Speaking to shareholders at the Annual General Meeting today, ACCIONA Chairman José Manuel Entrecanales said that the next phase of the company's growth will be based on selective bidding for projects that guarantee margins and returns, coupled with a move into new markets that offer opportunities in its two business areas, renewable energy and infrastructure.
"It bears repeating that we are interested only in profitable growth, and that we are not willing to sacrifice returns to expand the backlog," said ACCIONA's Chairman, referring to the company's track record in recent years: "In 2016, we did not win all the tenders and auctions that we would have liked, but I am sure that the ones where we were successful will provide appropriate returns and leverage ACCIONA's competitive advantages."
Referring to the current year, José Manuel Entrecanales stated that the Energy division will focus on "public and private sector auctions in countries where we have a track record, such as Chile, Mexico, Australia and the United States, as well as specific opportunities in growing countries where we are not yet established." To achieve this, the company will leverage its technological and financial competitiveness, which was in evidence in ACCIONA's recent successes in energy auctions and large private sector contracts in Mexico, Chile and Australia. "The contracts we obtained in 2016 cover 40% of our target of building 2,000 MW between now and 2020, and current trends suggest that we may even raise that target."
The Infrastructure division will also apply a selective approach to growth. "This rigorous approach to bidding is evident in the sound margins achieved by our international construction business, which is attributable, among other factors, to the major internal restructuring process that commenced just three years ago."
ACCIONA's Chairman noted that "in just a few months, the Spanish infrastructure industry went from being one of the most active in the world to practically disappearing in a matter of months." He emphasised that, in this context, "the restructuring and sacrifice that we commenced some years ago have borne fruit and we have managed satisfactorily to transfer our exposure from the domestic to the international market, as a result of which we are now a better, sounder company."
Referring to 2017, he advanced that "in Infrastructure, we will continue to bid for large projects in Australia, the United States and Southeast Asia. We will also give priority to internationalising our Service business."
In order to expand, ACCIONA must maintain the pace of investment achieved last year, which "reflects a return to levels more commensurate with our growth targets and our sound strategic and financial position", i.e. around 1,000 million euros.
Underpinning this new phase of growth is the change in the funding approach. "In the last few years, the group focused not only on reducing its financial risk but also on aligning its funding structure to the new regulatory environment for renewable power generation in Spain that resulted from the radical changes in legislation in 2012 and 2013, changes that are still being disputed in the courts, not to mention international arbitration. Refinancing 2,000 million euros of project debt with parent company debt culminated the process of transforming ACCIONA into a more diversified company with lower funding costs."
ACCIONA's Chairman also referred to two global trends that the company sees as both challenges and opportunities: digitisation and Big Data, and corporate transparency.
“Fortunately, I think ACCIONA's main lines of business are reasonably resilient to abrupt disruptions produced by hyperdigitisation. In any event, one of our main strategies is to incorporate Big Data into our operations, and many of our assets are already being monitored and managed on the basis of real-time data analysis," he said.
"Another important trend among companies, such as ours, that aspire to lead our industries is the growing concern for transparency and rigorous ethics and compliance in all our activities. This trend should and will continue; we at ACCIONA welcome it and are promoting it out of the conviction that it is a pre-requisite for any business that aspires to respectability and wishes to last over time."
Entrecanales defined ACCIONA as a SMART business: "Sustainability contributing to Mitigation of the effects of greenhouse gas emissions, working on Adaptation and Resilience for society to the major challenges of the future so as, ultimately, to contribute to Transforming the production and wealth creation model towards one that is more inclusive and environmentally-friendly."
The shareholders approved the appointment as an independent director of Karen Christiana Figueres, who is Vice-Chair of the Global Covenant of Mayors for Climate & Energy, a member of the Board of Directors of ClimateWorks, and a World Bank Climate Leader, among other positions; she will occupy the vacancy on the Board left by Carmen Becerril.
The meeting also approved the Sustainability Report and the 2016 financial statements, "whose results exemplify the group's resilience and capacity to adapt to changes in the context in which it operates"; it also approved a dividend of 2.875 euros gross per share (+15%), to be paid on 3 July 2017. It was also decided to appoint KPMG as auditors for the next three years (2017-2019).