MADRID | After the bubble burst, the category of construction activity rapidly turned into a trap for many Spanish companies. Its dramatic effects have during the last four years shaken and closed enterprises, in the small and medium size sections as much as among the large corporative groups. Those who strive to survive the downturn must now find an edge, and Obrascon Hurate Lain or OHL may have proved just that.

OHL has been awarded its second major contract in Russia, the company announced this week. The Spanish firm will build Olympic Flame, a tourist resort and sport infrastructures set to host mountain competitions in the 2014 Olympic and Paralympic Winter Games in the city ​​of Sochi, near the Black Sea.

Analysts in the financial City of Madrid said Friday in their investor notes that this deal show how OHL has raised its hability

“to carry out technically complex projects, which is helping OHL to offset the fall in demand in the domestic market.” Bankia Bolsa, Bsanalisis and Banesto Bolsa recommended overweight stock.

The budget for the latest Russian commission amounts to €497.5 million and the construction plan includes a 300-room hotel, which will reach a height of 245 metres, stylobate, water park, parking and ski resort, equipped with a network of tracks and lifts.

This is the second major contract in Russia for OHL. In December 2011, through its Czech subsidiary OHL ZS, it was awarded the Polar Ural project involving the construction of a railway of 390 km for the transport of coal and a budget of €1,95 billion. It was the largest construction contract so far in the history of the Spanish company.

The new project will be implemented in the National Park of Sochi, in the Krasnaya Polyana forest district, next to the river Mzymta. The plot has a total area of ​​510 hectares. Of this area, 147 hectares are devoted to buildings, sports facilities and infrastructures, which will have a total built area of ​​100,000 square metres. The contract was awarded by Sport-Olympic Flame Fond, a company set up for the project and self-financed, with the sovereign guarantee of the Russian government.

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Compared with May 2011, production in May 2012 dropped by 8.4% in the euro area and by 6.9% in the EU. These estimates were released by Eurostat, the statistical office of the European Union.

Month on month, among the member States for which data are available for May 2012, production in construction rose in eight, fell in six and remained stable in the Czech Republic. The highest increases were registered in the United Kingdom (+6.3%), Romania (+5.0%) and Portugal (+3.6%), and the largest decreases in Slovenia (-17.5%), Hungary (-4.1%) and Spain (-3.3%).

Building construction dropped by 0.2% in the euro area, but increased by 1.8% in the EU, after -3.6% and -7.7% respectively in April 2012. Civil engineering rose by 0.6% in the euro area and by 0.7% in the EU, after -3.9% and -4.8% respectively in the previous month.

In May 2012, year on year production in construction fell in twelve country members and rose in three. The largest decreases were registered in Spain (-24.8%), Slovenia (-23.7%) and Portugal (-16.4%), and the increases in Romania (+21.1%), Poland (+6.5%) and Germany (+2.2%).

Building construction declined by 8.6% in the euro area and by 6.3% in the EU, after -5.9% and -5.1% respectively in April 2012. Civil engineering decreased by 9.3% in the euro area and by 10.9% in the EU, after -9.3% and -10.9% respectively in the previous month.

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MADRID | In a bid to offset its exit from the Greek market, Alpine, FCC's subsidiary in Central and Eastern Europe, said it will concentrate a commercial offensive in its domestic markets. Alpine would have unpaid bills in Greece of up to €20 million, according to the Spanish press reports.

At a news conference in Gdansk, the company's new CEO Johannes Dotter announced that the company had already landed contracts worth close to €1 billion so far this year. They include the construction of a toll road in Oslo (Norway), worth €170 million, and 30 kilometres of railway line in Timişoara (Romania), in a joint venture with Avzi and Straco, which is worth €175 million.

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nalysts in Madrid noted that in the first quarter of this year FCC has generated 53 percent of sales in international markets. Alpine sales were 34 percent of FCC's international sales in 2011 or €3.26 billion.

Outside its natural territory, the new CEO highlighted two specific markets in East Asia: Singapore, where Alpine has been involved in the construction of several subway lines, and Hong Kong, where it has opened an office to explore business opportunities in the Chinese market. Also, Alpine built Baku Crystal Hall in Azerbaijan, which hosted the Eurovision Song Contest 2012.

