Bloomberg News

Mota-Engil Chief Plans Overseas Growth After African Contracts

February 07, 2012

Feb. 6 (Bloomberg) -- Mota-Engil SGPS SA, Portugal’s biggest construction company, plans to counter a recession at home by expanding abroad and building on a $703 million deal in Malawi, its chief executive officer said.

Helped by contracts in Angola and Malawi worth $1.2 billion, the order book this year will be “much higher” than the more than 3 billion euros ($3.92 billion) predicted for 2011, CEO Jorge Coelho said in a phone interview. Two-thirds of the Porto-based company’s orders this year will be generated outside its home market as “Mota-Engil is increasingly worth more abroad than it is in Portugal,” he said.

The $1.2 billion in contracts, which include the deal to build a railway line in Malawi for Vale SA, the world’s largest iron-ore producer, helped double Mota-Engil’s order book this year to 1.6 billion euros in Africa, Coelho said. Mota-Engil hopes to partner with Rio de Janeiro-based Vale on other projects, he said.

“The new contract that was signed with Vale is of a brutal strategic importance to the group,” said Coelho. “We hope they will see us as a partner for other projects in other parts of the world.”

Mota-Engil rose 4.6 percent to 1.31 euros at 11:58 a.m. in Lisbon, giving the company a market value of 267 million euros. The shares climbed 20 percent to 1.25 euros on Feb. 3, the biggest jump since 1999, after the company announced the contracts in Angola and Malawi.

Acquisition Plans

A deepening recession in Portugal amid austerity measures aimed at complying with a 78 billion-euro bailout package from the European Union and the International Monetary Fund have prompted Portuguese building companies to seek more work away from home.

Mota-Engil operates in 20 countries, Coelho said. Declining orders in Portugal are being offset by “much stronger growth outside,” he said.

Plans announced last year for two small acquisitions in Brazil and Colombia are “ongoing,” said Coelho. The company is also looking at entering other markets, including Qatar.

Work on the railway in Malawi, which is part of the Moatize coal mining project’s Nacala Corridor, is due to be completed in 27 months.

The Portuguese company will also be part of the group building the Calueque dam in Angola for the government, according to a Feb. 3 regulatory filing. Other orders in Angola include a project to expand Sonangol EP’s gas stations and real estate work.

Mota-Engil is scheduled to announce full-year results for 2011 on March 14.

--Editors: Robert Valpuesta, David Risser.

To contact the reporter on this story: Henrique Almeida in Lisbon at halmeida5@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net


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