Ferrovial reported a net negative result of -161 million euro due to provisions booked at Amey for its contract with Birmingham City Council

Ferrovial, the world-leading infrastructure operator and manager of services for cities, reported a net negative result of -161 million euro in the first quarter of 2018 as a result of booking a 237 million euro provision for possible losses on Amey’s contract with Birmingham City Council. The net profit reach 76 million euro (+3.3% compared with last year) eliminating this effect. EBITDA amounted to -75 million euro, or 162 million euro without the impact of the provision. Other factors that affected EBITDA were the conclusion of Broadspectrum’s immigration-related contracts in Australia and deconsolidation of the Portuguese toll roads. The decline in Amey’s activity in the United Kingdom also had an impact.

The company’s main infrastructure assets — 407 ETR in Toronto, Heathrow airport and the Managed Lanes in Texas — performed very well, providing 113 million euro in EBITDA in proportionate consolidation terms, applied to the holdings in assets recognized by the equity method, which provides a more accurate picture of the company’s performance.

Revenues amounted to 2,704 million euro, supported by growth in Construction and Services in Spain, though they were stable in like-for-like terms.

Ferrovial collected 108 million euro in dividends from the assets in which it holds a stake: 407 ETR distributed 226 million Canadian dollars (+9%), Heathrow 114 million pounds (+21%) and AGS 12 million pounds. No cash gains on assets sales were reported this quarter, contrasting with the 59 million euro reported in the year-ago quarter on the sale of 3.9% of Budimex.

The backlog amounted to 31,000 million euro, of which Services account for 20,016 million euro and Construction for 10,918 million euro; 79% of the backlog is located outside Spain (74% in the case of Services and 89% in the case of Construction). The backlog does not yet include over 1,300 million euro in international construction contracts that are pending financial close.

Traffic growth and performance by the main assets

Toll road and airport traffic, in Europe and America, continued to rise, supported by economic performance in those regions: 407 ETR (+2.5%), Heathrow (+3.1%), LBJ (+6.6%), NTE (+6.5%), and Ausol I (+10.3%).

EBITDA increased significantly at the company’s main assets: by 13.8% at 407 ETR in Canada and by 5.2% at Heathrow Airport (in local currency terms in both cases). Traffic performance on 407 ETR boosted revenues by 10.7% in local currency terms, while Heathrow attained 17.7 million passengers, resulting in a 3.9% increase in revenues to 680 million pounds.

The Managed Lanes projects in Texas continued to increase their contribution to revenues and EBITDA. The LBJ achieved 22 million dollars in EBITDA (+22.4%) on 27 million dollars in revenues (+23.5%). The NTE reported 24 million dollars in revenues (+18.2%) and 20 million dollars in EBITDA, a 21.9% increase year-on-year.

Main funding transactions

The net cash position excluding infrastructure projects stood at 938 million euro, while project debt was reduced to 4,584 million euro, from 4,804 million euro at 2017 year-end.

Taking advantage of the favorable market situation, in the first quarter the company registered a European Commercial Paper program with the Irish Stock Exchange for at most 1 billion euro. Under this program, Ferrovial can issue commercial paper maturing between 1 and 364 days, enabling it to further diversify its capital market funding sources and manage available liquidity more efficiently.

Business units

Toll Roads experienced growth in traffic on most of the company’s assets. The widespread improvement in the US, Canada, Europe and Spain became firmly established. Revenues amounted to 95 million euro, with a higher contribution from the Managed Lanes in Texas, and EBITDA achieved solid 9.7% growth in like-for-like terms. Ausol I continued to increase traffic, achieving a 10.3% improvement in the quarter due to tourism and good general economic performance.

Services revenues amounted to 1,560 million euro, and EBITDA, excluding the impact of the provision for the Birmingham contract, amounted to 75 million euro. Spain performed well, with revenues up 3.9% and growth in EBITDA. International revenues, from such countries as the US, Poland, Chile and Portugal, increased by 11.8% to 125 million euro. Broadspectrum, the Australian subsidiary, achieved 397 million euro in revenues in the quarter, affected by conclusion of the immigration-related contracts.

Construction revenues exceeded 1 billion euro (+10.1% in like-for-like terms), 81% from international business, concentrated mainly in the US and Poland. Budimex (revenues +19.5%) continues to perform well, particularly in industrial and non-residential building projects. Webber contributed 180 million euro in revenues in the quarter (+15.3% in like-for-like terms). The backlog is slightly less than 11 billion euro, pending inclusion of over 1.3 billion euro in international projects that are awaiting financial close.

In the Airports division, HAH reported 3.9% growth in revenues and a 5.2% increase in EBITDA, both in local currency terms. The AGS regional airports achieved 3.7% growth in EBITDA on 2.7% growth in revenues, in local currency terms. The number of passengers using these airports was impacted by adverse weather conditions during the winter, which resulted in cancellations and temporary closures. Nevertheless, Aberdeen increased passenger traffic due to inaugurating new leisure-related routes to Spain, Portugal and Malta.