Hochtief AG

XETRA:HOT

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the HOCHTEIF Full Year 2022 Results Call. [Operator Instructions].

I would now like to turn the conference over to Michael Pinkney. Please go ahead.

[Michael Pinkney, Head, Corporate Strategy]

Good afternoon to everyone, and thank you for joining this HOCHTIEF '22 results call. I'm Michael Pinkney, Head of Corporate Strategy, and I'm here with our CEO, Juan Santamaria; our CFO, Peter Sassenfeld as well as our Head of Capital Markets, Tobias Loskamp and other colleagues from the senior management team at HOCHTIEF.

We are, of course, as always, looking forward to your questions. But to kick off, our CEO will run us through the key aspects of our performance during the last year. Juan, all yours.

[Juan Santamaria, Chairman]

Thank you, Mike and team and good afternoon to everyone, and thanks for joining us today. HOCHTIEF delivered a robust performance in 2022, notwithstanding the challenges of the current macroeconomic environment. Solid growth in revenues and profits was accompanied by an outstanding cash flow performance and a further expansion of our order book, particularly in high-tech infrastructure. HOCHTIEF also achieved a substantial simplification of the group's corporate structure, following the successful buyout of the minorities of our Australian subsidiary, CIMIC.

And now moving on to the numbers. Sales increased by 23% in 2022 to EUR 26.2 billion and were 12% higher in FX-adjusted terms. Operational net profit rose by 15% to EUR 522 million with nominal net profit of EUR 482 million compared with EUR 208 million in 2021. All divisions contributed to the growth in operational net profits.

HOCHTIEF's cash flow generation was very strong in underlying and nominal terms. Underlying cash flow from operating activities pre-factoring was EUR 1.2 billion and EUR 1.05 billion on a nominal basis. As a consequence, we ended 2022 with a solid net cash position of over EUR 350 million even after the significant investments made during the year, in particular, the CIMIC buyout and the MACA investment.

And at the end of last year, the group's order book stood at over EUR 51 billion and is up by EUR 3 billion or 6% since December 2021. Following a solid performance in 2022 across the group, we will be proposing a dividend of EUR 4 per share, more than double the previous year's level. The payout of 65% of net profit is in line with our dividend policy. Significant year-on-year dividend per share increased in part by our strong cash flow performance. For 2023, our guidance is for an operational net profit of between EUR 510 million and EUR 550 million.

On the next slide, we can see the group's outstanding cash flow performance in more detail. Underlying cash flow from operating activities pre-factoring in 2022 of EUR 1.2 billion was EUR 453 million higher year-on-year, driven by strong cash conversion across the group. Net operating CapEx ramped up to EUR 164 million in 2022 full year due to increased purchases of job-costed tunneling equipment at CIMIC for major projects. And underlying free cash flow from operations in the 12-month period stands at a high level of over EUR 1 billion.

On Slide 6, we can look at the cash development from a balance sheet perspective. HOCHTIEF ended the year with a net cash position of EUR 354 million. Adjusting for these strategic investments of EUR 534 million CIMIC, net of the HOCHTIEF capital increase and for the EUR 126 million for MACA, the balance sheet would show a net cash position of just over EUR 1 billion, a EUR 460 million increase compared with December 2021. And we further adjust our other nonoperational effects as well as dividends distributed, we can see a EUR 750 million increase year-on-year, as shown in the chart.

The next 2 slides show more detail on the development of the group's orders. Our order book stands at EUR 51.4 billion and is up by EUR 3 billion since December 2021. Over half of our backlog, this is 54% is located in North America with a further 38% in the Asia Pacific region and 8% in Europe. New orders of EUR 30 billion or 9% higher year-on-year. In the presentation, you can find more details on the solid performance in 2022 of all divisions. But now I wanted to take the opportunity to talk about our strategy, which is shown on Slide 13 to 15.

