Ferrovial, a global infrastructure and services company, obtained 710 million euro in net profit in 2012, compared with 1.243 billion euro in 2011. EBITDA amounted to 927 million euro, a 13.4% improvement compared with 2011, resulting from the good operating performance of all of its businesses and an efficient strategy of asset rotation, reflecting also the company's sound financial position. Revenues amounted to 7.686 billion euro, 3.2% more than in 2011.
The 42.9% decline in net profit is attributable to the extraordinary gains obtained in 2011 (1.073 billion euro). A significant portion of that figure did not represent a cash inflow since it was attributable to the revaluation of Heathrow Airport Holdings (HAH).
The company's businesses outside Spain performed well and offset declines in the domestic market resulting from the economic situation. In Toll Roads, traffic recovered in the US. In Services, Amey performed extremely well in the UK, where revenues increased by 16.1% and EBITDA by 4.4%. In Construction, Budimex expanded revenues by 7.3% in Poland, while at Webber, in Texas, revenues rose by 39.2% and EBITDA by 34.5%. In Airports, Heathrow registered an all-time record of 70 million passengers.
EBITDA increased notably at the company's two main assets: by 9.8% at the 407 ETR in Canada and by 11.9% at Heathrow Airport (in local currency terms in both cases), supported by increased traffic, higher tolls and fees, and efficient management.
During the year, the company obtained major contracts, including maintenance services in Sheffield (UK) for 25 years, two waste treatment plants in the Canary Islands (Spain), concessions for the Highway 407 East Extension (Canada) and the A-66 Benavente-Zamora toll road (Spain), construction of Route 460 in Virginia (US) and the Padornelo and Del Espino tunnels for the high-speed railway to Galicia (Spain).
Revenue outside Spain increased by 17%
Ferrovial continued to make great strides in internationalisation in 2012. Its geographic and business diversification strategy ensures greater resilience during economic downturns.
Revenue outside Spain accounted for 62.2% of the total, i.e. an increase of 17.3% compared with 2011. Ferrovial's backlog amounted to 21.483 billion euro, which ensures activity in the medium and long term; it also includes a greater contribution from projects outside Spain, which account for 61.8% of the total (70% in Construction and 56% in Services).
Also, as part of its strategy to rotate and monetise assets, Ferrovial completed two divestments totalling 16.34% of Heathrow Airport Holdings, selling 10.62% to Qatar Holding for 478 million pounds and 5.72% to CIC International for 257 million pounds. As a result, HAH added two highly solvent investors to its shareholder structure, reinforcing its financial capacity. The two transactions amounted to 876 million euro in total and generated 186 million euro in capital gains.
Net cash position: 1.489 billion euro
The net cash position (excluding infrastructure projects) maintained the positive trend for the sixth consecutive year, amounting to 1.489 billion euro, an improvement of 64% compared with 2011 (907 million euro). This notable increase came after distributing 832 million euro in dividends.
Operating cash flow (excluding infrastructure projects) totalled 909 million euro, up 78%. This reflects higher dividends received from 407 ETR (198 million euro), the commencement of dividend payments by HAH (143 million euro), and record-high cash flow in the Services division (491 million euro, i.e. three times the 2011 figure).
The company continued to reduce consolidated net debt, to 5.106 billion euro in 2012, compared with 5.171 billion euro in 2011.
This further strengthened Ferrovial's sound financial position, and today it has sufficient liquidity and flexibility to undertake investments in the coming years.
As part of the company's long-term strategy of funding through the capital markets and early refinancing of maturing debt, 407 ETR issued two bonds for a total of 600 million Canadian dollars, and HAH issued bonds exceeding 3 billion pounds. The success of these issues confirms investor confidence in the quality of the assets.
In January 2013, Ferrovial successfully placed a 5-year 500 million euro bond with an annual coupon of 3.375%. Demand for what was Ferrovial's first corporate bond exceeded 5.590 billion euro. The funds raised will be used for the early repayment of parent company debt, further optimising the company's financial structure.
Both Standard & Poor's and Fitch confirmed Ferrovial's "investment grade" rating.
Services: revenues up 4.6%
Ferrovial Services saw profitability increase in 2012 as a result of new contracts and also of cost controls. In spite of the adverse situation, revenues totalled 2.951 billion euro, a 4.6% increase with respect to 2011. EBITDA amounted to 314 million euro, a 0.6% increase. Growth in the United Kingdom offset the lower activity in Spain.
