FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16
of
the Securities Exchange Act of 1934
For
the month of August, 2016
Commission File Number 1-11080
THE
ICA CORPORATION
(Translation of registrant's name into English)
Blvd.
Manuel Avila Camacho 36
Col. Lomas de Chapultepec
Del. Miguel Hidalgo
11000 Mexico City
Mexico
(Address of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form
20-F.....x.... Form 40-F.........
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Indicate
by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes
..... No...x...
If
"Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
Empresas ICA, S.A.B. de C.V.
Second Quarter
2016 Unaudited Results
August 25, 2016, Mexico City
— Empresas ICA, S.A.B. de C.V. (BMV: ICA), announced today its unaudited results for the second quarter of 2016, which have
been prepared in accordance with International Financial Reporting Standards. During the fourth quarter of 2015, the Company suspended
the sale of its social infrastructure projects. Accordingly, these projects are no longer classified as available for sale, and
financial statements from prior periods have been restated for comparability. In addition, ICA is no longer consolidating San Martín,
effective on the fourth quarter of 2015, as a result of the reduction in ICA’s shareholding to 31.2% from 51%.
·
The Airports and Concessions segments grew 21% and 5%, respectively over the same period in the prior year.
·
Construction revenues in Mexico began stabilizing. The decrease in revenues of 34% versus 1Q16 was less than the 66% drop
versus 2Q15 and principally due to the slowdown in Facchina’s U.S. projects.
·
Ps. 2,999 million net loss generated principally as a result of the effect of a Ps. 1,675 million foreign exchange conversion
loss.
·
Comprehensive backlog was Ps. 58,630 million at June 30, 2016, of which Ps. 28,685 million corresponds to ICA’s participation
in non-consolidated affiliates and joint ventures.
·
The company continues to focus on its operating restructuring process. For the year to date, the company has reduced cost
and expenses by 50%.
Financial and
Operating Results
Second quarter consolidated net revenues
decreased 42% to Ps. 5,281 million from Ps. 9,042 million in 2Q15. This reduction was principally the result of the termination
of foreign projects.
Net revenues of the Construction segment
decreased to Ps. 2,007 million in 2Q16 from Ps. 5,943 million in 2Q15.
The consolidated net loss was Ps. 2,999
million in 2Q16. The net loss was principally the result of the foreign exchange conversion loss and the decrease in revenues due
to the slow-down in the projects in Facchina. Loss per share was Ps. 5.49 (US$ 1.2 per ADS).
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Liquidity and Debt
Total consolidated debt decreased 4.53%
to Ps. 64,556 million as of June 30, 2016, as compared to December 31, 2015. The decrease was principally the result of loan payments
to Santander, Deutsche Bank, Barclays, and Value that were secured by the pledge of OMA B shares, payment of a working capital
line to BBVA Bancomer, and scheduled amortizations of debt of operating projects.
Total cash was Ps. 6,949 million at June
30, 2016. The 16% total cash reduction was principally generated in non-restricted cash which decreased from Ps. 3,997 million
in June 2015 to Ps. 2,946 million in June 2016.
Comprehensive
backlog
Comprehensive backlog, including ICA’s
share of backlog of unconsolidated affiliates and joint ventures, reached Ps. 58,630 million at June 30, 2016, a decrease of Ps.
2,127 million compared to March 2016 and a decrease of Ps. 5,913 million compared to December 2015. Consolidated backlog was Ps.
29,897 million, down Ps. 1,232 million compared to last quarter. Total backlog of non-consolidated affiliates and joint ventures
(principally at ICA Fluor) decreased Ps. 1,802 million to Ps. 60,452 million, of which ICA’s proportional share was Ps. 28,685
million at June 30, 2016.
* ICA’s proportional share in
ICA Fluor
** ICA’s proportional share in
other affiliates and joint ventures
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Reduction in Costs
and Expenses
From January 2015 to July 2016, the workforce
has decreased 54%. In the same period, cost and expense has been reduced by 50%. This efficiency of resources has permitted the
company to maintain at close of 2Q16 an EBITDA margin of 20.5%, similar to the 20.3% reported for 2Q15.
Financial and
Operational Restructuring Activities
ICA is currently focused on the consolidation
of its operational restructure and ensuring the long term continuity of the business in order to be in the position to define its
financial restructuring plan.
