Ferrovial, a global infrastructure operator and manager of municipal services, obtained 701 million euro in EBITDA in the first nine months of 2014, an 11% increase, on 10% growth in revenues to 6.488 billion euro, boosted by good business performance, particularly in Services and the international Construction area. International revenues increased by 13% to account for 69% of the total. The Board of Directors has approved the second edition of the Ferrovial Flexible Dividend programme.
Net profit amounted to 270 million euro, compared with 485 million euro in the same period of 2013, which included extraordinary items such as 137 million euro in capital gains on the sale of Stansted airport and 22 million euro on the sale of 40% of the Amey subsidiary that groups its PFI projects.
The total backlog is at an all-time high, 28.401 billion euro, of which 20.675 relate to Services and 7.726 to Construction; the figure does not yet include new contracts worth over 800 million euro in aggregate. In the first nine months of 2014, the company increased its international exposure, with the result that 69% of the backlog is located outside Spain (68% in Services and 74% in Construction). Notable new contracts include Interstate 77 in North Carolina; end-to-end management of non-medical services at the Ourense University Hospital Complex; waste collection in Madrid suburbs; renovation of the rail network in several UK regions; expansion of London Underground; and a number of road projects in Poland.
Driving the growth strategy
The company has undertaken a number of M&A transactions in the framework of its profitable growth strategy. In consortium with Macquarie, Ferrovial has reached an agreement to acquire Glasgow, Aberdeen and Southampton in a deal worth 1.048 billion pounds (about 1.317 billion euro). It also presented a bid, conditional upon the IPO, for 6.5% of Aena, which would give it Board representation.
Ferrovial also presented a non-binding offer for 100% of Australian company Transfield Services at 1.95 Australian dollars per share (i.e. a total of about 680 million euro). Transfield has about 20,000 employees and a presence mainly in Australia, New Zealand, the USA, Canada and Chile.
Ferrovial ended September 2014 with a net cash position (excluding infrastructure project debt) of 1.533 billion euro. Consolidated net debt amounted to 6.054 billion euro. The increase in this item with respect to December 2013 is mainly due to exchange rate fluctuations and to investments in toll roads under construction in Texas: NTE, LBJ Expressway and NTE 35W.
In the third quarter, Fitch Ratings upgraded the parent company's debt to BBB, with stable outlook, the same rating that Standard & Poor's has assigned for the last year.
In July, Ferrovial successfully completed its third bond issue: 300 million euro at 10 years paying a 2.5% coupon. The funds were used to optimise the corporate debt maturity calendar and reduce its cost, while also enhancing the company's investment capacity.
Also this year, Ferrovial arranged a new 5-year liquidity line amounting to 750 million euro which currently costs 80 basis points.
Steady growth by the main assets
EBITDA increased significantly at the company's two main assets: by 10% at the 407 ETR in Canada and by more than 12% at Heathrow Airport (in local currency terms in both cases). Traffic also continued the rising trend observed since the beginning of the year: 3.4% on 407 ETR, including growth in the number of trips and vehicle-kilometres travelled in all three quarters, while Heathrow reported 1.5% growth in passenger numbers to 56 million.
These results enabled 407 ETR to increase shareholder remuneration in the first nine months to 525 million Canadian dollars, while Heathrow Airport Holdings (HAH) distributed 203 million pounds in dividends. As a result, Ferrovial has collected 226 million euro in dividends from these investments so far this year.
The NTE in Texas was inaugurated on 4 October, nine months ahead of the original schedule. The road uses an advanced system of managed lanes on which tolling is dynamic. This concession, on one of the most congested corridors in the US, runs for 52 years and required an investment of 2.100 billion dollars.
In the Services division, integration of Enterprise and new contracts in the United Kingdom and Spain established the division as Ferrovial's largest in terms of revenues and EBITDA, which increased by 22% and 16%, respectively, in the period. The backlog reached another record high, 20.675 billion euro, including contracts recognised by the equity method; that is an 11% increase on 2013 year-end.
Toll Roads experienced traffic growth on most assets. The situation in Europe is gradually improving. Revenues increased by 1.6% to 323 million euro, despite adverse weather conditions in the US in the first quarter; SH130 put in a particularly strong performance.
In Construction, international activity continued to gain in importance, accounting for 77% of revenues and 74% of the backlog. During the period, Ferrovial Agroman landed major projects in Australia, Saudi Arabia and Brazil, as well as several road contracts in Poland. Total revenues were in line with last year, amounting to 2.936 billion euro, mainly as a result of completion of projects in the UK, and EBITDA increased by 16%. The backlog does not yet include new contracts worth over 800 million euro in aggregate.
As for Airports, HAH experienced 8.1% growth in revenues and an 11% increase in EBITDA, both in local currency terms. Almost 66 million passengers used the group's four airports in the first nine months. Heathrow continues to obtain record-high satisfaction indices, reflecting the improvements achieved in punctuality, safety and immigration. The unregulated airports (Glasgow, Aberdeen and Southampton) attained growth of 5% in passenger numbers, 5.7% in revenues and 9.8% in EBITDA.
Ferrovial Flexible Dividend
As part of the shareholder remuneration programme, the Board of Directors has established the warrant purchase price at 0.381 euro, which matches the amount of the interim dividend in 2014. A shareholder will need 41 warrants to receive a new share, and the reference price will be 16.012 euro per share. The period for trading warrants and for selling them to the company will begin on 4 November.