Growth in revenues, margins and earnings, progress in diversifying into recurring activities, and a greater international presence were the highlights of a period shaped by the acquisition of Webber (USA) and Swissport (handling)
EBIT increased by 20.8% to 631.1 million euro:
EBITDA amounted to 886.3 million euro, i.e. 22.3% more
- EBIT in recurring activities (infrastructure and services) grew by an average of nearly 27% and now account for 62% of the total
- Construction EBIT exceeded 143 million euro (+17%)
Consolidated revenues totalled 6.269 billion euro, an 18.2% increase:
Growth is assured by the backlogs: Construction up 5.2% to 6.901 billion euro; Real Estate up 8.4% to 1.119 billion euro and Services up 24.4% to 6.223 billion euro. Positive performance by traffic (toll roads and airports) and parking spaces (+8.1%)
Capital expenditure in 9M05 (915.3 million euro) is already 2.3 times higher than in FY04
Investment capacity is intact, with leverage at 4%
- considerable growth in all areas: Construction (+21.1%), Infrastructure (+23.2%), Real Estate (+5.2%) and Services (+15.6%)
- foreign revenues increased by 28.6% to 2.558 billion euro and account for 41% of the total
Ferrovial ended 9M05 with considerable growth in revenues, earnings and margins, an increase in diversification towards recurring activities (services and infrastructure), a greater international presence and two key transactions (acquisition of Texan construction group Webber and handling operator Swissport, both to be consolidated as from October). The company's investment capacity remains intact despite the fact that it invested 2.3 times more in 9M05 than in FY04.
Net income in the period amounted to 274.7 million euro, i.e. 23.2% more than in 9M04. Excluding non-recurring effects in both periods, net income would have increased by 23.3%.
EBIT increased 20.8% to 631.1 million euro, driven by higher revenues, improved margins and performance by recurring activities (infrastructure and services), which grew by an average of nearly 27% and now account for 62% of the total. Construction continued to perform strongly, with EBIT rising 16.9%.
EBITDA increased 22.3% to 886.3 million euro.
Net revenues totalled 6.269 billion euro, i.e. up 18.2%: Construction expanded 21.1% due to projects outside Spain (Poland, Portugal, Ireland, Italy and Chile) and an improvement in the domestic market; Services revenues rose 15.6% due to Amey (which also added an additional 33% of Tube Lines) and positive performance in Spain; Infrastructure revenues increased 23.2% due to traffic growth in toll roads and airports and the entry into operation of two new toll roads; and Real Estate revenues grew 5.2%, continuing the recovery that commenced in 2Q05.
International sales amounted to 2.558 billion euro (a 28.6% increase) and represented 41% of the company's total sales. The foreign countries making the greatest contribution to group revenues were the UK (21%), Poland (8%), Canada (3%), Portugal (3%) and Chile (3%).
Over 900 million euro invested and the investment capacity remains intact
Gross capital expenditure amounted to 915.3 million euro in 9M05, i.e. 2.3 times the figure in FY04. The main investments in the period were to acquire Texan construction group Webber (179 million euro), to obtain the Chicago Skyway concession (376 million euro), and to acquire an additional 33% of the London Underground concession company (139 million euro). The investment figure between January and September does not include the acquisition of Swissport (approximately 336 million euro) or the debt assumed in this company (310 million euro). Additionally, Ferrovial acquired land worth 187 million euro for homebuilding.
Despite these investments, the company generated a sizeable operational flow, so it had a net debt position of 128.6 million euro at the end of September 2005, representing just 4% leverage, and maintained its investment capacity intact.
Construction: market activity surged, the backlog was strengthened and the company entered the US
Strong growth in construction revenues, which rose 21.1% to 3.182 billion euro, was due mainly to intense activity in projects in other countries such as Poland, Portugal and Ireland, and to increased production in Spain. Construction EBIT totalled 143.6 million euro in 9M05, a 16.9% increase.
Ferrovial reached an agreement in August to buy 100% of Texan group Webber, which is specialised in infrastructure civil engineering, recycling of aggregates and extraction and supply of sand in Texas, the second-largest infrastructure market in the US. The transaction totalled 220 million USD (179 million euro). Webber's revenues in 2005 are expected to exceed 400 million USD (325 million euro) and its current backlog amounts to over 500 million USD (406 million euro).
The construction backlog increased by 5.2% to 6.901 billion euro at the end of 9M05, equivalent to 20 months' work. Capital expenditure in this division was 257.4 million euro for the acquisition of Webber and of heavy machinery, principally tunnel-boring machines.
Polish subsidiary, Budimex, increased revenues by 49.2% to 475.9 million euro and expanded its backlog to 534 million euro.
Infrastructure: growth in traffic and margins, and recovery of 44% of the investment in Chicago Skyway
Revenues in the Infrastructure division, which comprises toll roads, airports and car parks, increased by 23.2% to 567 million euro, driven by good performance by the toll roads and airports, a growing contribution from car parks, and the entry into operation of Chicago Skyway and the Radial 4 road.