Our group strategy is to further strengthen HOCHTIEF's position on its core markets and to pursue selective growth opportunities, particularly in the rapidly expanding areas of high-tech and early transition sustainable infrastructure. In product, we continue to focus on further derisking our order book for lower risk contracts now account for over 80% of the total. In order to further develop our expertise and know-how in these high-growth markets, we have been enhancing our engineering competencies, continued our in-house development of new innovative digital systems and strengthen our logistics know-how. This has been complemented by several bolt-on acquisitions.

On the supply chain and logistics front, for example, we're transforming traditional procurement processes by increasing visibility for clients throughout increasingly complex supply chains. Furthermore, we're actively engaging industry-wide R&D networks with research, science and industry partners to drive innovation in our industry. Additional project-driven innovation is executed at an operating company level, and this strategic management of innovation is led by Nexplore, which operates development and research centers in the proximity of HOCHTIEF's main subsidiaries.

Looking globally, and notwithstanding the [indiscernible] macroeconomic challenges, several long-term megatrends related to climate change, digitization, demographics, urbanization and industrial relocation are driving a strong investment growth in specific areas where HOCHTIEF is well positioned as a key player and can deliver the best possible solutions for private and public clients across the value chain.

By harnessing our strong existing infrastructure skill set and local presence in key developed markets, we can maximize these growth opportunities by establishing a leading presence in the value chain of these high-growth industries, which we are well positioned to support. Let me give you some examples of the new orders we have secured; energy transition, digital infrastructure, new mobility and healthcare biopharma over the last 12 months.

First, the build-out of renewable energy and infrastructure needed for energy transition in all our key markets, including large-scale electric vehicle battery manufacturing capacity is a priority. The Turner joint venture is building a multibillion electric vehicle battery plant for Honda and LG Energy. In Ohio, annual production capacity will be some 40-gigawatt hours by the end of 2025. The facility will produce electric vehicles factories used to power vehicles from early 2026. The battery recycling JV project worth up to USD 1 billion in Kentucky has also been awarded to a construction management company, a joint venture who is managing the construction of our manufacturing facility for Ascend Elements. The first-of-its-kind plant will use the client's patented synthesis process to manufacture sustainable engineer battery materials from recycled batteries while lowering waste and cargo emissions. Once completed, the plan will create up to 400 jobs and produce enough material annually to power more than 250,000 electric vehicles.

In Australia, CIMIC's UGL has been appointed by Neoen to install a high-voltage infrastructure and a Tesla supply battery energy storage system in Queensland alongside a solar farm at the same site, thus allowing stored energy to be transmitted into the electricity network from early 2025. Furthermore, UGL is also constructing a hydrogen-ready power generation plant in New South Wales, Australia.

Pacific Partnerships has acquired the development rights for Glenrowan Solar Farm in northern Victoria, a large-scale solar farm to be developed by CIMIC, the company will develop, invest in to manage solar farm with UGL to undertake contraction, operations and maintenance. CIMIC has a strong history of delivering leading-edge renewable energy projects and through Pacific continues to actively drive our presence in emissions-free renewable energy sector. The 245-hectare solar farm will have an installed capacity of up to 130 megawatts and generate enough electricity to power approximately 45,000 Australian homes.

And back here in Germany, HOCHTIEF secured a joint venture contract for the construction of a battery cell factory value an approx EUR 240 million. We're also very well placed in the digital infrastructure sector, with the rollout of high-tech infrastructure in 5G and its applicability in state-of-the-art facilities is rapidly expanding. HOCHTIEF is strongly positioned in the market for data centers with an order book at the end of last year worth over EUR 4 billion. Some of our recent project wins include several data center project wins for Turner in Virginia, Ohio, Missouri, Texas and Nebraska, with projects being managed by a team of around 1,000 specialists. Leighton Asia is also very active in the data center market and recently won a contract to build a data center campus for a multinational technology corporation, the details of which are confidential. Overall, in 2022, the group secured digital infrastructure contracts worth over EUR 3 billion or around 10% of HOCHTIEF's total new orders.

