Ferrovial reports 376 million euro net profit in 2016 Published on 27/02/2017
- Revenues rose by 11% to 10,759 million euro and EBITDA amounted to 944 million euro as a result of good traffic performance by Toll Roads and Airports, the integration of Broadspectrum, and international Construction.
- The main assets continued to evidence sound performance: highway 407 ETR in Canada increased revenues by 17.3%, Heathrow Airport by 4.7%, both in local currency terms. Traffic increased steadily in both Toll Roads and Airports: 407 ETR (+4.9%), NTE (+19.3%), Ausol I (+11.2%), Heathrow (+1.0%) and Glasgow Airport (+7.4%).
- The backlog reached 33,519 million euro, with international contracts accounting for 78%. New contracts include notably a section of California High-Speed Rail; the Olsztyn bypass and a number of sections of the S17 and S3 highways, in Poland; maintenance of 370 kilometers of roads, and enabling work for high-speed rail, in the United Kingdom; highway D4-R7 in Slovakia; and Broadspectrum’s contribution. Not yet included in the backlog is the recently-awarded contract for the I-66 in Virginia.
- Ferrovial generated 995 million euro in operating cash flow (excluding infrastructure) due to a balanced contribution of higher dividends from its main assets and better operating cash flow in Services. Highway 407 ETR contributed 244 million euro, HAH, 96 million euro, and the UK regional airports (AGS), 38 million euro. The company obtained 124 million euro in capital gains on divesting Chicago Skyway and the Irish toll roads.
Ferrovial, the world-leading infrastructure operator and service provider, reported 376 million euro in net profit in 2016, compared with 720 million euro in 2015. The difference is due mainly to one-off events in the year; adjusting for them, net profit would have increased by 3%. Revenues increased by 11% to 10,759 million euro, and EBITDA totaled 944 million euro.
These results were shaped by sustained traffic growth throughout the year, as well as good performance by the international Construction business, and consolidation of Broadspectrum from June onwards. Ferrovial generated 995 million euro in operating cash flow, excluding the Infrastructure business, because of a balanced contribution of higher dividends from the main assets and improved operating cash flow in Services.
The company received 477 million euro in dividends from the main assets in which it holds a stake. Highway 407 ETR contributed 244 million euro, HAH, 96 million euro, and the UK regional airports (AGS), 38 million euro. The company also obtained 124 million euro in capital gains on divesting Chicago Skyway and the Irish toll roads.
Ferrovial’s good performance enabled it to increase shareholder remuneration to 544 million euro, from 532 million euro in 2015.
In terms of operating performance, traffic increased at Ferrovial’s toll roads and airports in the US, Canada and Europe, including notably: 407 ETR (+4.9%), NTE (+19.3%), Ausol I (+11.2%), Heathrow (+1.0%) and Glasgow Airport (+7.4%).
The backlog reached 33,519 million euro, of which 24,431 million relate to Services and 9,088 million to Construction. International projects account for 78% of the backlog (76% in Services and 83% in Construction). Notable new contracts include a section of California High-Speed Rail; the Olsztyn bypass and a number of contracts for the S17 and S3 highways, in Poland; maintenance of 370 kilometers of roads, waste collection in Surrey and enabling works for high-speed rail in the United Kingdom; a section of US-175 in Dallas; construction of a bridge in Harwood, Australia; and the contribution by Broadspectrum. The company was also selected to initiate negotiations for a terminal redesign project at Denver Airport, and was awarded the I-66 concession in Virginia (neither included in the backlog as yet).
Ferrovial allocated 1,064 million euro to acquisitions, including notably the 934-million euro purchase of Broadspectrum in Australia, a country where the prospects for outsourcing services and infrastructure development are very positive. The company also entered the power transmission business by acquiring Transchile, which owns an electricity line in southern Chile, for 69 million euro. Other acquisitions during the year include Pepper Lawson, Siemsa and Biotran.
The company sold its 55% stake in Chicago Skyway in February, with a capital gain of 103 million euro. It also partly divested the M4 and M3 toll roads in Ireland, retaining 20%, while booking 21 million euro in capital gains. In June, an agreement was reached to sell 51% of the Norte Litoral toll road and 49% of the Algarve toll road, both in Portugal, to DIF. Ferrovial will retain 49% and 48%, respectively. This transaction will be completed early in 2017.
