Ferrovial, the world-leading infrastructure and services company, obtained 100 million euro in net profit in the first three months of 2013, compared with 7.6 million euro in the same period last year.
EBITDA in 1Q13 amounted to 181 million euro, compared with 192 million euro in 1Q12, while revenues in the period declined by 1.8% like-for-like, to 1.643 billion euro.
Ferrovial obtained notable adjudications, among them a contract to design, build, finance and operate a new section of the North Tarrant Express in Texas, worth an estimated 1.38 billion dollars. Other important contracts include the construction of an industrial complex for copper production in Poland, for KGHM Polska Mied?; and the construction, operation and maintenance of a desalination plant in the Sultanate of Oman.
The company made two major investments in the first quarter of 2013 to strengthen the Services activity through profitable growth and international diversification. Ferrovial acquired Enterprise, one of the UK's leading providers of services to utilities and the public sector. The integration of Enterprise into Amey will create one of the most diversified companies in its sector, with over 21,000 employees and revenues in excess of 2.6 billion euro. The financial closure of this deal was achieved on 8 April 2013, i.e. after the end of the quarter and, therefore, it is not included in these results.
Moreover, in March Ferrovial announced the acquisition of 70% of Steel Ingeniería, a specialised mining services company in Chile. This is Ferrovial's first venture into mining services.
Ferrovial Services UK subsidiary, Amey, sold 40% of its stake of the portfolio of PFI projects to Dutch mutual fund DIF for 37 million pounds in March. Following the sale, Amey maintains a 10% stake in that company and operates the contracts. Capital gains totalled 20 million euro.
Also in the quarter, Heathrow Airport Holdings (HAH) completed the sale of Stansted airport to Manchester Airports Group (MAG) for 1.5 billion pounds, i.e. 16 times 2012 EBITDA. The funds are being used for the early amortisation of bank debt at HAH's regulated airports, the repayment of other debt, and the remainder to be distributed to shareholders.
Sound performance by the main assets
EBITDA increased notably at the company's two main assets: by 7% at the 407 ETR and by 10.7% at Heathrow Airport (in local currency terms in both cases). 407 ETR increased its quarterly dividend by 14.3% in 1Q13, to 100 million Canadian dollars, while HAH distributed 64 million pounds among its shareholders (an increase of 6.7%). Ferrovial obtained 57 million euro in dividends from the two companies in the first quarter of 2013.
The US construction business also performed well, with 46% growth, and Ferrovial Services continued to expand internationally, with new contracts in Poland and Qatar.
Ferrovial expanded its international footprint in the first three months of the year. Sales outside Spain accounted for 64% of the total, and increased by 4.6% compared with the same period last year. International contracts account for 63% of the total Construction and Services backlog (more than 70% in Construction and 59% in Services).
Ferrovial ended the first three months of 2013 with a backlog of 21.080 billion euro, ensuring the company's activity in the medium and long term.
At the end of March 2013, its net cash position (excluding infrastructure project debt) was 1.047 billion euro. The 442 million euro decline with respect to 2012 year-end is attributable to the seasonality of receipts, the lower cash flow at the beginning of the year, and the payment to the tax authority of withholdings from dividends distributed in December 2012. Including infrastructure projects, consolidated net debt totalled 5.756 billion euro.
As part of the company's long-term strategy of funding through the capital markets and early refinancing, Ferrovial successfully completed a 5-year 500 million euro bond issue with a 3.375% coupon in January. The funds raised were used for the early repayment of parent company debt, optimising the company's financial structure. The largest upcoming maturities are 661 million euro, which fall due to 2015, and 501 million euro, in 2018.
Services: international expansion
Ferrovial Services increased its profitability in the first three months of the year, compared with the same period of 2012. EBITDA increased by 2.8% in like-for-like terms to 71 million euro, despite a 1.9% like-for-like decline in revenues to 710 million euro.
The backlog remained stable, at 12.542 billion euro (+0.2% at constant exchange rates); the company began maintaining Telefónica's Data Processing Centre and providing road consulting services to Kent County (UK).