Next, the transformation of traditional transportation infrastructure to new sustainable mobility concept is another area of growth. Some of our important project wins in the last 12 months are through UGL, subsidiary of CIMIC and through the U-Go Mobility joint venture, we were awarded a multiyear contract to operate the backbone for a connected, sustainable and intermodal transport network in city. The contract was fully commenced in July 23 is around 7 years and will provide revenue to UGL of approximately EUR 250 million. UGL, CPB and Pacific, in addition, are part of the Canberra Light Rail PPP consortium that is currently enhancing Canberra's world-class light rail system with new wireless light rail vehicles along with a great existing fleet over a 20-year period. UGL is also a member of the MTM joint venture, which operates Melbourne's Metropolitan rail network. And at the same time, part of the MTM's consortium, which operates the Sydney Metro Northwest.

Next, talking about healthcare and biopharma. This is another strong area for the group, driven by both demographics, aging population and technological advances. In the fast-growing biopharma segment, Turner will build a USD 725 million pharmaceutical plant in Colorado, producing oligonucleotides which help treat cancer and cardiovascular disease. New healthcare projects include the Boston Children's Hospital which Turner is building in Massachusetts, the new emergency department project at the University of Rochester in New York, and a radiation oncology treatment center in California.

In Australia, CIMIC has been selected for the early contractor involvement phase for the development of Sydney's Royal Prince Alfred hospital. CPB has also been selected by the New South Wales government to deliver the main works construction on the Nepean hospital redevelopment stage 2. The target awards is part of the government's EUR 1 billion expansion upgrade of the hospital. And our market-leading PBT capabilities are being applied in our core activities with complementary opportunities in these high-growth areas.

An active evaluation of capital allocation options is a key ingredient of the group's strategy to support HOCHTIEF's diversification, simplification and growth as well as our expertise in high-tech infrastructure. Last year, we completed the 3 important strategic M&A acquisitions with the CIMIC minority buyout and the MACA investment. In addition, several important bolt-on acquisitions were executed by CIMIC as part of this strategy.

Environmental, social and governance, ESG, is another strategic priority for the management. In 2022, HOCHTIEF published its sustainability plan 2025, with a commitment to be climate neutral by 2045. This plan comprises several targets, including net 0 for Scope 1 emissions by 2038 with a near-term objective to reduce emissions by 20% by 2025 versus 2019; net 0 Scope 2 target by 2038 with a 25% reduction by 2025; for Scope 3 indirect emissions net 0 by 2045. In addition, in terms of the circular economy perspective, we aim to achieve waste recycling of at least 80% by 2025 and to continue reducing their [indiscernible] with 0 waste to landfill by 2045.

We have recently announced that as of 2023, we will implement by the diversity management action plans for projects in environmentally sensitive areas. Furthermore, we continue to focus on social and governance objectives, including increasing the proportion of women's senior management and fostering diversity in the workplace.

So to wrap up, the group delivered solid 2022 results with an outstanding cash conversion performance, and we can, therefore, propose a significant increase to our dividend to EUR 4 per share, backed by our solid balance sheet, a firm order book and being well positioned in our core markets as well as the rapidly expanding sectors of high-tech, energy transition and sustainable infrastructure, we see a positive outlook for HOCHTIEF in 2023 and beyond.

Thank you very much to everyone for listening. And now I welcome your questions.

[Michael Pinkney, Head, Corporate Strategy]

Ready to take questions, operator. Thank you.

[Operator]

[Operator Instructions]. And the first question comes from Victor Acitores from Societe Generale.

[Victor Acitores, Societe Generale]

I have three questions, if I may. The first 1 will be on the resource, let's say, part of the business of CIMIC, if you can give us some color about the strategy and outlook of that division? This is the first one.

The second one is that if you can give some color about the cash conversion evolution for Leighton Asia, okay, is that -- if there is still room to improve in 2023, we have reached the level of 100% already or not, we have the room to improve? This is the second one.

