Consolidation of a more services-oriented profile, entry into the US and increased exposure to London Underground were the key features of 2004
Excluding the extraordinary expenses associated with the Cintra IPO in 2004 and the reversal of provisions in 2003, net income increased by 16.1% to 334.0 million euro
EBIT increased by 24.5% to 765.8 million euro: recurring activities (infrastructure and services) accounted for 59% of the total
EBITDA rose by 20.7% to 1,069 million euro
Consolidated sales totalled 7,268.2 million euro, a 20.6% increase, with other countries contributing 2,692 million euro (+36.6%), 37% of the total
Continuing activity is assured by the backlogs: construction 6,721 million euro (+10.1%); real estate 1,000 million euro; services 4,973 million euro. Strong growth in traffic (toll roads and airports) and a notable increase in parking spaces (+14.5%)
Sizeable cash flow enabled the company to end the year with 139 million euro in net cash
Ferrovial obtained 556.8 million euro in net income in 2004, a 63.5% increase. Excluding the extraordinary expenses associated with the Cintra IPO in 2004 and the reversal of provisions in 2003, net income increased by 16.1% to 334 million euro. Significant progress was made in practically all business areas in 2004, with positive performance in margins and the main operating variables (backlogs and traffic), which guarantee activity over the coming months.
EBIT increased by 24.5% to 765.8 million euro, driven by growth in sales and improved margins. Non-construction activities accounted for 78% of the total and the more recurring businesses (infrastructure and services) represented 59%.
EBITDA increased by 20.7% to 1,069 million euro, up from 885.8 million euro in 2003. Services contributed almost 23% of EBITDA.
Net sales amounted to 7,268.2 million euro, a 20.6% increase, boosted mainly by the services and infrastructure divisions. Construction sales fell by 0.5%, contrasting with increases of 17.3% in infrastructure, 5.4% in real estate and a sizeable 81% in services.
International sales amounted to 2,692 million euro (a 36.6% increase) and they represented 37% of the company"s total sales. The United Kingdom accounts for 54% of foreign revenues, followed in importance by Poland (19%), Canada (9%), Portugal (8%) and Chile (6%).
Gross capital expenditure amounted to 389.3 million euro and was allocated mainly to the infrastructure and services divisions. The real estate division bought development land for a total of 213 million euro.
Strong cash flow enabled Ferrovial to end the year with 139 million euro in net cash. In 1Q05, payments were made for the Chicago Skyway concession (375 million euro) and the acquisition of another 33% stake in Tube Lines, raising leverage to 20% at present.
Construction: international activity surged, margins were stable
The 7% increase in foreign activity offset the gentle slowdown in domestic activity due to delays in some projects. Construction division sales slipped 0.5% in 2004 o 3,583 million euro, while EBIT gained 1% to 169.5 million euro; the EBIT margin was 4.7%.
The construction backlog grew by 10.1% in 2004 to 6,721 million euro, representing 23 months of activity. The domestic backlog accounted for 75% of the total and the foreign backlog for the other 25% (1,684 million euro). Polish subsidiary Budimex attained 489.3 million euro in sales and its backlog increased by 51.7% to 617 million euro after a year of intense bidding for projects.
Civil engineering accounted for 60% of the total backlog, industrial for 10%, and the other 30% was evenly distributed between residential and non-residential building.
Infrastructure: strong growth in traffic, and entry in the US market
The infrastructure division, which includes toll roads, airports and car parks, increased sales by 17.3% to 614 million euro and it attained 290.1 million euro in EBIT, an 18.2% increase on 2003.
The toll road division registered 452.6 million euro in sales (+16.5%) and 325.5 million euro in EBIT (+19.4%), driven by strong growth in revenues and traffic on the toll roads in Spain and other countries and to the opening of two toll roads: Radial R-4 (Spain) and Scut Algarve (Portugal).
The 407 Express Toll Route (407ETR) in Toronto made a major contribution: its sales increased by 7.4% to 247.2 million euro and its EBIT rose 8.7% to 142.5 million euro. The number of daily trips increased by 5.3% to 271,892 and vehicle kilometres travelled (VKT) rose 7.5% to 1,960 million in a year when tolls were raised by an average of 7.3%.
Sales in the car park area increased by 14.1% to 101.4 million euro and the number of parking spaces under management rose by 14.5% to over 207,000. In 2004, the Group acquired 100% of Estacionamientos Guipuzcoanos (Eguisa), one of Spain"s largest off-street car park concession companies.
Growth in key figures in the airports division was due basically to a sizeable increase in traffic. Sydney +12% and Bristol +20%. In 2004, over 35 million travellers passed through airports managed by Ferrovial.
Highlights in this area included the initial public offering of Cintra, which groups the toll road and car park businesses, and the entry into the US concession market through landing the Chicago Skyway and being selected a strategic partner of the State of Texas to design and plan the Trans-Texas Corridor over a 50-year period (one of the most ambitious infrastructure projects ever undertaken in Texas).
In January 2005, the Ontario Superior Court ruled in favour of the 407 ETR concession company and dismissed the Province of Ontario"s appeal against the arbitration decision issued on 10 July 2004, which stated that 407 ETR did not need any authorisation from the provincial government in order to increase tolls.
Real estate: backlog guarantees sales in the coming months
Residential development maintained a steady pace in 2004, with sales rising 5.4% to 768.1 million euro. EBIT increased by 10% to 146 million euro.
The backlog amounted to 999 million euro, assuring sales for the next 16 months, approximately. Realty brokerage, conducted through Don Piso, increased sales by 19% to 108.4 million euros.
The land bank assures activity in this area until 2008 (inclusive).
Services: consolidation of acquisitions and strengthening of Tube Lines (UK)
Completing the integration of the services activities enabled Ferrovial to position itself as one of Europe"s leading players in this area.
In 2004, the services area increased sales by 81% to 2,458.7 million euro, with EBIT amounting to 161.4 million euro, over twice the 2003 figure (+126.7%).
The division"s EBITDA margin improved significantly, reaching 9.9% (vs. 8.1% in 2003) due to positive performance in all areas. urban services, facility management and infrastructure maintenance.
The services backlog totalled 4,973 million euro, not counting the London Underground maintenance contract, which will provide 15 million euro in annual sales for the next 28 years.
After being acquired in 2003, both Amey and Cespa successfully exceeded the initial expectations on inclusion into Ferrovial"s services area. Amey, one of the UK"s largest services companies, attained 1,382.9 million euro in sales (+72.8%), with EBIT more than doubling (+113.7%) to 74.8 million euro.
In December 2004, Amey reached an agreement with Jarvis to buy the latter"s 33% stake in Tube Lines, a company which holds a 30-year concession to maintain and renovate three lines of London Underground. 100 stations and 335 km. of track. With this operation, which was signed in February 2005, Amey has strengthened its presence in a major asset by attaining a 66% stake and assuming full management of the contract to provide technical assistance in operating and maintaining the lines managed by Tube Lines.
Note: Amey"s 2003 figures only include 7 months (June - December).