Earnings call transcript: Ola Group Q2 2025 sees 46% EBITDA growth

Ola Group reported its Q2 2025 earnings, showcasing a robust financial performance with a 46% increase in EBITDA compared to the previous year. The company also highlighted strategic initiatives and operational updates that could influence future growth. The stock price of its subsidiary, Obrascon Huarte Lain SA (OHLA), saw a modest rise of 1.21% post-announcement. According to InvestingPro analysis, OHLA is currently undervalued, with strong fundamentals including a healthy cash position exceeding its debt levels.

Key Takeaways

• EBITDA grew by 46% year-over-year, reaching €84 million.
• The construction division, responsible for 94% of sales, achieved a 4% business growth.
• The company approved a reorganization plan targeting €44 million in cost savings.
• Moody’s downgraded Ola Group’s rating from B3 to Caa81, maintaining a stable outlook.

Company Performance

Ola Group demonstrated resilience in Q2 2025, driven by significant growth in its construction division, which accounts for the majority of its sales. Despite challenges in its industrial division, the company’s diversified portfolio across North America, Europe, and Latin America helped sustain its overall performance. The group’s successful recapitalization and reduced leverage ratio further strengthened its financial position.

Financial Highlights

• Total sales: €1.69 billion
• EBITDA: €84 million, marking a 46% increase from 2024
• EBITDA margin: 5%
• New contracts: €2.22 billion
• Total portfolio: €8.63 billion, a 2% increase from 2024
• Cash position: €663 million, stable compared to 2024

Outlook & Guidance

Ola Group aims for a full-year EBITDA of €175 million, with expectations of margin improvements in the industrial division. The company plans to sell its services division by the second half of 2026 and is exploring exit strategies for the Canalajas asset. Future guidance includes EPS forecasts of -0.0 USD for FY2025 and 0.02 USD for FY2026, alongside revenue projections of $4.4 billion and $4.5 billion, respectively. InvestingPro data reveals analyst targets ranging from €0.44 to €0.81, with consensus showing moderate optimism about the company’s prospects. Get access to 8 additional exclusive ProTips and comprehensive financial analysis with an InvestingPro subscription.

Executive Commentary

CEO Thomas Rees commented, "We have proven our resiliency in the face of adversity," emphasizing the company’s ability to navigate challenges. CFO Victor Pastor added, "Our earnings for the first half provide a strong foundation to achieve our objectives."

Risks and Challenges

• The industrial division faces setbacks due to an unfavorable Chilean court decision impacting EBITDA.
• Moody’s rating downgrade could affect investor confidence.
• The company must successfully execute its reorganization plan to achieve targeted cost savings.
• Ongoing legal proceedings and internal investigations may pose reputational risks.

Ola Group’s Q2 2025 earnings call highlighted a period of growth and strategic restructuring. With a focus on improving margins and reducing costs, the company is poised to navigate future challenges while capitalizing on its diversified portfolio. For deeper insights into OHLA’s financial health and growth potential, access the comprehensive Pro Research Report available exclusively on InvestingPro, covering what really matters for informed investment decisions.

Full transcript - Obrascon Huarte Lain SA (OHLA) Q2 2025:

Conference Moderator, Ola Group: Welcome to the Ola Group Earnings Conference. Senior management will address the main milestones, and we will then give way to a Q and A session. On the upper right of your screen. Thank you. Senior management has the floor.

Good morning, all, and thank you so very much for being with us today. This is going to be a conference. I’m Thomas Rees, CEO of Ola Group. And with me is our CFO, Victor Pastor and Pedro Ariano, who is Head of Investment Relations and Capital Markets. I would like to begin this call by sharing with you our vision of how the group has performed over the past six months, the 2025, in which we have advanced and executed our strategy in a disciplined manner with financial accountability in mind and a long term vision.