And the third one will be related with the backdrop of high interest rates. You drive any strategy in the group in order to improve the cash debt structure currently on the back of the high outstanding debt that you have at the holding level, but also relevant net cash at Americas.

[Juan Santamaria, Chairman]

Thank you, Victor. So let me start with resources marketing in CIMIC. And we've been quite focused on, first, taking all the advantage of the growth in the resources market, which continues to bloom. But also, they diversify out of all coal. And in that sense, we've made a lot of progress in other metals. If you look, for example, at 2022, we won the 4-year contract in Mount Holland, which is a lithium mine in West Australia and that continues expanding our capacity lithium, which is currently quite important, and we're positioning as a significant player. But also, we won the Iron Bridge magnetite project in Western Australia, and we won the greenfield copper operations in South Australia. We continue expanding in tar in Chile. We won in Canada, I mean, the mine designed for the gold project through Sedgman. And we continue to expand our capabilities in our metals together with iron ore.

In addition to that, the MACA acquisition in that sense, has been very, very strategic because not only has diversified us in the Western Australia region, which we were not that important, but also is giving us a significant expertise in the iron ore market, which is a future not only at present, but also key for the future and in gold as well. So we are very, very much comfortable with the strategy and quite optimistic in the future. I also believe that there will be new projects in the U.S., and hopefully, we can announce some of that throughout the year.

In terms of the cash conversion of Leighton Asia, I always say the same, and I thought that '22 was going to be a time where a lot of these reconciliations would come to an end. I -- in Leighton Asia, we don't have losses, right? Our projects to not lose any money. They are good margins in general. And now to Hong Kong, Philippines, Indonesia, Singapore, India, et cetera. But the challenges are in Hong Kong, all our projects continues to bid because we are not getting the final reconciliation for the clients, so that will have to reverse.

So it's not that we are spending the cash and that cash flow for the last 3 years have been out and is not coming. It will come, but we need to make sure that we agree with the clients. We are not even in arbitrations on the projects, we are still in reconciliation phase or mediation depending on the project. And hopefully, we should be able to contain agreement soon. But again, I thought that 2022 would be one of those years, and it hasn't been. So I believe that in '23, we should start getting some of that back.

Related to the third, high interest rates, if you look at our margins, probably the high interest rates has been derivable that has affected the most to us. And you go through the regions, especially in the Asia Pacific region, just at CIMIC level, we saw an increase of $20 million on interest rates, which is substantial. And until it was affected in addition to the bad weather was affected as well by the high interest rates. Yes, when it comes to Germany, FX has been able to net some of that increase in the interest rates. But of course, that's the reality that we're facing. What do we expect in '23? I hope first that the sales continue to grow. Our backlog is very healthy, and I believe that we can continue increasing operational margins, and that will offset the growth in the interest rates. So that would be the first part of my answer.

At the second time part of my answer is more related about our debt structure. I mean a lot of our debt is long term. And also, we've been very careful, especially as we were navigating through COVID to have a lot of liquidity, right? So we were -- we prefer to have liquidity than retain debt. We are going to evaluate -- I mean, putting aside the long-term debt, but we're going to continue evaluating if this is the right approach or as interest rates continue growing, and we need to change our strategy.

[Operator]

And the next question comes from Luis Prieto from Kepler Cheuvreux.

[Luis Prieto, Kepler Cheuvreux]

I had two, if I may. The first one is, there's a sharp increase in order intake in Americas and Asia Pacific in the last part of the year. And you just reviewed a number of opportunities that seem quite encouraging in terms of your target niches, et cetera. So, what my question would be why the relatively conservative outlook aren't doing my math correctly, you're aiming for minus 2% to plus 5% growth in operating and profit year-on-year, which again, sounds a bit subdued.

And the second question is a very short one. Should we expect at any point in time this year a buyback?

