Highlights in 1H05: growth in revenues, margins and earnings in all business areas, progress in diversifying towards recurring activities, and a greater international presence
EBIT increased by 19.4% to 408.9 million euro:
– EBIT in recurring activities (infrastructure and services) grew by nearly 25% and now account for 60% of the total
– Construction EBIT exceeded 91 million euro (+19.8% on June 2004)
EBITDA amounted to 559.6 million euro, i.e. 18.3% more
Consolidated revenues totalled 4,073.8 million euro, a 16% increase;
– growth in all areas: Construction (+17.9%), Infrastructure (+21.4%), Real Estate (+3.3%) and Services (+15%)
– foreign revenues increased by 28.4% to 1.63 billion euro and account for 40% of the total
Growth is assured by the backlogs: construction up 8.7% to 6.886 billion euro; real estate up 5% to 1.058 billion euro and services up 8% to 5.758 billion euro. Positive traffic performance (toll roads and airports) and an increase in parking spaces (8.1%)
Capital expenditure in the first half of 2005 (623.4 million euro) exceeded the total for 2004. Investment capacity is intact, with leverage at 6%
Ferrovial ended 1H05 with considerable growth in revenues, earnings and margins in all its business areas, more diversification into recurring activities, and a greater international presence. The company´s investment capacity remains intact despite the fact that it invested more in 1H05 than in FY2004.
Net income in the period amounted to 198.2 million euro, i.e. 44.7% more than in 1H04. Eliminating the effect of non-recurring earnings (sale of 5% of Ausol and release of the provision at Autopista del Maipo, Chile), net income increased by 18.8%.
EBIT increased 19.4% to 408.9 million euro, driven by higher revenues, improved margins and performance by recurring activities (infrastructure and services), which grew nearly 25% and now account for 60% of the total. Construction continued to perform strongly, with EBIT rising 19.8%. EBITDA increased 18.3% to 559.5 million euro.
Revenues totalled 4,073.8 million euro, i.e. up 16%, boosted by all the activities: construction revenues rose 17.9% due to good performance by construction outside Spain (Poland, Portugal, Ireland, Italy and Chile) and an improvement in the domestic market; services revenues rose 15% due to Amey (which also added an additional 33% of Tube Lines) and positive performance in Spain; infrastructure revenues increased 21.4% due to traffic growth at toll roads and airports and the entry into operation of the Chicago Skyway and R-4 toll roads; and real estate revenues climbed 3.3% due to greater deliveries of homes and land sales.
International sales amounted to 1.63 billion euro (a 28.4% increase) and represented 40% of the company´s total sales. The foreign countries making the greatest contribution to group revenues were the UK (22%), Poland (7%), Canada (3%), Portugal (3%) and Chile (3%).
Gross capital investment in 1H05 amounted to 623.4 million euro: three times more than in 1H04 (208 million euro) and more than in full-year 2004 (389 million euro). Investments in the period were mainly to acquire Chicago Skyway (376 million euro), an additional 33% of the London Underground concession company (139 million euro) and machinery, mainly tunnel-boring machines. Additionally, in 1H05, Ferrovial acquired land worth 128 million euro for homebuilding.
As a result of these investments, the company had a net debt position of 184.5 million euro at 30 June 2005, representing 6% leverage, and maintained its investment capacity intact.
Construction: international activity surged, margins increased and the backlog was strengthened
Strong growth in construction revenues, which rose 17.9% to 1.98 billion euro, was due mainly to intense activity in projects in other countries such as Poland, Portugal and Ireland; production in Spain increased by 8%.
This division´s EBIT reached 91.2 million euro in the first half of 2005, a 19.8% increase, and the EBIT margin was 4.6% (4.5% in 1H04).
The construction backlog increased by 8.7% to 6.886 billion euro, equivalent to 21 months´ work. Capital expenditure increased 3.5-fold due to the acquisition of heavy machinery, principally tunnel-boring machines.
Polish subsidiary, Budimex, increased revenues by 53.6% to 261.5 million euro and expanded its backlog by 17.5% to 578 million euro.