The backlog amounted to 12.784 billion euro, an increase of 2.9% year-on-year.
Amey's revenues expanded by 16.1% to 1.491 billion euro, while its EBITDA increased by 4.4% to 118 million euro. The backlog at year-end amounted to 7.207 billion euro, 15.3% more than in 2011. During 2012 were of note the award of the infrastructure maintenance in Sheffield and the contract with the UK Ministry of Justice, along with the start-up of a number of other contracts.
In Spain, the highlights were the award of two treatment plants in the Canary Islands; the renewal of the contract to maintain green areas in Madrid; the maintenance of a number of stretches of national highways; a new call centre contract with Madrid city government; an energy management contract in Torrejón and an energy services maintenance contract in Soto del Real.
Cespa and Ferroser together attained 1.461 billion euro in revenues in 2012 and 195 million euro in EBITDA; their backlog at year-end amounted to 5.577 billion euro. Although these figures reflect a decline in activity due to the economic situation, margins remained stable with respect to 2011 as a result of cost controls and active management of backlog quality.
Toll Roads: good performance in the United States and Canada
The US and Canadian toll roads maintained their good performance in 2012. In the US, both Chicago Skyway and Indiana Toll Road saw traffic recover, especially heavy vehicle traffic, due to the improved economy and the decline in gasoline prices from their April highs.
Canadian Highway 407, Cintra's largest asset, which is equity-accounted, increased revenues by 8.7% and EBITDA by 9.8%, both in local currency terms. These figures are due to increases in both tolls and traffic (in terms of both number of trips and average distance travelled). These results led to an increase in dividends from 407 ETR to 198 million euro.
Overall, Toll Road revenues declined by 2.1% year-on-year to 381 million euro while EBITDA amounted to 272 million euro. Profitability was affected by the decline in traffic in Europe, due to the economic situation and the higher price of fuel, which was partly offset by higher tolls.
In 2012, the consolidated group expanded due to the inauguration in November of SH 130 in Texas, which Cintra will manage for 50 years, and the Azores toll road, which came into operation in December 2011.
In Spain, the R-4 and Ocaña-La Roda toll roads were granted protection from creditors at their own request in October and December, respectively. The investment in both projects is fully provisioned and these developments will not have a material impact on Ferrovial's accounts.
As for future prospects, the company is examining projects in North America and Europe as well as the possibilities offered by new markets such as Australia and Latin America.
Construction: 70% of the backlog is outside Spain
The Construction division obtained 4.326 billion euro in revenues in 2012, an improvement of 1.9% year-on-year, while EBITDA increased by 36.8% to 337 million euro.
Performance during the year was shaped by good results in the international arena. Greater order intake outside Spain offset the decline in domestic activity caused by cutbacks in government tenders.
The Construction backlog amounts to 8.699 billion euro, of which 6.059 billion euro (70%) are in projects outside Spain, notably the new contract to build the 407 ETR East Extension in Canada, US highway 460 in Virginia, and the Tokamak complex at the ITERInternational Thermonuclear Experimental Reactor in France, in addition to existing contracts such as Crossrail in London.
Polish subsidiary Budimex increased revenues by 7.3%, to 1.420 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 a runway at Katowice International Airport.
Webber expanded its key figures by over 30% in 2012, with revenues amounting to 592 million euro and EBITDA to 23 million euro, due to commencing contracts and to the faster pace of execution of the LBJ and NTE highways in Texas.
Airports: Heathrow reaches a record 70 million passengers
Heathrow Airport Holdings increased revenues by 4.8% in 2012 to 2.646 billion pounds. EBITDA expanded by 5.3%, to 1.355 billion pounds.
This was due mainly to positive traffic performance at Heathrow, which increased by 0.9% with respect to 2011, to a record 70 million passengers. Occupancy also reached a record 75.6% in 2012. There was a notable increase in long-haul traffic on routes to and from North America and Brazil, as well as the Middle and Far East. Overall, HAH handled 99.7 million passengers in 2012.
Scottish airports also performed well, with traffic up 8.3% at Aberdeen, while EBITDA increased by 12.1%.
In 2012, HAH began paying quarterly dividends for the first time since its acquisition in 2006. The company distributed 240 million pounds in 2012. That figure is expected to increase slightly in 2013.
In 2012, HAH 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 bank debt at the non-regulated airports.
After year-end, in January 2013 the company announced the sale of Stansted airport to Manchester Airport Group for 1.5 billion pounds, a figure that exceeded market expectations. The transaction is scheduled to be completed in late February.