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.
Subsequent Events
On
May 27, 2016, the company, together with its partners in the consortium, presented a mercantile lawsuit against the Government
of Mexico City (GDF) before the Mexico City courts, in order to recover the totality of the debt owed the consortium by the GDF
for the construction of Line 12 of the Mexico City Metro, including additional and extraordinary works, maintenance, and rehabilitation,
without waiving any of its other claims or existing lawsuits.
As
a result of the anticipatory termination of the TEC II Lazaro Cardenas Container Terminal, the company and the client are in the
arbitration phase, in which the company continues to assert its rights in the dispute regarding this project.
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Business
Segment Results
Construction
Revenues were Ps. 2,007 million in 2Q16
compared to Ps. 5,943 million in 2Q15. The slow-down was caused principally by our exit from international business and termination
of projects in Panama, Costa Rica and Colombia. Additionally, slow-downs in Facchina during 2Q16 have contributed to the decrease
in construction revenues.
An operating loss of Ps. 726 million in
2Q16 was caused by the above described decrease in construction revenues and due to higher costs in U.S. projects.
Construction backlog decreased 3.4% to
Ps. 29,897 million at June 30, 2016, compared to Ps. 31,129 million at March 31, 2016, principally due to our foreign exit strategy.
Construction debt decreased from Ps. 6,398
at December 31, 2015 to Ps. 3,770 million at June 30, 2016.
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Concessions
Revenues from operating concessions rose
9% to Ps. 483 million compared with the second quarter of 2015. The largest revenue increases came from La Piedad Bypass, the Rio
de los Remedios toll road, the Mayab toll road and the Río Verde – Ciudad Valles highway. This increase was partially
offset by a 14% drop in the Acapulco Tunnel revenues caused by a reduction in traffic volume.
Concessions total revenues increased 5%,
in the amount of Ps. 87 million to Ps. 1,878 million in 2Q16 from Ps. 1,791 million in 2Q15. This increase was principally the
result of revenue increases in operating projects.
Average daily traffic volumes [(ADTV)]
on operating highways increased 5% compared to 2Q15. The largest increases were on La Piedad bypass, the Río de los Remedios
toll road and the Mayab toll road with 13%, 5% and 5% increases, respectively. The increase on the consolidated ADTV was offset
by a slow-down in the Acapulco tunnel traffic volume of 19% compared to the same period in 2015.
The growth and higher contribution from
operating projects revenues to total revenues generated an increase in concessions’ adjusted EBITDA and adjusted EBITDA margin.
Adjusted EBITDA rose 12% to Ps. 1,169 million compared to the same period in 2015, while adjusted EBITDA margin increased from
58.5% in 2Q15 to 62.2% in 2Q16.
Debt of the concessions segment was Ps.
29,252 million at June 30, 2016, a decrease of 4% compared to June 30, 2015. Of total debt, 82% is debt for projects in operation
and 18% is debt related to projects in construction.
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Concessions Operating
Information
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Airports
Revenues increased to Ps. 1,327 million
in 2Q16, an increase of 21% compared to 2Q15. This growth resulted from: i) a 26% increase in aeronautical revenues and a 26% increase
in non-aeronautical revenues; ii) the opening of 11 domestic routes; iii) strengthening of diversification activities and iv) steady
improvement in commercial activities.
Airport construction revenues and costs
are not operational and represent the total value of airport asset additions. These non-cash items don’t have an effect on
operating income, adjusted EBITDA nor net profit.
Adjusted EBITDA increased 41% to Ps. 742
million in 2Q16, with a margin of 55.9%.
Debt in the Airports segment was Ps. 4,699
million at June 30, 2016, a decrease of 4% compared to December 31, 2015. The ratio of net debt to Adjusted EBITDA was 1.86.
Passenger traffic volumes increased 9%
to 4.5 million passengers in 2Q16. Domestic passenger traffic grew 10% and international passenger traffic decreased 2%.
ICA’s shareholding in OMA, direct
and indirect, was 14.32% at June 30, 2016. Among other factors, ICA’s holding of 74.5% of SETA, the strategic partner of
OMA that holds all OMA’s Series BB shares, enables ICA to exercise control of OMA.