Among the main projects currently under way at Alpine, Dotter cited the Gotthard base tunnel (Switzerland), which will be the world's longest tunnel (57 km), the Whitechapel and Liverpool Street stations, as part of the London Crossrail project, and the Singapore metro.

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It must be difficult to take decisions in this moment. This crisis is marked by the fact that many financial entities in trouble had been distracted or paid more attention to thinking about what they lost than to doing their work. I led the BBVA’s operations in Argentina during the “corralito”. Something we should know is that everybody is in the same situation, and even though with limitations, competition exists. Those who work hard, with dedication and willingness, will get a better relative position.

You mention the “corralito”. Do you think are there some similarities in Spain? To extrapolate the corralito to Spain’s reality within Europe is a very difficult tightrope walker exercise. Neither the soundness nor the foundations of the Spanish economy have anything to do with what happened in Argentina.

Capital outflows are registering record high levels. I think it is a momentary event, although it reflects investors confidence deterioration in our country. It should be interpreted wisely in order to put it into context within the current European instability. We should not forget that we belong to the euro zone, which acts as a safeguard from a currency crisis point of view, in the sense that the necessary financing will be covered in the end with the access to the Eurosystem.

The Spain’s risk premium has spiked, and Brussels is sending contradictory messages. What is the option that the Spanish banking sector should take? Europe has a very complex governance. The decision-making grounds on some specific agreements make the process very slow. We have never seen politicians spending such a great deal of time together, and this is what building up the European Union involves.

The Spanish financial system is under a very profound change. In the end, we will have a financial system much smaller in terms of players, but much more orthodox because they will be listed on the stock exchange, with shareholders, and consequently, more professional. However, there is no easy way, and it is difficult to carry out the necessary transformations when the economic environment is tough. The Spanish economy is showing unequivocal signs of competitiveness improvement, so that we will find the ground sooner or later to start gaining height.

According to the Treasury, the future of the euro depends on what is going to happen in Italy and Spain during the next weeks. Would you agree? This is the first EU severe crisis and we are learning on the ground how to manage it. If current stress remained in Italy’s and Spain’s sovereign debt markets, it would be a make-or-break moment for the euro. I am convinced that the European authorities will be able to reach an agreement about the kind of monetary, fiscal and politics union that country members may need in the medium term.

Sabadell has just been given Brussels’ approval to take the control of the Valencia region-based savings bank CAM. It was expected two months ago. What are the implications of this delay? It has meant some cost of opportunity. Every month of delay are months that you can considered as lost, because you cannot explain what you want to do. Anyway, we have had the fortune that the auditors have enable us to know the entity deeply, so that we have been punctually informed about all the important decisions which were to be made. And this is not a complaint at all about the work made by Brussels.

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MADRID | Spain’s Ferrovial announced Wednesday that its subsidiary Cintra Infraestructuras, in a 50% consortium with SNC-Lavalin, was awarded the €78-million contract for the first phase of the Highway 407 East project in Ontario, Canada. The group was appointed by Infrastructure Ontario and the Ontario Ministry of Transportation.

Phase one of the new highway will extend 22 kilometers east from Brock Road in Pickering, Ontario to Harmony Road in Oshawa, Ontario. It also includes a 10 kilometers north-south highway, east of Lake Ridge Road, connecting Highway 407 East to Highway 401. Highway 407 East will provide a seamless connection to 407 ETR. The contract is for a 30-year concession starting from the date the highway opens to traffic, which is scheduled for the end of 2015.

According to the Spanish company’s note release, highway 407 East will be publicly owned and controlled a tolled highway. The province of Ontario will set the toll rates and retain all toll revenues generated on the new highway. Construction will be headed by Ferrovial Agroman and its partner, SNC-Lavalin.

Ferrovial, through its subsidiary Cintra, currently manages close to 2,000 kilometers of roads in 20 concessions in the USA, Canada and Europe, leading the world’s private sector development of transport infrastructure.

On May 11, another Spanish company, ACS Group, also confirmed that financing for the construction of the Edmonton highway in Alberta, Canada, had been secured after the success of an initial bond issuance that obtained 500 million of Canadian dollars or €380 million. ACS’ is a 34-year duration contract valued at €1.4 billion.

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