In operational terms, I would like to underscore the fact that Ola Group has made sales of a total of €1,690,000 EBITDA is of €84,000,000 which is a growth of 46% if we compare with the 2024, with a margin over sales of 5%. This, I think, reflects the efforts underway carried out by the company in order to improve the margins. As you know, all of these numbers exclude Division de Servicio, the services division, which at this point is being accounted for as an interrupted activity. It is very important to underscore these facts, and it is important also to understand the context because they spell a milestone in our operational evolution. We’ve been working along these lines and improving over the past few years.

These half year results, I think, cast a strong light and allow us to understand clearly the achievement of our plan that we advised the market of some months ago and as was ratified a couple of weeks ago in the GSM. And thus, as a proxy in what in the Anglo Saxon terminology is known as last twelve months, we have abided by and complied with the guidance announced for 2025 in terms of sales and EBITDA. In other words, these results that we share today with the market give visibility, confidence and credibility to our road map and operational terms for this year. Now apart from EBITDA, the EBIT and the attributable net profit or results compare better than the same numbers for the ’4. Please remember that in the 2025, Grupo Ola satisfactorily achieved the recapitalization, which has resulted in a nonrecurrent or one off increase of the financial expenses to the tune of some €15,000,000 and which, if we take into account negative rate of exchange of €6,000,000 have affected the attributable net results.

If we exclude this amount of pretty well €21,000,000 which are, of course, because of the specific one off events in the period, Grupo Ola is about to breakeven. Now new contracts in this half year amount to €2,218,000 which is a book to bill ratio of 1.3, which means that we continue to onboard new healthy portfolios at a brisker pace than that of execution. This, of course, completely and fully complies with internal diversification criteria, be it by geographies or by project size, and concentrates in our three main regions, which are North America, Europe and Latin America. These new contracts explain that the total portfolio for the group at the 2025 amounted to €8,628,000,000 which is 2% more than at the 2024. At Grupo Ola, we continue to ensure that control is tight in operational and portfolio terms.

Let me underscore the fact that this portfolio is validated by all of our internal committees and is subject to ongoing periodical reassessments and revisions, which helps us, of course, improve our response to any unforeseen event or contingency. So by divisions, Construction, which is 94% of group sales, has grown its business by 4% and has generated an EBITDA of €109,000,000 and the margin is of 6.8%. These numbers are more than 68% of the €64,000,000 that we saw in the 2024. Now this improvement is the result of the control of the follow-up and of the hard work in operational efficiency terms that we have been backing for time now. New contracts in the division over these six months has been at EUR 2,176,000.000, which explains that our short term portfolio is of EUR 7,662,000.000, which is over twenty five months of sales at current levels.

Let me repeat that. Twenty five months, that’s more than two years. Allow me to very briefly explain to you what the Industrial division does. This represents 5% of the total of group sales, and sales are of EUR82 million in the first half year. EBITDA has been minus EUR1313 million.

This result can be fundamentally explained by the impact of an unfavorable decision issued in Chile, which has to do with an old project, which has been in the courts for some ten years now, and the decision was known of in July, as I said. Although it is an event after the end of the semester, we have implemented the impairment in accordance with the principle of caution in accordance with best accounting practices. I would underscore the fact that this has not affected our cash. Absent this extraordinary element, EBITDA would have been positive and higher than that of the 2025. As reported then, we continue to forecast progressive improvements margins wise and in terms of the division of this portfolio throughout the 2025.

Now from a financial point of view, Grupo Ola has completed the 2025 with a total position of €663,000,000 which is similar to the same period in 2024. Among the more important relevant facts, apart from our operational activities, I would underscore the following: first, on February 13, we successfully completed our recapitalization, and this included the extension of the maturity until December 2029, the release for the first time in ten years of well night €110,000,000 pledged and the payback of the debt to the tune of more than one-nine-one €190,000,000 This improvement in our financial profile means that Grupo Ola has reduced the leverage ratio from over eleven four years back to the current 2.2. Secondly, we successfully completed our second capital increase in May with an excess demand to the tune of €55,000,000 which more than offsets the unfair execution of the Kuwait guarantees. Third, we have renewed the Board five new top level members. This governance body is more professional now than it has ever been before.