The Airports segment includes
Grupo Aeroportuario del Centro Norte (known as OMA), Aeroinvest (now merged into Controladora de Operaciones de Infraestructura),
and Servicios de Tecnología Aeroportuaria (SETA). The earnings report of GACN, which is the operating company in the Airports segment, can be found at http://ir.oma.aero. Those results differ from the ones presented here as a result of consolidation effects.
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Consolidated Results for the Second Quarter 2016
Revenues
were Ps. 5,281 million
in 2Q16, a reduction of 42% compared to the prior year period. The reductions were principally the result of the 66% reduction
in Construction segment revenues partially offset by the increase in operating project revenues from the Concessions segment and
increase in Airport revenues.
Cost of sales
was Ps. 4,141 million
in 2Q16 compared to Ps. 7,371 million in 2Q15; the reduction was in line with the decrease in revenues.
Selling, general and administrative
expenses
decreased 19% to Ps. 528 million in 2Q16, and were equivalent to 10% of revenues. The accumulated reduction from January
2015 is 50%, approximately.
Other Income (expense), net
was
a Ps. 109 million expense, principally due to restructuring expenses.
Operating income
was Ps. 502 million
representing a 57% reduction, caused by the 66% drop in Construction revenues.
Adjusted EBITDA
was Ps. 957 million
in 2Q16, maintaining a margin of 18.1%, compared with a margin of 18.5% in 2Q15.
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Comprehensive financing cost
was
Ps. 2,955 million in 2Q16, representing a 69% increase compared to 2Q15. This increase in comprehensive financing costs is principally
due to the Ps. 1,675 million foreign exchange conversion loss.
Share in earnings of affiliated companies
and joint ventures
was a Ps. 225 million loss in 2Q16 principally affected by a loss in ICA Fluor caused by a recognition of
a contingency reserve for possible cost over-run in Los Ramones project. Supplemental information on the performance of affiliates
and joint ventures is presented in the Notes.
Taxes
reached Ps. 321 million,
and were affected by the charge, conservatively, on the asset for tax losses generated in the quarter by ICA and some of its subsidiaries.
The Company does not lose the right to use these tax losses before they expire in accordance with tax law.
Consolidated net loss
was Ps. 2,999
million in 2Q16.
Net loss of the controlling interest
was 3,357 million in 2Q16. The loss per share was Ps. 5.49 and US$ 1.20 per ADS.
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Capital Investments
and Divestments
During 2Q16, the company invested approximately
Ps. 1,062 million, principally in the construction works of Palmillas – Apaseo El Grande with Ps. 703 million and the Tunnel
Diamante with Ps. 164 million.
During the second quarter, the company
sold investments and assets totaling Ps. 314 million. The most important transactions were a sale of shares for Ps. 120 million,
sale of long-term assets for Ps. 143 million and the sale of real estate assets for Ps. 51 million.
Debt and Liquidity
Total debt as of June 30, 2016 decreased
by a net Ps. 3,061 million compared to December 30, 2015. Total accumulated debt payments and amortization were Ps. 5,892 million,
and included principally payment of loans from Santander, Deutsche Bank, Barclays, and Value that were secured by OMA B shares,
the payment of a working capital line to BBVA Bancomer, and scheduled amortization of debt of operating projects. Disbursements,
principally related to concessioned highways under construction, totaled Ps. 1,016 million in principal and Ps. 1,473 million in
total. Disbursements come principally from the Palmillas – Apaseo el Grande and the Diamante Tunnel projects. Other effects,
including currency fluctuations, were Ps. 1,370 million.
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Beginning in the fourth quarter of 2015,
the company announced the suspension of payments on unsecured debt, this suspension includes interest coupons on the Notes due
in 2017, 2021, and 2024. This decision resulted in the balance sheet reclassification to short-term of certain debt obligations
in the Construction and Concessions segments and the three corporate bonds that became due once there was a non-compliance on payment
obligations. A total of Ps.29, 287 million in debt was reclassified to short term.
Total cash was Ps. 6,949 million at June
30, 2016. Of this, Ps. 4,003 million was restricted cash, and Ps. 2,946 million was unrestricted, of which Ps. 1,916 million was
unrestricted cash held at OMA.
