Renta 4 | Ferrovial (FER) remained in the red at the close of the first quarter. According to the company it registered losses of 98 M€ on making provisions of 345 M€ for the delays which have accumulated in the construction of two motorways in the US.
The Group presided by Rafael del Pino made this provision following that of 774 M€ which it made at the end of the year to sanitise the services division which it is selling and which led it to end 2018 with losses of 448 M€.
The results of Q119 are marked by the provision of 345 M€ registered in the construction division against possible future losses in various projects in the US for the increase in costs caused by the delays in design and increases in raw material prices. We calculate that the impact of the provision on our valuation is -0.50 €/share, -2% on the price at yesterday´s close.
At the operational level sales, slightly above expectations, rose +7.1% through the larger contribution of motorways (+5% in comparable terms). The net cash position is affected by the provision registered, without this impact it would be slightly below expectations.
Pending the operation of the sale of the services division, where the company has communicated that Amey, affected by its conflict with Birmingham City Hall, will not form part of the operation.
Despite the good performance of motorways and Heathrow, we think the construction division´s provision will be badly received by part of the market. We reiterate O.P 25 €, Overweight.