The backlog also included, for the first time, the results of Ferrovial Services' expansion into Chile, and the first road and building maintenance contracts in Poland, which contributed a total of 66 million euro. It does not include contracts arising from the acquisition of UK services company Enterprise, which was completed on 8 April following approval by the European Competition Authorities.
Amey obtained revenues of 353 million euro in 1Q13, i.e. 3.4% less than in 1Q12 in like-for-like terms, since last year the company was engaged in one-time projects related to the 2012 Olympics in London. Greater revenues from consulting contracts helped offset this effect. The backlog totalled 7.138 billion euro.
EBITDA in Spain increased by 49 million euro, due to cost containment, and revenues amounted to 345 million euro. The backlog amounted to 5.197 billion euro.
Toll Roads: traffic improved in North America
In like-for-like terms, Toll Road revenues rose by 10.1% with respect to last year, to 97 million euro. This figure reflects the entry into operation of the SH 130 in Texas, which Cintra will manage for 50 years, as well as the traffic performance and notable growth in tolls on the Chicago Skyway. EBITDA was 59 million euro.
Canada's 407 ETR, which is equity-accounted, stood out in particular, with revenues increasing by 6.5% and EBITDA by 7%, both in local currency terms. These figures reflect the combined effect of higher tolls as from 1 February and sound traffic performance, which was stable in the quarter, which had two fewer working days compared with the first quarter of 2012.
Traffic on US toll roads continued to recover, especially heavy vehicle traffic, in line with the improved economy and the decline in gasoline prices. Traffic remained strong on the Chicago Skyway despite a slight decline resulting from an average increase in tolls of 17.5% as from January. Traffic continues to recover on the Indiana Toll Road.
The trend in Europe in recent quarters persisted, due to the economic situation and the higher price of fuel. Spain was also affected by the VAT hike from 18% to 21% on 1 September 2012, which increased tolls by 2.5%.
Construction: large adjudications
The Construction division obtained 821 million euro in revenues in the first three months of 2012, a decline of 6% in like-for-like terms. The positive performance of the international business, especially in the US, partly offset the lower activity in Spain, impacted by a 45% decline in public tenders in 2012.
The Construction backlog decreased by 2.5% in like-for-like terms, to 8.538 billion euro. Of that figure, 5.982 billion euro, i.e. more than 70%, is located outside Spain and relates to toll road projects in Canada (407 East Extension), Texas (LBJ, NTE and the NTE expansion), and Virginia (US 460). Ferrovial's growing presence in North America is positioning it as a leader in the execution of highly-complex projects.
Webber's revenues expanded by 36% and EBITDA by 47%, both in like-for-like terms, due to the greater level of execution of the LBJ and NTE toll roads in Texas.
Budimex, Ferrovial's Polish subsidiary, obtained revenues of 189 million euro, i.e. a decline of 22% in like-for-like terms, reflecting the completion of major projects and the slowdown in public road tenders resulting from the temporary halt of European Union funding. After the end of the quarter, Budimex signed contracts worth more than 300 million euro, including initial adjudications to build a section of the A-4 highway in Poland and the new railway line in Gda?sk.
Airports: Heathrow's revenues increase by 6.7%
HAH attained 587 million pounds in revenues, a 7.3% increase, while EBITDA amounted to 256 million pounds, a 9.6% increase (both in like-for-like terms). These figures include Stansted's earnings until 28 February, when the sale to MAG was completed.
Heathrow's traffic reached a new record of 16 million passengers in the first three months of 2013, 1.8% more than in the same period of 2012. Revenues amounted to 494 million pounds, a 6.7% increase. Terminal 5 was recently named the world's Best Airport terminal by the prestigious Skytrax World Airports Awards.
There was a notable increase in long-haul traffic on routes to and from Brazil, the Middle East and the Far East, as well as some destinations in Europe. A total of 20.5 million passengers used HAH's airports in the first three months of 2013.