- Revenues increased by 3.2% in like-for-like terms. There was notable growth in International Construction (17.4%), Amey (11%), Swissport (5.8%), Toll Roads (4.6%) and BAA (4.6%).
- The main assets reflected the recovery in economic activity in the third quarter: traffic increased by 5.4% on Canadian toll road 407 ETR and by 4.4% at London Heathrow airport.
- The joint backlog of Construction and Services expanded by 20% to end September at 22.542 billion euro; 60% of that figure is in the international area.
- Ferrovial is progressing with its policy of rotating assets and realizing their value, having sold 10% of 407 ETR, Cintra Chile and Tube Lines, and commenced the process to divest a minority stake in BAA.
Ferrovial, the world-leading infrastructure and services company, obtained 315 million euro in net profit in the first nine months of 2010, contrasting with losses of 191 million euro in the same period of 2009. Performance by the company's main businesses improved in the third quarter and it benefited from the positive impact of its policy of rotating and realizing the value of its assets, although the funds from the 407 ETR transaction are not included in this quarter's figures yet.
EBITDA also reflected the improved trading performance. It increased by 5.7% like-for-like in the first nine months of 2010 to 1.973 billion euro. Proforma revenues amounted to 9.107 billion euro, a 3.2% increase.
At the end of the third quarter, Ferrovial's Construction and Services backlog amounted to a record 22.542 billion euro, i.e. 20% more than at the end of 2009, ensuring future earnings visibility. The backlog reflects the company's internationalization, as 60% is in countries other than Spain. That proportion is 64% in the case of Construction and 57% in Services.
Symptoms of economic recovery
The performance by the business divisions reflects signs of economic recovery in most of the markets where the company operates. Construction revenues increased by 7% in the third quarter of 2010, while traffic on 407 Express Toll Route in Canada surged by 5.4% and traffic through Heathrow airport increased by 4.4%. Swissport, the handling subsidiary, benefited from this recovery, handling 33% more cargo in tonnage terms.
Excluding infrastructure projects, the company's net debt amounted to 1.106 billion euro at the end of the third quarter, i.e. 13.3% less than at the end of 2009. Consolidated net debt (i.e. including infrastructure projects) amounted to 20.512 billion euro at the end of the quarter, a decline of 8% (1.759 billion euro) with respect to 2009 year-end. The reduction is due to the classification of the 407 ETR toll road as available for sale; its debt totals 3.150 billion euro. This effect was partly offset by the exchange rate effect.
Notable financing operations in 2010 include the cancellation in September of BAA subordinated debt amounting to 1.100 billion pounds sterling. The company also funded such projects as the LBJ highway in the USA that requires an investment of 2.800 billion dollars.
Between January and September, Ferrovial continued with its policy of rotating assets, having sold 60% of Cintra Chile (229 million euro), BAA's stake in real estate company APP (280 million euro), and Tube Lines (239 million euro).
It has also completed three other deals whose results have not yet been booked: the sale of Naples airport (150 million euro), the sale of 50% of Trados 45, which manages a section of Madrid's M-45 highway, for 67 million euro, and of 10% of 407 ETR for 894 million Canadian dollars (640 million euro). Ferrovial's geographic and business diversification strategy has been maintained in recent years and is reflected in its income statement.
The international business accounted for 70% of revenues and 85% of EBITDA. The Airports division contributed 48.3% of EBITDA, Toll Roads 28.8%, Services 13.8%, and Construction 8.8%.
Services: Record backlog of 11.919 billion euro
The Services division attained 2.884 billion euro in revenues in the first nine months of 2010, i.e. growth of 3.6% in like-for-like terms, while EBITDA amounted to 272 million euro, an increase of 6.7%. The backlog increased 19.6% to a record high: 11.919 billion euro.
Swissport increased revenues by 5.8% to 961 million euro and EBITDA by 45.8% to 79 million euro, both in like-for-like terms. The Cargo business handled 33% more tonnage. UK subsidiary Amey increased revenues by 11% like-for-like to 819 million euro. The backlog amounted to 6.714 billion euro, up 32.1%, following attainment of a contract to maintain roads and other infrastructure in Birmingham. Additionally, Amey landed a number of contracts with Network Rail in the UK worth 103 million euro in total.
In Spain, Ferrovial Services offset the negative impact of the economic situation by controlling costs and pulling out of less profitable contracts. Revenues amounted to 1.105 billion euro (a 2.8% decline) and EBITDA to 131 million euro (-6.9%). The backlog amounted to 5.205 billion euro, a 6.5% increase.
Toll roads: Traffic on the 407 ETR increased by 5.8%
In like-for-like terms, toll road revenues rose 4.6% with respect to last year, to 762 million euro. EBITDA increased by 5.8% in like-for-like terms to 569 million euro. Canada's 407 ETR stood out in particular, with traffic increasing 5.8%. Revenues (340 million euro) increased 11.4% proforma and EBITDA rose 15.4% to 280 million euro. Traffic on Ireland's M4-M6 made a sharp recovery, increasing 4.7%. In June, the Company inaugurated Ireland's M3 toll road, which it will manage for 45 years.
Construction: 64% of the backlog comes from outside Spain
The Construction division obtained 3.313 billion euro in revenues and 173 million euro in EBITDA in the first nine months of 2010. The backlog expanded by 20.7% to 10.623 billion euro. The international business contributed revenues of 1.757 billion euro, i.e. 17.4% more like-for-like than in the same period of 2009, and EBITDA of 84 million euro, up 10.4% proforma.
The international backlog expanded by 46.2% to 6.751 billion euro, i.e. accounting for 64% of the division total. Budimex and Webber reported significant growth in the main line items during the period. Polish subsidiary Budimex expanded revenues by 19.1% to 701 million euro, while the US subsidiary Webber increased revenues by 7.4% to 366 million euro in like-for-like terms. In the US, the decline seen in previous quarters (revenues -20%) persisted due to a smaller volume of building and civil engineering projects. Backlog amounted to 3.872 billion euro in the period.
Airports: Traffic at Heathrow increased by 4.4% in the third quarter
Revenues at Ferrovial Aeropuertos totaled 2.091 billion euro, while EBITDA amounted to 953 million euro. In pounds sterling proforma terms, BAA reported growth of 4.6% in revenues (1.785 billion) and 7% in EBITDA (810 million). UK airport activity was affected during the period by the eruption of the Icelandic volcano, which closed UK airspace from 15 to 20 April, and by the 34-day strike by British Airways employees. Heathrow's traffic totaled 49.6 million passengers, practically flat (-0.6%).
Traffic increased by 4.4% in the third quarter, reaching record numbers in July and August. A total of 83.4 million passengers used BAA's airports. European flights gained ground at UK airports, accounting for 45% of the total, compared with 21% in the case of domestic UK flights and 34% for long-haul flights.