Infrastructure EBIT rose by 26.7% to 237.5 million euro and the EBIT margin was 41.9% (40.7% in 9M04).
Good traffic performance on the main corridors boosted toll road revenues by 25.4% to 428.6 million euro and EBIT by 26.2% to 202.9 million euro. The 407 ETR's performance is significant: EBITDA rose by 22% on 17% growth in revenues, and traffic increased by 6.1% in terms of both the number of vehicles and the average distance travelled. Since tolls were deregulated on the 407 ETR in 2003, they have been increased by 30%, while vehicle kilometres travelled (VKT) have risen by 15%. The latest toll increase (peak hour +7.2%) was implemented in February.
The group began to operate its first toll road in the US, the Chicago Skyway; eight months after the acquisition, the group recouped 44% (206 million USD) of its initial investment after completing a 1.55 billion USD refinancing deal. The operation also improved shareholder IRR (internal rate of return) by over 150 basis points. The refinancing deal included placing a 1.4 billion USD bond issue in the US, the largest-ever toll road bond issue in that country.
The main contracts obtained were the M-203 road in Madrid (78.5 million euro for a 30-year concession), the only toll road to be awarded in Spain this year; and being selected to negotiate the concession for the M3 toll road between Clonee and North Kells in Ireland, where the investment is expected to be 600 million euro and the concession period runs for 45 years.
Car park revenues increased by 22.6% to 88.9 million euro and the number of managed parking spaces exceeded 215,000 in the period (+8.1%). EBIT increased significantly (+42.7%) to 20.4 million euro and the EBIT margin rose to 20.4% (19.7% in 9M04).
The improvement in the airport business (revenues +8% and EBIT +15.3%) was due essentially to strong growth in traffic: Sydney +4%, Bristol +13% and Belfast +8%.
The refinancing of Bristol Airport was completed in May with a credit line of 515 million pounds (770 million euro). This refinancing operation enabled the airport to pay an extraordinary 88 million euro dividend; added to the dividends it paid in previous years, this means that 180% of the initial capital investment in 2001 has been recovered.
The Real Estate backlog (over 1.1 billion euro) guarantees 20 months' sales
The Real Estate business continued the recovery that commenced in 2Q05, with revenues rising 5.2% to 510.8 million euro in 9M05. EBIT increased by 10.5% to 97.8 million euro and the EBIT margin reached 19.1% (18.2% in 9M04).
Pre-sales increased by 7.3% and the real estate backlog rose by 8.4% to 1.119 billion euro, guaranteeing sales for approximately 20 months.
Real estate brokerage, conducted through Don Piso, expanded revenues by 21% to 91.1 million euro.
Services: second-largest contributor to revenues and earnings, and entry into the handling business
The Services area has established itself as the group's second-largest generator of revenues and EBIT, accounting for 34% and 24%, respectively, of the total.
In 9M05, the Services division obtained 2.139 billion euro in revenues (a 15.6% increase), boosted by the acquisition of an additional 33% of Tube Lines (maintenance of London Underground) and good general performance, in both Spain and the UK. EBIT totalled 153.4 million euro, a 27.1% increase. The EBIT margin rose to 7.2%, from 6.5% in 9M04.
The services backlog totalled 6.223 billion euro, 24.4% more than in 9M04.
In August, Ferrovial acquired Swissport, the world's largest independent handling company, which operates at over 180 airports in 41 countries. The transaction values Swissport at 646 million euro: Ferrovial will pay 336 million euro for Swissport's shares and will assume its debt, which totalled 310 million euro at 2004 year-end. In 2004, Swissport's revenues amounted to 836 million euro and EBITDA to 66 million euro. Swissport will be consolidated as from October 2005.
Through Amey, the Services division has consolidated its presence in the UK, a market which represents 60% of the division's total revenues and slightly over half of its EBIT. Amey's EBIT margin improved to 6.8% (5.9% in 9M04). Amey's backlog grew 27.1% to 3.736 billion euro, not including the London Underground maintenance and refurbishment contract.
Service revenues in the domestic market increased by 9.4% to 856.1 million euro and EBIT by 14.7% to 66.5 million euro. The EBIT margin also improved significantly, to 7.8%.
| Net income
| Net financial debt
| Gross capital expenditure
| Construction backlog
| Real estate backlog
| Services backlog (*)
(*) Does not include the contract to maintain three lines of London Underground (Tube Lines)
NOTE: Adoption of International Financial Reporting Standards (IFRS) The financial information for the January-September period being compared was drafted in accordance with the new EU accounting regulations for Listed Consolidated Groups. Concession companies are awaiting the publication of a final interpretation on the specific method applicable to depreciation and amortisation. The draft interpretation that has been published allows companies to use the general IFRS method until the final interpretation is issued. Ferrovial has presented its 9M05 results under IFRS by adopting the following approaches: non-capitalisation of financial expenses on operating assets, straight-line depreciation of concession assets, and non-application of the IFRIC's interpretations regarding the two proposed models (intangible asset and financial asset).