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Romagna-based construction group CMC aims to grow revenues by 25% in three years

by Ilaria Vesentini

Romagna-based construction giant CMC expects to grow its revenues by €100 million per year as part of their three-year business plan, in order to reach their goal of €1.5 billion in turnover by 2019 (as compared to €1.2 billion in 2016). These growth prospects hinge on new contracts in both North and South America, as well as a takeover in Switzerland.

This plan will cause Italy to be overshadowed (as a market), “even though domestic turnover has remained steady at €0.5 billion, versus predictions that it would shrink to €400 million,” stated General Manager Roberto Macrì, “thanks to new high-speed railroad (TAV) contracts, since nothing else is doing much.”

All of this development has come from foreign countries: 84% of the €1.1 billion in new orders in 2016 came from abroad, on top of a €3.56 billion portfolio.

In order to support international orders, CMC signed a €20 million medium-to-long term loan with Interbanca (of the Banca IFIS group). There’s no financial reorganization in sight, said Macrì, even though (starting this year), the group could exercise their call option on the €300 million bond they launched in 2014: “The market wouldn’t look kindly upon a buyback operation for an issue that is currently at 94, even though it would be advantageous for us,” Macrì explained.

Their transformation from a cooperative into a corporation has been cut back by the three-year plan: “Nowadays, what international investor would put a dime into the capital of an Italian construction company,” Macrì asked, “which does a third of its business in a country that’s gripped by total political uncertainty, and which has no investment prospects? Today we wouldn’t even be able to place a bond like we did three years ago when 98% of the paper was bought by foreign investors.”

After 116 years of history, the construction and cement cooperative is still in the hands of 400 worker-shareholders (out of 7,597 employees). They aim for large projects, particularly water and underground works.

Their African construction sites comprise a third of their turnover, “and we don’t want to invest any further,” discloses Macrì, “just like in Asia, where we’re based in 13 countries that provide 25% of our sales. The challenge is to grow in the Americas. In Argentina, we’re at the top of the list in the competition to construct a $200 million tunnel in Buenos Aires (50% of which is split with Spanish firm Isolux-Corsàn). We want to make the leap into the USA, where so far we’ve only done minor civil works with our subsidiaries in New York and Boston. As CMC Ravenna, we’ve joined one of the three consortiums on the short list for extending Boston’s green line, a $1.5 billion competition.”

In Europe, CMC is courting a Swiss company in order to consolidate a partnership through joining their shareholders: “Our specialization in underground works will fit in well with the confederation, a nearby ‘pressure valve' for the domestic crisis,” said Macrì.