[Juan Santamaria, Chairman]

So yes, I mean, we -- I mean, our -- when you look at the guidance on our expectations for '23 when it comes to margins, we're reflecting the increase in interest cost, which is something that we have to monitor. That's basically driving the flat message that we're giving potentially in Asia Pacific. But in HOCHTIEF, we're increasing material the guidance in Americas and also in Americas. So that would be my read. Now when it comes to the buyback, I will continue looking at options. I mean, right now, we're not thinking on specific buyback, but we will analyze throughout the year or our best options for capital allocation.

[Operator]

And the next question comes from Marcin Wojtal from Bank of America.

[Marcin Wojtal, Bank of America Merrill Lynch]

Yes. I had a few questions. The first one is on HOCHTIEF Americas profitability, which was down again about 60 basis points year-on-year. Obviously, I appreciate you have strong revenue growth. But my question is really, is there a deterioration in profitability that is underlying or it's a reflection of strong revenue growth or perhaps you are just accounting very conservatively in the U.S.

My question number two, could you maybe give some color on the operational performance of HOCHTIEF? Is there actually growth in Theiss on a year-on-year basis in 2022. And lastly, if I may, is there any update on the potential sale of your stake in Ventia in Australia?

[Juan Santamaria, Chairman]

So starting with the first one. First of all, if you look at HOCHTIEF Americas over the last years have always moved between 2.1% to 2.5% on a PBT basis, right number one. And we're still in that way.

Number two, there is a component, and we are at HOCHTIEF Americas, especially Futon is growing significantly in terms of order book and sales are going to continue increasing. So there's a kind of project mix because typically, that comes from Turner is driving lower margins from what is coming from [indiscernible].

The other component really changes every year is that from an equity perspective, it does it changes whether Turner is in equity accounted JVs or is consolidating on a proportion of patients projects. And this year has been one of those years in which there's a lot of proportional consolidation. So therefore, margins come down. Otherwise, for equity accounting, you wouldn't be taking the revenue, but you are taking the profit. So there's a little bit of that. However, and the most important thing in terms of outlook, a lot of the projects that we're winning right now we're just in initial phases for engineering with very low margins, so that's also contributing. And as we start building our new work in hand, I think that those margins can increase. So I'm not only -- not concerned on the contrary, I think that, that has a very positive outlook.

Talking about Theiss, this from an EBIT perspective, an EBITDA perspective is performing very well and has been performing very well over the last few years with the exception of this year and -- year of '21 because of the [indiscernible]. But it's not that material. The challenge with this comes at the financial interest and because of our agreement with Elliot, we are junior today. So they get the first 180 and we'll get the rest. So any effect of the interest rates and 5% to us. And that's what is affecting the performance in our NPAT as we consolidate the NPAT of this through our P&L.

And the third question, which is about Ventia, I mean we have announced in the past, we are -- I mean, we are clearly looking at options to invest our 30% from it. But we're not in a hurry. I mean we're not in a hurry. We could do in '23, '24, whenever we see a window.

[Operator]

And the next question comes from Graham Hunt from Jefferies.

[Graham Hunt, Jefferies]

Just two from me. I think you mentioned in your prepared remarks that lower risk contracts are accounting for over 80% of the total now. I don't know if you could give us some color how that breaks down regionally and also whether that's the level you're now comfortable whether you see further to go there?

And then second question, just on Abertis. Could you remind us of how you view that strategically within the HOCHTIEF Group today, whether there's any update on that?

[Juan Santamaria, Chairman]

Sorry, Graham. Can you repeat the second question?

[Graham Hunt, Jefferies]

Just on Abertis and its strategic road in HOCHTIEF, whether you have any updated view on that for us?

[Juan Santamaria, Chairman]

Okay. So starting with the low risk. If we move to HOCHTIEF North Americas, on 10% cost reimbursable alliance, progress in this and target cost loans. Flatiron is transitioning very, very fast into the low risk, and we are -- I mean, we are pretty close to 100%. The last 2 jobs that were won by Flatiron later announced a few days ago, North Carolina. Those are the only design deal of Flatiron has been securing in the last year. And that's because we have very good jobs, North Carolina is a very good market for Flatiron. They performed very well, and they've been working on previously in our jobs in the same area.

