Ferrovial reports 488.5 million euro profit

Ferrovial obtained 488.5 million euro in net profit in the first nine months of 2012, it said in a press release, an improvement of 1.4% year-on-year.

The Spanish company's main businesses outside Spain performed well and offset declines in the domestic market resulting from the economic situation. It also landed major new contracts: maintenance services in Sheffield (UK) for 25 years and construction of the East Extension of the 407 ETR in Canada and US Route 460 in Virginia (US), as well as for the Padornelo and Del Espino tunnels for the high-speed railway to Galicia, and two waste treatment plants in the Canary Islands.

Earnings before interest, taxes, depreciation and amortisation in the first nine months expanded by 10.3%, to 660 million euro, reflecting the good performance of the businesses, cost control efforts, and the quality of the backlog. Sales in the period totalled 5.653 billion euro, an improvement of 2.5%.

That earnings figure “has increased notably at the company's two main assets: by 10.1% at Heathrow airport and by 9.2% at Canadian toll road 407 ETR (in local currency terms in both cases), supported by increased traffic, higher tolls and fees, and efficient management,” Ferrovial explained.

Budimex, in Poland, registered 17.3% growth in revenues, and Webber also performed well, with improvements of more than 30% in its main operating line items. Amey's Earnings before interest, taxes, depreciation and amortisation rose by 11.4%, in line with the company's usual good performance, and sales by 21%.

The company further reinforced its international footprint in the first nine months of the year. Sales outside Spain accounted for 63% of the total, that is an increase of 20% compared with the same period last year.

Ferrovial ended September 2012 with a Construction and Services backlog of 22.460 billion euro, which according to the company assures activity in the medium and long term. International contracts accounted for 63% of the total backlog (57% in Services and 69% in Construction).

Two major transactions occurred in the period. In the second quarter, the company completed the sale of Edinburgh airport to GIP for 807 million pounds,or 16.7 times 2011 earnings before interest, taxes, depreciation and amortisation.

The funds were used to pay down non-regulated airports’ bank debt of Heathrow Airport Holdings (formerly BAA). On 17 August, Ferrovial reached an agreement to sell a 10.62% stake in Heathrow Airport Holdings to Qatar Holding for 478 million pounds. “The deal is still conditional upon obtaining approval from the European competition authorities, with the result that it is not reflected in the quarterly earnings,” Ferrovial pointed out.

At the end of the period, the net cash position (not including infrastructure project debt) amounted to 898 million euro, including dividend payments to shareholders totalling 203 million euro. Including infrastructure projects, consolidated net debt totalled 5.609 billion euro.

As part of the company's long-term strategy of funding through the capital markets and early refinancing, 407 ETR and Heathrow Airport Holdings both issued bonds, enabling them to optimise their capital structure and increase the dividend payout. In 2012, 407 ETR issued two long-term bonds worth 600 million Canadian dollars, enabling it to refinance the 2014 debt early. The toll road does not have notable debt payments until 2015.

Heathrow Airport Holdings issued bonds totalling more than 3 billion pounds, including issues in Swiss francs, US dollars and Canadian dollars, as well as several private placements. As a result, Heathrow Airport Holdings' current financial structure is based mainly on long-term funding provided by the capital markets.

Ferrovial also has 3 billion euro in liquidity.


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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.