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Of total debt at June 30, 2016, 76% was
securities debt, and 24% was bank debt. Debt denominated in foreign currency, principally dollars, was 46% of the total. Short-term
maturities represent 49% of total debt; project-related debt represents 60% and parent company debt represents 40% of short-term
maturities, directly reflecting the administration’s efforts to reduce secured parent company debt.
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Consolidated Financial Statements
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Annexes: Supplemental
Information
Construction Backlog
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Non-Consolidated
Affiliates and Joint Ventures
Construction
Includes principally the results of ICA Fluor (51%), San Martín
(31.2%) and the construction companies for the Nueva Necaxa- Tihuatlán highway (60%).
Non-Consolidated
Backlog
At June 30, 2016, non-consolidated backlog
totaled Ps. 60,451 million.
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New contracts and net contract additions
were Ps. 2,484 million. The most significant were ICA Fluor projects such as DUBA Madero, Tula 4 A Packet, Tula Cocker Plant, Los
Ramones South Gasoduct, and San Martin mining construction projects among others. ICA’s proportionate share is Ps. 1,134
million.
Concessions
Includes principally the concessions for
the Nuevo Necaxa - Tihuatlan highway (50%) and the Mitla – Tehuantepec toll road (60%).
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Corporate and Other
Includes principally Actica (50%) and
Los Portales in Peru (50%).
Notes and Disclaimer
The unaudited condensed consolidated financial
statements of Empresas ICA, S.A.B. de C.V. and subsidiaries have been prepared in accordance with International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards Board (IASB) and presented in accordance with IAS 34 “Intermediate
Financial Reporting”. These financial statements include all the adjustments, including those of a normal and recurring nature,
required for an adequate presentation of the results of operations. Results for interim reporting periods may not be indicative
of full year results. As a result, the reading and analysis of these interim financial statements should be done in conjunction
with the financial statements for the year ended December 31, 2015, which were also prepared under IFRS.
Unaudited financials
: Financial
statements are unaudited statements.
Prior period comparisons
: Unless
stated otherwise, comparisons of operating or financial results are made with respect to the comparable prior-year period, or balances
as of December 31, 2015.
Percentage changes:
Are calculated
based on actual amounts.
Adjusted EBITDA:
Adjusted EBITDA
is not a financial measure computed under IFRS and should not be considered an indicator of financial performance or free cash
flow. We define Adjusted EBITDA as net income of controlling interest plus (i) net income of non-controlling interest, (ii) discontinued
operations, (iii) income taxes, (iv) share in net income of affiliates, (v) net comprehensive financing cost, (vi) depreciation
and amortization, and (vii) net interest expense included in cost of sales. Our management believes that Adjusted EBITDA provides
a useful measure of its performance, supplemental to net income and operating income, because it excludes the effects of financing
decisions, non-controlling shareholdings, and other non-operating items. The calculation of Adjusted EBITDA is also provided as
a result of requests from the financial community and is widely used by investors in order to calculate ratios and to make estimates
of the total value of our company in comparison to other companies. Financial ratios calculated on the base of Adjusted
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EBITDA are also widely used by credit
providers in order to gauge the debt servicing capacity of companies and are relevant measures under one or more of our or our
subsidiaries’ financing agreements.
Exchange rate
Amounts in U.S. dollars (US$) are converted
at an exchange rate of Ps. 17.3361 per U.S. dollar as of March 31, 2016, Ps. 14.9524 as of March 31, 2014, and Ps. 17.3398 as of
December 31, 2015.
Financial Derivative
Instruments
ICA enters into financial derivative contracts
in the subsidiaries where projects are located solely in order to reduce the uncertainty on the returns on projects. The instruments
entered into are established on a notional amount. Interest rate derivatives are used in order to fix maximum financial costs.
Exchange rate derivatives are entered into in order to reduce the exchange risk on projects that incur labor and materials costs
in a currency different from the currency of the financing of the project, as well as to convert foreign debt into domestic currencies.
ICA enters into its financings in the same currency as the source of repayment. ICA has a policy of not entering into derivatives
for speculative purposes.
From an accounting perspective, there
are two classifications for derivative instruments. “Hedging financial instruments” must meet the specific requirements
established in IFRS. Other derivative financial instruments that do not meet IFRS requirements for hedge accounting treatment are
designated as trading derivatives.