And now 50% of the members are independent. Fourth, in the month of June, after having reported the successful capital increase and renewal of the Board of Administration, thus clearing away those two points that were underscored in the credit watch, Moody’s rating agency downgraded Grupo Ola from B3 to Caa81 stable. This decision is not to be explained, especially in view of the fact that our indicators and financial ratios have improved. Our corporate governance has been strengthened. We have successfully completed a capital increase amounting to €55,000,000 and we find our second one for EUR 50,000,000.

And we find ourselves in a better position in operational terms, in financial terms, having done away with risks from our balance sheet. If we think of all of the above and in view of these facts and in line with the group’s positive evolution, the external auditor of Grupo Ola, who is fully familiar with the company, has redacted from the in form and this limited reassessment of the first six months of 2025, those two paragraphs that were included in those accounts in the month of December 2024, the concepts being going concern, a going concern, I repeat, and potential effects of the SIDRA arbitration. And fifth, from a strategic point of view, in May, we approved a new corporate reorganization plan, which focuses on efficiency, and we aspire to consolidate a savings to the tune of EUR44 million, this for structural costs. And this plan will allow us to reduce in the upcoming eighteen months the structural cost of EUR3.8 billion of sales to yearly levels not reaching 3%, and this is in line with best practices in the sector. Now from a legal point of view, we have seen very important decisions that do away with material contingencies that were of import.

On March 3, the International Chamber of Commerce reported that favorable award Doha major stations sentencing Qatar Railways to paying €3,000,000 to a joint venture in which Ola has a share to the tune of 33%. This is very positive in accounting terms and in financial terms as well. We expect to receive the gross amount before twelve months are up. Additionally, on July 1, we reported to the market the resolution of the final award regarding the request of the parties in the contract. This, of course, having to do with the Seadra Hospital in Qatar.

Qatar Foundation requested approximately €1,000,000,000 but the award specifies only €24,000,000 in the sentence, of which 13 would correspond to Ola Group because of that 55% stake in said joint venture. As of the very first moment, Grupo Ola has been very prudent and has so explained openly. It has registered provisions amounting to €33,000,000 no variation and always in line with best practices because what we aim to do is protect our shareholders’, employees’ and stakeholders’ best interests. And thus, we had provisions amounting to more than $1,313,000,000 euros which would have to be paid out now in cash in our accounts. I think this speaks for our spurious, responsible and reliable managerial activity.

The possible reversion of these provisions will represent a positive impact in all terms. This sentence, and I need to underscore this, this sentence does away with any possible uncertainty and does away with the most important risk that OLA Group has faced over the past eleven years. And I’m coming to the end now. I’d like to say that this 2025 speaks for tangible improvement in terms of profitability, efficiency in operational terms and contract capacity, in line with what’s been announced. Again, we have proven our resiliency in the face of adversity.

We can make good on our commitments, and we, in fact, are prudent and cautious in our activities. Thank you all, ladies and gentlemen, and we have time now for questions. We will be happy to take questions now. Good morning, all. I’m Petra Reyano.

Thank you very much for having spent time with us. And we begin now with our questions. I am receiving questions via the application. Having provided these instructions, I will begin with Aaron Navarro’s question analyst and makes a reference to the EBITDA construction. I understand that you mean it’s high.

And is this going to be a constant element throughout the year? Another question has to do with industrial activities. I think that’s clear. And says, without that award, would numbers have been better than last year or in the first quarter? And then kindly confirm guidance for the rest of 2025.

Alvaro, let me respond. With regard to EBITDA, it is due to the construction activities underway. It is the execution of contracts, which is underway. And we do not believe that there is anything extraordinary that we could report on regarding the second half of the year, which means that Thomas has repeated what the guidance is until the end of the year. We are feeling comfortable.

And our earnings for the first half, I think, is a sufficiently strong foundation to allow us to achieve the objective. And as Thomas said, last 12, in excess of that objective result, EBITDA, EUR 175,000,000 for this year. Allow me to remind all of your good selves that EUR 175,000,000 at the end of the year EBITDA wise includes the Services division, and the numbers we are reporting on today exclude the division. So if we see the last twelve months, that’s where we are. But Services, of course, would always be an additional amount to the results.

