Net Income this quarter has been affected by reduced net exceptional items in comparison with the same period in 2007.
The contribution from international sales represented 63% of the total. In terms of Construction, international sales offset lower domestic sales. Consolidated net debt has been reduced by EUR1,087m
In spite of the impact of the foreign exchange rate and the forecast costs in BAA (Security and T5 opening)
Ferrovial has recorded sales of EUR3,245.2m (-4.8%) in the first quarter of 2008. When comparing these figures with the same period last year, one has to recognise that there has been a combination of various exceptional circumstances: firstly, the change in the consolidation perimeter after the latest disinvestments; secondly, the negative exchange-rate impact of the euro vs. two of the benchmark currencies, sterling and the US dollar, which devalued against the euro, by 14% and 16% respectively. These events have had a significant impact on sales. If these were to be compared on a like-for-like basis, net revenues would have increased by 2.6%.
Ferrovials EBITDA reached EUR556.7m in the first quarter of the year, 12.4% less than in the same period last year. In this period BAA saw operating costs increase 33%, as a reflection of the forecast rises in security and airport maintenance costs, as well as the opening of Terminal 5 at Heathrow Airport. The higher tariffs approved by the regulator on 1st April 2008 will enable the company to recoup these cost increases in the coming reporting periods.
The drop in net income was directly related to the fact that net exceptional items were lower in Q108 than in the same period last year. The companys net profits reached EUR78.5m (-82.5%). The disposal of World Duty Free contributed a capital gain of EUR179.4m vs. the EUR474.8m gain on the sale of Sydney Airport in the same period last year.
The contribution made to total sales by international business amounted to EUR2,043.6m, or 63% of the total. The remaining EUR1,201.6m was contributed by domestic business.
Ferrovials diversification in the last few years has resulted in Airports, Services and Toll Motorways representing 88% of EBITDA, with Construction making a contribution of 12%.
It must be highlighted that both the Construction backlog (EUR9,281.2m, 11% up on last year) and Services backlog (EUR10,086.8m, 12.3% up on last year) have shown notable increases. Both backlogs incorporate an important international contribution. Construction will develop 40% of its future business outside of Spain, whilst the international contribution made to the Services backlog is equal to 52% of the Services total. The contribution made by Tube Lines is not included in this figure.
Financial debt with recourse to the parent company totalled EUR2,272.5m at the close of the first quarter. Net consolidated debt was reduced this quarter by EUR1,087m to EUR29,177.4m.
Gross investment increased in the first quarter to reach EUR388.8m.
Airports: sales of EUR733.1m
Within the Airports division, in the year to March, ADIL (BAAs holding company) contributed EUR725.6m to sales, EUR211.8m to EBITDA and EUR45.6m to net profits. The results of this quarter were affected by the movements in the sterling/euro exchange rate (-14%), by the changes in the consolidation perimeter reflecting the disposal of various assets in 2007 and 2008 and by cost increases reflecting more spending on security and the opening of Terminal 5.
BAAs passenger numbers rose 1.2% YOY to 33.4 million. The performance of BAAs principal magnitudes is determined by their seasonality. Passenger numbers are higher in the second and the third quarters, and these two quarters make the biggest contribution to the profit and loss account.
The most important events of the first three months of the year were:
Toll Motorways and Parking: EBITDA growth of 15.3%
- The publication of the new tariffs for the next quinquennium approved by the CAA came into effect on 1st Apri 2008. The tariff for Heathrow is set at GBP12.80 per passenger for this financial year, authorized to increase by 7.5% + inflation yearly thereafter. For Gatwick it is set at GBP6.79 per passenger for this financial year, and has been authorized to increase by 2.0% + inflation yearly thereafter.
- The opening of Terminal 5 at Heathrow airport on 27 March 2008.
Sales at the Toll Motorways and Parking division grew 12.5% in the quarter to EUR255.8m. EBITDA reached EUR169.5m, up 15.3%, thanks to strong operating performance from the principal assets.
Cintras toll motorway business, including the parent companies, posted earnings growth of 14.4% to EUR220.9m in the first quarter. The Canadian 407 ETR motorway, which has the biggest turnover in the group, saw net turnover reach EUR78.3m, an increase of 12.7%. Other highlights of the period were the double-digit growth at Ausol (10.7%), Radial 4 (22.2%), the Chilean toll motorways (21.4%) and the Irish M4-M6 (16.9%). The substantial depreciation of the US dollar (-13.7%) reduced the euro earnings of the US assets by EUR2.9m. This was partly offset by the appreciation of the Canadian dollar (+0.5%) and the Chilean peso (+3.7%), which added EUR2.1m to turnover.
One of the main highlights of the quarter was that three months ahead of schedule, the Greek government handed over the operational section of Ionian Roads on 10 January, and the tolls from that section thus started to accrue to the concession company from that date.
During the first quarter, the refinancing processes for the 407 ETR and SH 130 have been finalized, and the senior debt of the Ionian Roads has been syndicated. These transactions, all completed in the first quarter of 2008, reflect the motorways capacity to refinance their debt or raise finance even in complicated market conditions like the present, as well as the markets appetite for high-quality assets.
Growth in earnings derived from Parking was 3.1% to EUR34.6m, thanks to the increase in the number of open parking spaces (+5.3%).
Services: the fastest-expanding division in terms of sales
In the first quarter of 2008, Services saw growth in its principal magnitudes, both in sales and in the EBITDA, which both increased by 3.4%, to EUR1,156.6m and EUR209.9m respectively. Eliminating the impact of the exchange rate, sales would have grown by 9.8% and EBITDA by 9.7%. The backlog grew 12.3% to EUR10,086.8m.
This division is becoming increasingly international: business outside Spain now represents around 67% of sales and 52% of EBITDA. En particular, Services are becoming more important in the UK through Amey. The British market now accounts for nearly 43% of total earnings, or EUR496m. Amey made operating profits of EUR35m, a 10.5% improvement.
The handling operator Swissport increased sales to EUR281.8m (+2.8%) and EBITDA by 15.1% to EUR11.4m. These improvements are explained by increased activity and the 2007 cost optimisation programme. In the domestic market, sales growth in the Services division reached 11.3% to EUR378.5m, and EBITDA grew 3% to EUR51.8m. The backlog increased 22.7% to a total of EUR4,838m.
Construction: the backlog increased 11%
Sales in the Construction division reached EUR1,119.3m, 8.1% lower than in the first quarter of 2007. The return was similar to the level achieved in the same period last year. At the end of the first quarter, the backlog stood at EUR9,281.2m, an increase of 11%. This strong growth guarantees the visibility of results for the next few years.
The new contracts awarded in various international markets are the principal driver of this backlog, and represent now 40% of this figure. In 12 months, the international element of this backlog has increased from EUR2,571m to EUR 3,664m (+42.5%).
In Poland, Budimex posted notable growth in sales (+10.9% to EUR187.9m) and in its backlog (+16.3% to EUR936.1m). In the US, Webber contributed sales of EUR68.2m and a backlog of EUR557.9m (+10.8%). Owing to the declining activity in the domestic market with respect to Q107, in which various important contracts were completed, sales in Spain have decreased by 14%.