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Ferrovial reports recovery in construction

26 Feb 21 Ferrovial’s revenue grew by 4.7% last year and its EBITDA profitability figure soared though there was a net loss once factors including Covid-19 were taken into account.

The increase in revenue to more than €6.3bn (£5.4bn) was driven by good performance in the Construction division, which showed a clear recovery and attained a 2.3% EBIT margin, said the company.

Ferrovial reported EBITDA - earnings before interest, taxes, depreciation, and amortisation -  of €409m in 2020 compared to the previous year’s €121m.

The year’s overall figures reflect the impact of Covid-19 on traffic and on operating results. The results for the year include -€447m contributed by the Airports business, a -€22m provision for the corporate restructuring programme, discontinued operations, and a court decision. As a result, the company reported a net loss of €-410m in 2020, compared with €268m profit in 2019.

Construction increased revenue by 11.4% in like-for-like terms to €5,862m due to the contribution from projects in the US and good performance by Budimex. Overseas markets accounted for 87% of total revenues. All of the division’s subsidiaries registered growth in revenues, including a notable +29.2% like-for-like increase at Webber. The division’s operating cash flow amounted to €293m before tax, with an EBIT margin of 2.3%. The Construction backlog reached €10,129m at year-end. The division improved margins despite the impact of Covid-19.

Ferrovial collected €458m in dividends from projects last year. Canadian toll road 407 ETR distributed CA$562.5m (€160m to Ferrovial) and Heathrow airport distributed £100m (€29m to Ferrovial). The LBJ toll road in Texas distributed its first dividend, US$229m, of which Ferrovial collected €109m.

The combined Construction and Services backlog totals €23,156m.

The board of directors believes that shareholders should play a more active role in defining and monitoring the company’s climate strategy. Shareholders are being asked to vote, on a consultative basis, on the company’s plan to reduce greenhouse gas emissions, and to commission the board of directors to submit a report on Ferrovial’s Climate Strategy to the shareholders’ meeting for a consultative vote from 2022 onwards.

Among the measures adopted to address the COVID-19 situation, Ferrovial reviewed spending plans and postponed all non-essential expenditure.

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At corporate level, the company implemented a new operating model that will provide for cost savings of €50m per year from 2021, after achieving €26m in 2020. In the year as a whole, additional cost savings related to Covid-19 amounted to €23m.

The main new projects awarded in 2020 include a US$70m contract to extend and upgrade the FM 1960 road in Harris County, north of Houston, a US$115m contract to upgrade IH 35 in Laredo, Texas and a €288m deal to expand Oporto Metro, in Portugal. Other contracts that Ferrovial won last year include reconstruction of Warszawa Zachodnia railway station, in western Warsaw, worth €433m, and construction of the control tower and six ancillary buildings at Jorge Chávez International Airport in Lima, Peru.

Traffic in the Toll Roads division recovered from its low point last April as lockdowns eased and the economy reopened. However, the improvement was impacted by the upswing in Covid-19 cases towards the end of the year and the measures imposed to slow the spread of the disease.

In the Airports division, Heathrow handled 22.1m passengers in 2020, a 72.7% decline, resulting in £1,175m in revenues and £270m in adjusted EBITDA. Heathrow’s rapid response to the situation, by restructuring its organisation, renegotiating contracts and cutting non-essential costs, provided it with sufficient liquidity to cover all its payment obligations through at least March 2022.

Revenues in the Toll Roads division declined by 19.2% like-for-like to €405m as a result of the reduction in traffic. The United States accounts for 74.4% of the division’s revenues. EBITDA declined by 22.9% like-for-like to €251m.

In the Airports division, the decline in traffic reduced Heathrow’s revenues by 61.7% and its adjusted EBITDA by 85.9%. The AGS airports were significantly affected by the decline in traffic, with revenues down 67.4% and EBITDA down 126.1%.

Ferrovial remains committed to divesting its Services business, and the process is ongoing. The first milestone in this process was the sale of Broadspectrum, completed in July. The division’s overall revenues amounted to €5,081m in 2020, while EBITDA amounted to €186m. The Services backlog stood at €13,027m.

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