have closed 2022 or at the start of 2023,” said Ferrari. “Now
we have other priorities, such as commitments related to
tenders. We won’t do a buyback to speculate, to buy at 80 when
the issue price was 100.”
In the meantime, the company is to continue on its share
buy-back program, launched earlier this year. It could be
implemented no later than Oct. 30, and could entail as much as
10% of shares outstanding.
Webuild has a backlog of €38 billion, almost half of which
is related to Italy’s National Recovery and Reconstruction Plan
(NRRP), to be financed with European Union funds. The CFO said,
however, that despite this program, the country’s builders are
still facing economic headwinds.
“You have to also be realistic, in this period corporate
crises also emerge,” said Ferrari. “There are companies blowing
up, because of their size, because of entrepreneur-centered
ownership which occasionally can slip.”
Sofia Fraschini