Ferrovial, the world-leading infrastructure and services company, obtained 488.5 million euro in net profit in the first nine months of 2012, an improvement of 1.4% year-on-year.
The company's main businesses outside Spain performed well and offset declines in the domestic market resulting from the economic situation. It also landed major new contracts: maintenance services in Sheffield (UK) for 25 years and construction of the East Extension of the 407 ETR in Canada and US Route 460 in Virginia (US), as well as for the Padornelo and Del Espino tunnels for the high-speed railway to Galicia, and two waste treatment plants in the Canary Islands.
EBITDA in the first nine months expanded by 10.3%, to 660 million euro, reflecting the good performance of the businesses, cost control efforts, and the quality of the backlog. Sales in the period totalled 5.653 billion euro, an improvement of 2.5%.
EBITDA increased notably at the company's two main assets: by 10.1% at Heathrow airport and by 9.2% at Canadian toll road 407 ETR (in local currency terms in both cases), supported by increased traffic, higher tolls and fees, and efficient management.
Budimex, in Poland, registered 17.3% growth in revenues, and Webber also performed well, with improvements of more than 30% in its main operating line items. Amey's EBITDA rose by 11.4%, in line with the company's usual good performance, and sales by 21%. These figures reflect positive results of the company's businesses outside Spain.
The company further reinforced its international footprint in the first nine months of the year. Sales outside Spain accounted for 63% of the total, i.e. an increase of 20% compared with the same period last year.
Ferrovial ended September 2012 with a Construction and Services backlog of 22.460 billion euro, which assures activity in the medium and long term. International contracts accounted for 63% of the total backlog (57% in Services and 69% in Construction).
Two major transactions occurred in the period. In the second quarter, the company completed the sale of Edinburgh airport to GIP for 807 million pounds, i.e. 16.7 times 2011 EBITDA. The funds were used to pay down non-regulated airports bank debt of Heathrow Airport Holdings (formerly BAA). On 17 August, Ferrovial reached an agreement to sell a 10.62% stake in Heathrow Airport Holdings to Qatar Holding for 478 million pounds. The deal is still conditional upon obtaining approval from the European competition authorities, with the result that it is not reflected in the quarterly earnings.
At the end of the period, the net cash position (not including infrastructure project debt) amounted to 898 million euro, including dividend payments to shareholders totalling 203 million euro. Including infrastructure projects, consolidated net debt totalled 5.609 billion euro.
As part of the company's long-term strategy of funding through the capital markets and early refinancing, 407 ETR and Heathrow Airport Holdings both issued bonds, enabling them to optimise their capital structure and increase the dividend payout. In 2012, 407 ETR issued two long-term bonds worth 600 million Canadian dollars, enabling it to refinance the 2014 debt early. The toll road does not have notable debt payments until 2015.
Heathrow Airport Holdings issued bonds totalling more than 3 billion pounds, including issues in Swiss francs, US dollars and Canadian dollars, as well as several private placements. As a result, Heathrow Airport Holdings' current financial structure is based mainly on long-term funding provided by the capital markets.
Ferrovial also has 3 billion euro in liquidity, which, together with net and operating profit, ensure a solid financial position.
Services: revenues increased by 6.6%.
The Services division attained 2.204 billion euro in revenues in the first nine months of 2012, i.e. growth of 6.6%, while EBITDA increased by 3.8% to 216 million euro. The backlog increased to 13.397 billion euro, reflecting the company's new contracts, which include a 25-year contract to provide maintenance services in Sheffield (UK) worth approximately 1.400 billion pounds.
Revenues expanded in the UK and maintained the trend from previous quarters in Spain, attributable to the economic situation.
Amey increased revenues by 21%, to 1.118 billion euro, due to the commencement of contracts (including the UK Ministry of Justice) and to higher revenue from contracts in portfolio, some of which were related to extraordinary projects for the Olympic Games in London. The backlog totalled 7.672 billion euro.
Despite the economic situation, EBITDA in Spain remained stable at 139 million euro as a result of cost containment, and revenues totalled 1.086 billion euro. The backlog was 5.725 billion euro.
Toll Roads: recovery in traffic in the US and Canada
Toll road revenues fell by 2.3% with respect to the same period last year, to 293 million euro. Nevertheless, EBITDA rose 1.8% to 227 million euro.
Canada's 407 ETR, which is equity-accounted, stood out in particular, with revenues increasing by 8.9% and EBITDA by 9.2%, both in local currency terms, reflecting higher tolls and traffic performance. In the US, Texas State Highway 130 became operational on 24 October; the road will be managed by Cintra for the next 50 years.
In the second and third quarters, traffic on the company's US and Canadian toll roads exceeded the trend of the last twelve months, especially heavy vehicle traffic, due to the improved economy and the decline in gasoline prices from April highs.
Performance in 9M12 is reflected in the decline in traffic in Spain and Europe, due to the economic situation and the higher price of fuel.
In September and October, the Boards of Directors of the R-4 and Ocaña-La Roda toll roads agreed to initiate insolvency proceedings. The investment in both projects is fully provisioned and Ferrovial does not expect any major impact on its accounts.
Construction: 69% of the backlog is outside Spain
The Construction division obtained 3.169 billion euro in revenues in the first nine months of 2012, an improvement of 0.8% year-on-year. Performance in the period reflects advancement by the international business, especially Budimex and Webber, whose revenues increased by 17.3% and 38.4%, respectively.
The increase in projects outside Spain contrasts with the domestic backlog, impacted by the decline in public sector tenders. The Construction backlog totalled 9.063 billion euro, of which 6.255 billion (69%) come from activity outside Spain, in particular the 407 ETR East Extension contract. The backlog does not include the contract recently awarded to a consortium led by Ferrovial Agroman (70% stake) to build US Route 460 in Virginia for 1.396 billion dollars (total value).
Polish subsidiary Budimex increased revenues by 17.3%, to 1.097 billion euro. The company obtained an initial contract to design and build a waste treatment plant in Bialystok, a Cultural Encounter Centre in Lublin and one of its main bridges, providing access to the city.
Webber's key figures expanded by around 30% during the period due to the commencement of contracts awarded last year and to the greater level of execution of the LBJ and NTE toll roads in Texas.
Airports: Heathrow's revenues increase by 8.7%
Heathrow Airport Holdings attained 1.990 billion pounds in revenues, a 5.4% increase, while EBITDA amounted to 997 million pounds, a 4.3% increase.
Heathrow's traffic totalled 53 million passengers, i.e. 0.6% growth in the first nine months of the year. Sales amounted to 1.709 billion pounds, an 8.7% increase. Satisfaction levels were also high among passengers at Heathrow, which reached its highest ever during the quarter based on the survey on service quality conducted by Airports Council International.
Passenger numbers in the period exceeded the all-time record even though the numbers in July and August were 400,000 lower than in the same months of 2011. Many visitors avoided travelling to London during the Olympic Games. Traffic trends returned to normal in September while setting a new record. There was a notable increase in long-haul traffic on routes to and from Brazil, the Middle East and the Far East. A total of 75.8 million passengers used the airports in the first nine months of 2012.
The Scottish airports performed well, expanding traffic (+5.5%) and EBITDA (+5.5%), particularly in the case of Aberdeen (traffic +8.9% and EBITDA +15.6%).