ICA values all derivatives at fair value.
Fair value is based on market prices for derivatives traded in recognized markets; if no active market exists, fair value is based
on other recognized valuation methodologies in the financial sector, validated by third party experts, and supported by sufficient,
reliable, and verifiable information.
Fair value is recognized in the balance
sheet as an asset or liability, in accordance with the rights or obligations derived from the contracts executed and in accordance
with accounting norms. For hedging derivatives, changes in fair value are recorded temporarily in other comprehensive income within
stockholders’ equity, and are subsequently reclassified to results at the same time that they are affected by the item being
hedged. For trading derivatives, the fluctuation in fair value is recognized in results of the period as part of Comprehensive
Financing Cost.
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Glossary
ADTV:
Average Daily Traffic Volume
is the number of vehicles that travel the entire length of a highway.
Concessions Revenues
are composed
of the following:
|
·
|
Operating revenue from concessions:
includes tolls and fee payments from the government
for the availability of PPP roads and or tariffs based on traffic volume, according to the type of concession.
|
|
·
|
Operations and maintenance:
revenue from the provision of services for operating and maintaining
highways for non-consolidated affiliates.
|
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·
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Financial income:
results from the i) reimbursement of the cost of financing obtained to
build infrastructure assets granted under concession arrangements and ii) interest income earned on concession assets accounted
for as long-term accounts receivable.
|
|
·
|
Construction:
the revenue recognized by the concessionaire for costs that are not attributable
to the construction company.
|
PPP:
Public-Private Partnership
is a legal mechanism that enables a private sector company to provide services to the federal, state, or municipal government clients
through fixed term licenses, generally from 20 to 40 years, to finance, construct, establish, operate, and maintain a public means
of transportation or communication. The client’s payment consists of a fixed payment for the availability of the highway
together with a minimum shadow tariff based on traffic volume.
ICA OVT:
Operational platform that
holds the concessions for four projects: the Acapulco Tunnel, the Mayab toll road, the Rio Verde-Ciudad Valles highway, and the
La Piedad Bypass. ICA has 51% ownership and CDPQ has 49%.
Analyst coverage
In compliance with the regulations of
the Mexican Stock Exchange, the following is the list of analysts that cover ICA’s securities:
Actinver - Ramón Ortiz
BBVA Bancomer - Francisco Chávez
Banorte-Ixe - José Itzamna Espitia
Barclays - Pablo Monsivais
Intercam – Alejandra Marcos
Monex - Roberto Solano
UBS - Marimar Torreblanca
Invex – David Arenas
This press release contains projections or
other forward-looking statements related to ICA that reflect ICA’s current expectations or beliefs concerning future events.
Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause
actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking
statements. These factors include cancellations of significant construction projects included in backlog, material changes in the
performance or terms of our concessions, additional costs incurred in projects under construction, failure to comply with covenants
contained in our debt agreements, developments in legal proceedings, unanticipated increases in financing and other costs or the
inability
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to obtain additional debt or equity financing
on attractive terms, changes to our liquidity, economic and political conditions and government policies in Mexico or elsewhere,
changes in capital markets in general that may affect policies or attitudes towards lending to Mexico or Mexican companies, changes
in inflation rates, exchange rates, regulatory developments, customer demand, competition and tax and other laws affecting ICA’s
businesses and other factors set forth in ICA’s most recent filing on Form 20-F and in any filing or submission ICA has made
with the SEC subsequent to its most recent filing on Form 20-F. All forward-looking statements are based on information available
to ICA on the date hereof, and ICA assumes no obligation to update such statements.
Empresas ICA, S.A.B. de C.V., carries out
large-scale civil and industrial construction projects and operates a portfolio of long-term assets, including airports, toll roads,
water systems, and real estate. Founded in 1947, ICA is listed on the Mexican stock exchange. For more information, visit
ir.ica.mx.
For more information,
contact:
Christianne Ibáñez
christianne.ibanez@ica.mx
relacion.inversionistas@ica.mx
+(5255) 5272 9991
x 3607
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Pablo García
pablo.garcia@ica.mx
Chief Financial Officer
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SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: August 26, 2016
|
Empresas ICA, S.A.B. de C.V.
/s/ Pablo Garcia
Name: Pablo Garcia
Title: Chief Financial Officer
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