So I mean, or design build, but we're quite comfortable with that. If we move to Europe, in general, all what we're doing right now in Europe on a similar space, all of the cellular rates, unit prices, no design build, except on the building side, at the building side, we are very comfortable with the risk profile on the jobs we are taking. And that accounts for a relatively small percentage [indiscernible] we are talking about.

If we move into Asia Pacific, UGL all of those are -- in the case of this [indiscernible] rates, in the case of UGL service contracts of risk, 15% both, in Leighton Asia only to say the rates and construction lease and CPB is probably around the 70-30. Altogether, that's when we are talking about 80%, 20%. But I wanted to go through the detail because one thing is to talk about low risk, high risk. Typically, what we do is design build, [indiscernible] the rest, okay, which are cause reimbursable alliance, et cetera. But that doesn't mean that we're uncomfortable with the design lead. We are being very careful when we look at those jobs.

Then we move into the Abertis question. I mean from a 20% Abertis in HOCHTIEF, it's important. And right now, there's no perspective to change that if that was the purpose of the question. If we're talking about Abertis in general from a HOCHTIEF perspective or Abertis perspective, that 20% that we have. We -- I mean, I always say the same but Abertis is a very important asset for us, but we need to make sure that together with our partner, we continue investing and we continue finalizing Abertis. So it's too is binary. We're committed to it, and we believe that our points are committed to it. So we believe that we can have a very overt, but it's important that we focus on time.

[Operator]

And the next question comes from Augustin Cendre from Stifel.

[Augustin Cendre, Stifel, Nicolaus & Company]

I just have a follow-up question actually on the project risks. Given that we've seen numerous one-offs in the past few years coming from projects in Asia Pacific and Europe, could you elaborate a bit more on the risk you see on current projects. Here what I'm trying to understand is whether we can expect the end of one-offs going forward, at least -- at least with such a scale?

[Juan Santamaria, Chairman]

Okay. So I mentioned before, the difference between the percentage of low-risk projects versus the rest of the jobs. In our group risk report, not really you have been in front of you right now. But basically, we will talk about the C470, which is the job of Flatiron Colorado. We talk about Champlain Bridge, Texas Harbor bridge. We talk about the Adelaide Hospital and we'll talk about the Rastatt project in Germany. In all those jobs, except Texas harbor bridge are finished some time ago, they are in arbitrations. And I want to believe that the level of operations we have in books are enough. In any case, all those jobs can only mean cash for us, right, in the worst case. But of course, we believe that our provisions are okay.

When it comes to the Texas harbor bridge, last year, we've been working with the client, and I'm sure you can follow in the news. We got a green light for construction the permits. We make sure that we were driving the project in the right way to take satisfaction. And right now, I mean, we need to negotiate the terms of an agreement again, I want to believe that we are -- we have the right provisions on the job for that. Again, that depending on that, we'll have potentially an effect in P&L or positive or negative. But again, I don't think that those are supermarket I mean we're comfortable with our -- and is there any other risk that I can see right now in the group, no? I'm quite comfortable with of risk and the only ones that require the provisions that I mentioned are the ones I just described.

[Operator]

And we have a follow-up question from Luis Prieto from Kepler Cheuvreux.

[Luis Prieto, Kepler Cheuvreux]

I had a follow-up question on the outlook query that I had before. Basically, what I would like to know is to what extent is these affecting -- what's the contribution of Theiss to that outlook for this year? Are you expecting because of the interest rate pressure, a drop in the NPAT contribution or what is your take?

[Juan Santamaria, Chairman]

Yes. I was looking by another figures of Theiss in '21. So in '21, it is contributed to EUR 65 million plain basis. Sorry, EUR 65 million and an EUR 58 million, right? That will grow obviously because this acquired MACA, and we are not expecting that on 2018. How much? I can give you a range, but that's – that's more or less the level that we're talking about. In reality, I mean, Theiss should be -- if we are getting that impact, it means that obviously you need to outline patients another $180 million, which is what Elliot is getting. But as I said before, this impact is mainly because of the interest rates.