Now as to Industrial. EBITDA, I would need to underscore here what has been explained by Tomas over the past few minutes. It’s negative, including best practices. And because of that cautionary principle, although it is an event that takes after July, we’ve included it in our numbers for June. Which means what?

Well, it means that as Tomas rightly pointed out, were we to adjust that EBITDA, the result of EBITDA Industrial for the first six months versus 2025 would have been more than. So the division would be improving. It would have a positive trend, and it would be on the upswing EBITDA wise. I would underscore what we heard before. We expect margin and new contracts to improve throughout the second half.

Now there’s a number of questions which have to do with cash flow, numbers and so on, explanations, which I think, Alvaro, after the call, perhaps we could agree on everything that we could discuss. Tomas, Victor, we are receiving questions. I’m seeing questions which have to do with the award. The award because of the VR mere debt, I don’t know whether you want to add anything. Well, with regard to this debt, let me answer by saying that a number of actions are underway with regards collection in accordance with the contents of the pacts and agreements with Grupo V.

Yarmir. So far to date, and to the best of our knowledge, the group has, in fact, completed the different tranches of the debt. And should that not be the case, we, if it were necessary, would, of course, take the case to court in the case of any possible noncompliance by the Yarmir. The debt, I believe that that was a question also, amounts to approximately EUR 28,000,000. Thank you, Thomas.

And there’s another number of questions. Investors, were receiving these questions. And well, two of them, Services and Canalajas. What is in the pipeline? Is it going to be sold?

What is the calendar? Let me answer by saying that both assets are indeed up for sale. In the case of services, however, at this point in time, there is a reorganization, a restructuring underway. After two years of results that were less than expected with shrinking margins in the face of the conditions, this sector in general in Spain. And because of that, we have decided to introduce major changes.

First, an administrative reorganization or reshuffling, which is going to actually be spelled out in a shrinking structure. We’re going to be leaner. It’s going to be more efficient, and the margins, therefore, will be better. This process will, of course, need additional time, months. So our long term plan encompasses a sale in the second half, probably the ’26.

In the case of Canalajas, indeed, yes, we are looking for a potential buyer. And at the same time, we are constantly in conversations with our partner in order to see potential exit strategies. Ola Group would share its and sell its stake in Canalajas because it is not an absolutely essential asset for the company. UNIDENTIFIED We have a question from Imperial Capital. The question is, could we break down region by region of information regarding cash?

Ethan, we never provide this granular information. Please go to the document, Page 10. Every quarter, we publish and we differentiate between assets and capital and liquid assets. On the one hand, we explain that pledged amount, 3,000,000 in different bank accounts and other elements as well. And then we have the accounts that we know, liquid assets and cash.

That is the company. That EUR559 million plus would include EUR303 million, which correspond to JVs in English, joint ventures in English, UTEs in Spanish. Why? Because that is the amount that we manage ex company for all JVs because we have the working capital outside of the joint ventures and in all of the regions where we have a presence. Any other detail and so on?

The question wasn’t actually very specific, but I am, of course, available, and I will be more than happy to provide the clarification and perhaps give a little bit more background regarding what the company is doing. Another question. This one has to do with intermediates. We’ve just published this information, provisional numbers and the explanations there regarding pending sentences. And I’m going to group them together.

First, pending. As I say, there’s an explanation there in terms of amounts, the material elements which await the company. So explanations of SIDRA. In those accounts, what we see is that we have requested clarification, which might represent a variation in favor of the JV. So we want a little bit more flavor.

We want to know when SIDRA is going to be finally resolved. Let me answer first by addressing SIDRA, and then I’ll take the other question. In the case of the SIDRA sentence, which looks at those requests of the different parties in that arbitration, which, as I said, is nearly ten years old, I would say that the result is very favorable for Ola Group. Grupo Ola has a stake. As I say, it’s one of the parties in this joint venture, 55% stake, actually.