Infrastructure: growth in traffic and margins, and commencement of operations in the US
Revenues in the Infrastructure division, which comprises toll roads, airports and car parks, increased by 21.4% to 350.8 million euro, driven by good performance by the toll roads and airports and a growing contribution from car parks. Commencement of operation of the Chicago Skyway and the R-4 (Madrid) also contributed.
Infrastructure EBIT rose by 24.4% to 139.1 million euro and the EBIT margin was 39.7% (38.7% in 1H04), mainly because of the improvement in the car park business.
Traffic performance on the main corridors boosted toll road revenues by 22.8% to 262 million euro and EBIT by 23.3% to 118.6 million euro. The 407 ETR”s performance is significant: EBIT rose by 25.7% on 15% growth in revenues, and traffic increased by 5.8% despite a toll increase on 7 February (peak tolls +7.2%). Since tolls were deregulated on the 407 ETR in 2003, they have been increased by 30%, while vehicle kilometres travelled (VKT) have risen by 16%. The daily record traffic of over 400,000 vehicles per day was exceeded three times in June (absolute record of 413,687 on 30 June).
Ferrovial began operating its first toll road in the US, the Chicago Skyway, which completed syndication of a senior non-recourse credit facility for $1.19 billion which was 100% oversubscribed by 15 international banks.
Car park revenues increased by 23.7% to 58.9 million euro and the number of managed parking spaces exceeded 214,200 in the period. EBIT increased significantly (50%) to 13.8 million euro and the EBIT margin rose to 23.4% (19.3% in 1H04).
The improvement in the airport business was due essentially to strong growth in traffic. Sydney +5%, Bristol +12% and Belfast +11%.
The refinancing of Bristol Airport was completed in May with a credit line of 515 million pounds (770 million euro). This refinancing operation enabled the airport to pay an extraordinary 88 million euro dividend; added to the dividends it paid in previous years, this means that 180% of the initial capital investment in 2001 has been recovered.
The real estate backlog (over 1 billion euro) guarantees 17 months´ sales
The large volume of properties delivered and land sales in 2Q05 enabled the Real Estate division to increase revenues by 3.3% to 381.1 million euro in 1H05. EBIT increased by 7.9% to 72.7 million euro and the EBIT margin reached 19.1% (18.3% in June 2004).
Pre-sales increased by 9.5% and the real estate backlog rose by 5% to 1.058 billion euro, guaranteeing sales for approximately 17 months.
Real estate brokerage, conducted through Don Piso, expanded revenues by 36% to 71.8 million euro.
Services: second-largest contributor to revenues and earnings
The Services area has established itself as the group´s second-largest generator of revenues and EBIT, accounting for 35% and 26%, respectively, of the total.
In the first half of 2005, the Services division obtained 1.439 billion euro in revenues (a 15% increase), boosted by the acquisition of an additional 33% Tube Lines (maintenance of London Underground) and good general performance, both in Spain and in the United Kingdom. EBIT totalled 106.4 million euro, a 24.9% increase. The EBIT margin rose to 7.4%, from 6.8% in 1H04.
Through Amey, the Services division has consolidated its presence in the UK, a market which represents 60.3% of the division´s total revenues and slightly over half of its EBIT. Amey´s EBIT margin improved to 6.4% (5.9% in 1H04).
Revenues in the domestic market increased by 10.2% to 569.9 million euro and EBIT by 20.5% to 50.5 million euro. The EBIT margin also improved significantly, to 8.9%.
The services backlog totalled 5.758 billion euro, 8% more than at the end of June 2004. That figure does not include the backlog of the London Underground maintenance and refurbishment contract, which represents 15 billion euro in revenues over the next 28 years.
NOTE: Adoption of International Financial Reporting Standards (IFRS)
The financial information for the two half-yearly periods being compared has been drafted in accordance with the new EU accounting regulations for listed consolidated groups.
Concession companies are awaiting the publication of a final interpretation on the specific method applicable to depreciation and amortisation
The draft interpretation that has been published allows companies to use the general IFRS method until the final interpretation is issued
Ferrovial has presented its 1H05 results under IFRS by adopting the following approaches: non-capitalisation of financial expenses on operating assets, and non-application of the IFRIC´s interpretations regarding the two proposed models (intangible asset and financial asset).