Ferrovial ended 2016 with a net cash position (excluding infrastructure project debt) of 697 million euro, compared with 1,514 million euro at 2015 year-end, affected mainly by the acquisition of Broadspectrum. Consolidated net debt amounted to 4,266 million euro.
In September, Ferrovial issued a 500 million euro 6-year senior bond paying a coupon of 0.375%. A number of projects were funded in 2016, including the I-285/SR 400 in Atlanta: 458 million dollars through a bank loan that is tax-exempt for the lender. Ausol’s 558 million euro debt was refinanced by issuing 507 million euro in 30-year bonds and notes, rated BBB, that pay a 3.75% coupon, as well as 51 million euro in subordinated bank debt. Funding for the D4-R7 highway in Slovakia, which represents an investment of 975 million euro, was completed in June.
In the summer, Fitch Ratings and Standard & Poor’s affirmed the company’s BBB rating, with stable outlook.
Solid growth by the main assets
Highway 407 ETR continued to perform well: traffic rose by 4.9%, which increased revenues by 13.2% and EBITDA by 17.3%, both in local currency terms. Heathrow reported 1.0% growth in traffic, to 75.7 million passengers, which resulted in a 1.5% increase in revenues to 2,807 million pounds, raising EBITDA by 4.8%.
The NTE and LBJ highways in Texas continue to improve performance, and have achieved a high level of user satisfaction. The NTE obtained 73 million dollars in revenues in 2016, a 41.3% increase over 2015, while EBITDA rose 49.5% to 57 million. The road registered 6 million trips, a 5.1% increase with respect to the period of October-December 2015. Revenues on the LBJ amounted to 76 million dollars, while EBITDA totaled 59 million, and the road registered 10 million trips in the fourth quarter of 2016, 43.7% more than in the same period of 2015. The LBJ was inaugurated in September 2015.
Traffic increased on most Toll Roads due to the economic recovery and fuel price performance. The US, Spain and other European countries registered an improvement across the board. Revenues increased to 486 million euro, a 24.8% year-on-year improvement in like-for-like terms. At the beginning of the year, Cintra signed the contract for the D4-R7 highway in Slovakia (Bratislava bypass). Additionally, 407 ETR announced a 10.7% increase in the dividend with respect to the first quarter of 2016.
Services revenues increased to 6,078 million euro in 2016 due to integrating Broadspectrum, although they were affected by depreciation of the pound sterling and by budget constraints at UK local government level. In the UK, Amey implemented a restructuring plan in 2016 to adapt to market conditions. Spain performed well, with 5.1% growth in revenues due to the higher contribution from the waste treatment and industrial maintenance businesses. The international business, including such countries as Poland, Portugal and Chile, expanded by 19.8% in like-for-like terms. After the integration of Broadspectrum, the business in Australia and New Zealand has been reorganized, and it will continue to operate in the US, Canada and Chile in 2017.
In Construction, revenues amounted to 4,194 million euro, accompanied by strong order intake, high returns on projects and notable growth by Budimex. International work accounts for a growing proportion of this division. Countries other than Spain accounted for 83% of revenues and the backlog.
As for Airports, HAH continued to grow revenues and EBITDA, and retail revenues increased by 7.7%. Heathrow was named “Best Airport” by Skytrax and Airport Council International in a number of categories, and the percentage of users who rate it as very good or excellent increased to 81%. In regional airports, Glasgow experienced an increase in traffic, revenues (+8.3%) and EBITDA (+24.9%) in local currency, supported by 7.4% growth in passenger numbers. Passengers numbers at the three airports increased by 2.8% to 14.4 million.
Proposal to the Shareholders’ Meeting
At its meeting today, the Board of Directors resolved to hold the Annual General Shareholders’ Meeting on 4 and 5 April (at first and second call, respectively). The proposals submitted for shareholders’ endorsement include the approval of the 2016 annual financial statements, and the ratification of Mr. Philip Bowman and Ms. Hanne Birgitte Breinbjerg Sørensen as independent directors.
Also to be submitted for approval at the General Shareholders’ Meeting is a shareholder remuneration programme (flexible dividend) in similar terms to the previous three years, to be implemented in the form of two scrip issues. Based on the closing price of Ferrovial’s share on 24 February 2017, they would be equivalent to the payment of a dividend of approximately 0.719 euro per share, similar to the dividend paid in 2016. The Board is also proposing that the Shareholders’ Meeting approve a programme to buy back a maximum of 19 million treasury shares, at a cost of at most 275 million euro.