And the sentence, the award, actually addresses a payment of $13.01 €3,000,000 for Ola. The total amount is of €24,000,000. I would underscore the fact that, yes, indeed, a clarification has been requested of the arbitration court because in our opinion, there is an arithmetical problem here. We believe that the amount would actually be lesser. It might be an amount that would be in favor of the joint venture, but this is going to depend on clarification.

We believe this will be As to the other question? Yes. It has to do with what is pending. That is included in the financial statements that we’ve published.

The auditor is well aware of all of the information. The auditor is familiar, and those paragraphs have been redacted. There is a part that addresses litigation, addressing sentences, but there is no further information apart from that which exists there. This was published this morning. Tomas Victor, I think that this is a question for Tomas.

There are a number of investors who have questions one way or another about internal investigation and publication in the media, news that have been published recently. So is the Board stable? What can we expect with regards to share price? Of course, we can’t say anything there. And about research and investigation, I believe that many are not familiar with that relevant fact, CNMB, the conclusion of that investigation, but it would be, I think, interesting to give a little bit of flavor.

Let me answer by saying yes, yes, I’ll be happy to do that. Regarding that point, I would underscore that internally, in other words, via compliance, a number of reports were addressed, previous members of the Board regarding related party transactions and so on, including myself. And that whistleblowing, that investigation really led to no finding of any irregular activity. This was so determined, and this was so reported to the CNMV. The CNMV has, on two occasions, requested of the company that information be provided in this regard.

This information has been provided in a satisfactory manner, and the CNMB has not made any further observation. The CNMB has not addressed any other issues. So we believe that this issue has been resolved. No irregularity has actually been proven. Now as to the board, I would repeat what Tomas just said.

This governing body has been bolstered. There are five new directors, top level professionals. Two more questions, which have to do with Mohari and, I think, Kanalejas and complications because of the different awards, Ola and Mohari? And then a little bit more information about BOBO. Yes.

I’ll take these questions with pleasure. First, regarding Mohari, I would say that, in fact, arbitration has been wrapped up. And what Mohari requested vis a vis the shareholders’ agreement, the expectations, only in one of four points has been approved. I’m not going to go into the specifics, but what this means is that of a total of over €40,000,000 This was in quantitative terms. It has fleshed out in an award or a sentence that mandates that the company pay approximately €3,500,000 which, by the way, have already been paid out.

So I think it’s fair to say that three of four points were confirmed to be right, the interpretation of said contract. As to the second question, BOBO. What I can say about BOBO is that at this point in time, the company is active in two fields. You have the jurisdictional field, if you will, the Chile because I need to underscore this was the desire was to reach conciliation. And should no agreement be reached, there would be a sentencing, and it was the purported noncompliance of the concession.

Now I think that what we’re seeing here is the delay in the works because it is a very complex work, which includes four hospitals in one single concession. Because it is one single concession, the activities cannot be looked at independently or separately because everything that has to do with this concession, including the financing thereof, is assessed by any potential investor as a single event. And any possible complication, and there were complications in a number of hospitals that slowed down the commencement because of permits and licenses, I believe, is to be attributed to the client here, the Ministry of Public Works, Ministerio de Obras Publicas. They say no. They say that some of the noncompliance is our responsibility.

We are debating this in formal terms. But parallel to that, we have conversations underway with the client. We are on a very positive track, and we do believe that we will shortly, in a couple of weeks’ time, be seeing a conclusion thereof. Thank you very much, Thomas, Victor. I don’t think I’m forgetting anything.

I don’t see any question that is pending response. If this is the case, please, our team, of course, our Investor Relations team will be more than happy to continue to address questions with all of you. Yes, we know that Bruno Navarro and another explanation regarding treasury, so cash flow and treasury. And then the sentences that are pending, Mohari, Seadra, BOBO, Servicios or Services and Canalajas, Corporate Governance. I think that all of the questions have been dealt with.

And if that is not the case, I repeat, we will be delighted to provide all and any information, confirmation and details necessary. I think that we have come to the end of our call then. Yes. Let me just say thank you very much to all of your good selves. Thank you very much.

I hope everyone has a great summer. Thank you, and goodbye.

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