SENER Operating Revenue up 7.6% in 2013
The SENER Engineering and Technology Group closed the 2013 financial year with an operating revenue of €1.218 billion, representing a growth of 7.6% on the previous year. The number of people working at SENER reached 5,570, an increase of 3.8%, and R&D investment was €71.7 million, representing 5.8% of the group's revenue. These figures position SENER as Spain's leading multidisciplinary engineering group in terms of R&D and the development of technologically-differentiated international projects.
SENER said it has attained these positive results in spite of a year full of difficulties marked by an almost total lack of new projects and prospects in the Spanish market. Furthermore, the profound changes brought on by the recently-approved reforms in the Spanish electricity sector and the significant decreases in defense, space and R&D budgets that have always supported SENER's aeronautical business, significantly affected the development of SENER's three business areas in 2013, the company explained.
In the area of engineering and construction, sales reached €561.6 million, up 8.7% on the 2012 figures, with contracting figures reaching €664.7 million. Organic growth and the opportunities offered by international markets, especially Latin America, Europe and Africa, have offset the decrease in sales and contracting in Spain. SENER noted sustained success of turnkey projects in the power and process sector, particularly in renewable energy, thermal power and liquefied natural gas; in the Infrastructure and transport engineering sector, focused primarily on metro and light rail projects; and the marine sector, with new FORAN System licenses and a significant recovery of the ship engineering business. With regard to the aerospace area, a good level of activity has been maintained thanks to the recent procurement of important space projects, but the loss of the Spanish institutional market cannot easily be compensated by exportation. Nevertheless, in 2013 the operating result for engineering and construction rose to €55.8 million (+6.5% compared to 2012).
In the aeronautics area, sales increased by 7.8% to €633 million, and the operating result was €47.4 million (+11.2%). In this business area, the gradual reduction in defense is being compensated by a growth in civil projects, especially the Trent engines developed by ITP with its partner Rolls-Royce. To further consolidate this shift, ITP, which has just celebrated its 25th anniversary, is continuing its process of substantial investment in new products for the civil aeronautics market, where the development of low pressure turbines for the new Trent XWB 97k and Trent 1000-TEN engines as well as the commitment to industrial participation in the Geared Turbofan engine (GTF) from Pratt & Whitney are worthy of note.
The energy and environment area suffered in 2013 from the regulatory changes introduced by the Spanish Government in the Special Regime, which were initiated in 2012. This has resulted in an operating loss for the financial year amounting to €28.3 million, if calculated in proportion to SENER shares. In addition, the new regulations will also reduce the future revenue of the plants in which SENER holds a stake, leading the group to make an additional adjustment to the aforementioned losses for asset impairment, representing -€40.1 million in the annual accounts.
SENER's strategy in 2013
SENER said it has maintained a strong commercial position and a very healthy operating account and balance sheet, allowing it to continue with its 3i’s strategy for innovation, internationalization and investment.
Innovation: €71.1 million were invested in R&D in 2013. This figure represents 5.8% of the group revenue and consolidates SENER's solid commitment to continued improvement and expansion of its range of differentiated technological products and services in order to achieve a healthy organic growth and generate trust in the innovative solutions it puts forward.
Internationalization: SENER continues to consolidate itself as one of the leading engineering firms in Central and South America. Mexico is the group's second largest country in terms of workforce (now totaling 923 employees). Engineering and construction operations, which have focused so far on the power sector, have diversified into transport infrastructure, with major projects such as the new railway linking Mexico City to Toluca. In aeronautics, ITP is also expanding its plant in Querétaro. This plant is dedicated to manufacturing small and medium-sized turbine components, as well as tubes. These activities have also required support from ITP Mexico's engineering team. Moving on to Brazil, SENER's development in the country is progressing with firm steps and, in Engineering & Construction, it has already established a team of 339 employees in São Paulo, the result of our organic growth and the acquisition of the companies Setepla (Civil engineering and transport infrastructure) and Exen (power and process).
In energy and environment, a joint investment has been initiated with Petrobras in a new recycling plant for lubricating oils that will use patented SENER technology. This plant in Rio de Janeiro will be the first project in the energy and environment area outside Spain.
Outside of Latin America, SENER is developing its organization in Asia and the Middle East. This year, a new division in India has been added to those already existing in Abu Dhabi, Japan, Korea and China.
Apart from this organizational growth, in 2013 the company has secured important engineering and construction projects in France, Belgium, Algeria, the Persian Gulf, India, Morocco, South Africa, Mexico, Bolivia and Colombia, among other countries.
Investment: Group investments in 2013 amounted to €139 million, the most important of which was the consolidation and expansion of ITP's participation in the GTF Pratt & Whitney program. On the other hand, there was almost no investment in energy and environment; planned investments in Spain were frozen in 2012 as a result of the regulatory changes and uncertainty, also making it impossible to estimate the economic future of existing facilities.
SENER said it will continue with the same strategy as in previous years, focused on the development of technology-based competitive advantages which, together with its increasing internationalization, productive investment and financial prudence, are the foundations for ongoing solid growth.