[Operator]

And the next question comes from Dario Maglione from BNP Paribas Exane.

[Dario Maglione, BNP Paribas Exane]

A couple of questions from me. One is on the free cash flow and cash flow conversion for next year. You expect any cash absolute on working capital as you move to lower these contracts in the U.S. or in Asia Pacific?

And the second question on -- if you can give us a bit of guidance for operating margins in Americas and Asia Pacific in 2023?

[Juan Santamaria, Chairman]

Okay. So starting with the cash flow. When we were moving from design build projects, CPB into Alliance [indiscernible] is yes, there was a significant unwinding. We've seen that over the last years, but the transition, I would say is that is almost completed, right? So I mean, there could be some unwinding of some of the old products of Flatiron, they're good, okay. But again, nothing that I'm concerned, nothing that -- it's not going to be offset by far by the new sales and the new contracts, which are going to provide very stable cash flows. And that's on one hand.

In terms of the margins, I would be -- if it was not because of the interest rates, I would be very comfortable to talk about an increase in margins because as we get into high tech business, those margins are higher than in the [indiscernible]. So the more we get new projects on the high tech on the energy transition on new mobility those, especially in high-tech and transition, those margins are higher. The only thing that I want to be cautious, and that's what is driving guidance is uncertainty around interest rates.

[Operator]

[Operator Instructions]. And we have another follow-up question from Graham Hunt from Jefferies.

[Graham Hunt, Jefferies]

Just on -- I wanted to come back to the new opportunities that you discussed in high-tech infrastructure. And actually, just wondered if you could provide any more color around your own capacity and capability to deliver these projects, are you seeing a pressure to invest to bring in capability to deliver these high-tech projects? Is the labor supply tightness, which is affecting potentially your own capacity to deliver them. I'm just trying to understand, as the business shifts towards these more complex projects, how does that impact the way you invest internally in talent and your own workforce?

[Juan Santamaria, Chairman]

So first of all, I mean, in order to be able to deliver the projects that we are winning right now, batteries, data centers, et cetera, et cetera. I mean, the biopharma we've been doing a lot of bolt-on acquisitions, small ones throughout the years that have allowed us to verticalize some of these specialties or expertise to be able to come unites projects. In addition to that, we have more than 1,000 people in the organization for these projects of different specialties, industrial engineers, et cetera, besides our traditional civil workforce. In addition, we built 2 new logistics hubs, one in the U.S. to source brew and one in Asia to make sure that we were able to make the supply chain, which is key for all of this, and we have to integrate mechanic integration capabilities and on the data center software integration capabilities. So all of this in the first phase, we've been able to achieve, thanks to all the reasons on the station.

Now let's talk about the future, okay? The future, we're thinking about hydrogen future or in our semiconductors, we're thinking on the next part of what's coming [indiscernible] is the future of the 5G infrastructure. And that's more complex. I mean there's -- we're exploring all different options. Right now, we've got alliances in all those fields or creating alliances in all those fields, important ones. In hydrogen sector, we are looking at uplands in Australia. We're looking at one plant in Chile and we'll do a point for those. We're looking in the semiconductor areas of different hubs in the U.S. through alliances. And we're trying to speak to our current clients on the data centers, especially the big files to see what's coming in the future. But if we wanted to grow internally, I do believe that there is a need for inorganic growth in those areas. It's difficult to grow organically or it's difficult to internalize small companies to achieve what we've been able to achieve on the battery sector of the data center. I'm sure if I answer your question.

[Operator]

There are no further questions at this time, and I hand back to Mike Pinkney for closing comments.

[Michael Pinkney, Head, Corporate Strategy]

Okay. Thanks very much, operator. So thanks to everyone for joining us. I'll just hand you back to Juan for closing.

[Juan Santamaria, Chairman]

Thanks for your time, for your interest and questions. And of course, if you have any follow-up questions, we are available on a service. Thanks again.

[Operator]

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.