Ferrovial posted weak Q1 results, with its crown assets – 407 ETR and Heathrow still under pressure from travel restrictions. However, the managed lanes in the US have seen a sharp recovery in traffic after the upliftment of restrictions on 10 March, with traffic on the NTE35W for Q1 even above the 2019 level. Construction and Services businesses continue to show resilience with margin improvements.
Companies: Ferrovial (FER:BME)Ferrovial, S.A. (FER:MCE)
Ferrovial reported top-line figures which were better than expected due to the favourable construction market. However, the slower traffic recovery, especially on its motorways, led to lower equity-accounted contributions. Ferrovial expects traffic to recover soon on its motorways once the situation is normal and anticipates a 67% yoy increase in traffic at Heathrow, but has not provided any further quantifiable guidance. It has completed divestments worth €501m, and has proposed a total scrip d
Ferrovial continues to be impacted by low traffic on its infrastructure, as reflected in the low income and dividends from these assets (-40% yoy). Additionally, management reassured that there is a limited risk of a Heathrow capital injection.
Revenues were up by 11% lfl courtesy of the construction business which benefited from a low comparison base. However, NI was unsurprisingly low due to a negative contribution from equity-accounted assets and discontinued business. We will revise our num
Companies: Ferrovial, S.A.
Ferrovial posted lfl growth of 12.2% on the back of a weak comparison base. The net result, which includes the equity-accounted result, stood at €-379m (vs €-6m in H1 19). Heathrow has a strong cash position but AGS is suffering and may require an equity injection. All toll roads except LBJ are well above the dividend lockup ratio. LBJ might join this club too if Ferrovial executes a favourable refinancing. Lastly, Ferrovial sold a 5% stake in Budimex but should retain the rest.
Ferrovial announced Q1 20 results showing significant growth in the construction business and a stable contribution from managed lanes. EBITDA was affected by the €-39m restructuring provision and the bottom-line was significantly affected by the weak airport assets. Ferrovial is financially stable with Heathrow capable of surviving 12 months with no revenues.
Ferrovial Group has published its consolidated results which came in better than our expectations but broadly in line with the consensus. The Toll Roads segment outperformed our expectations, while the losses in Construction were greater than anticipated due to an additional standalone loss of €-49m reported by Ferrovial Agroman. The possibility of Heathrow’s expansion has diminished, yet management has expressed its interest of keeping its stake in this asset. The company has proposed a scrip d
Principal infrastructure assets maintained their robust performance.
Following this earnings release, we will rework our model. We expect a minor upward change to our target price and no change in our recommendation.
There was a strong operating performance from the main infra assets. Indeed, US managed lanes’ EBITDA grew strongly, namely by 45.4% for NTE and 23.7% for LBJ, while ETR 407 posted a 7.1% increase. Finally, Heathrow registered a 7% increase and 3.9% increase excluding IFRS 16.
Following this earnings release, we will keep our recommendation unchanged.
The key highlight of this publication is the €-345m provision in Construction for potential future losses in US projects where delays in design approvals imply prices cannot be signed off with subcontractors.
Following this press release, we will sharply reduce our profit forecasts due to the €-345m provision in construction, which will eat up most of the profit that had been expected in FY19.
Following the announcement that the Services division is to be divested, management explained that the strategy is to refocus on the infrastructure business and mainly in high complexity concessions.
We have to dig deeper into the numbers as the reclassification of the Services division as a held-for-sale divestment blurs the picture but, as a first assessment, we would say that we have to decrease our valuation moderately.
Management has decided to classify as “held for sale” all of its services activities. This decision is the result of the strategic move to focus on the development of its infrastructure business.
As management was not willing to share a range for divestment proceeds, we do not yet know whether the €3bn proceeds in our model is a good assessment or not. Hence we will not change our forecast and we will keep our positive recommendation.
Ferrovial announced in mid-October that it has hired an adviser to explore the potential sale of its Services unit in whole or in part or even not at all.
Ferrovial has hired an adviser to explore the potential sale of its services unit in whole or in part or even not at all, a move that we welcome, as profitability has narrowed, mostly in waste management, with the EBIT margin tumbling to 2%-3% in 2016-17 from 6%-7% between 2006 and 2012 for the whole Services division. We believe that the company could reallocate the proceeds to infrastructure in a value-creative way.
We expect to keep our recommendation unchanged.
Ferrovial is a very complex company. In H1 18, the financial performance was impacted by the €237m charge booked in Q1 18. But the developments in the toll roads and airports division are encouraging in terms of traffic. Overall, following this earnings release, we will revise our model. We don’t expect a change in recommendation as Ferrovial will clearly remain value-destructive in FY 18.
With a ROCE expected of below 6.5% against a WACC of 7.6%, Ferrovial is a value-destroying company. With the £-208m provision (€-237m) registered for the Birmingham contract (BHM) in Services, one can understand that risk management isn’t yet at the utmost best level.
As a consequence, we will reduce our target price. And this should trigger a change in recommendation from Add to Reduce.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Ferrovial, S.A..
We currently have 0 research reports from 0
Seeing Machines has announced that it has been appointed by CAE Australia to integrate its precision eye-tracking technology, for an Australian defence industry customer. The engagement is valued at A$1m over five years and comes at the end of a successful direct engagement between Seeing Machines and an Australian defence industry innovation programme delivered over the past two years. This programme exceeded all stakeholder expectations and has opened several additional opportunities across th
Companies: Seeing Machines Limited
XPD increased profit by 40% last year and strong trading has continued through to the end of May. In 2020a growth was largely driven by the Freight Forwarding division. Now management reports that all three divisions – Freight Forwarding, Warehousing & Logistics and Transport Solutions - are growing. As with many logistics businesses, trading at XPD is seasonal with most profit made in H2, hence we have not lifted our estimates at this stage, but with this AGM statement today, risks are clearly
Companies: Xpediator Plc
Despite the challenges presented by Covid-19, TP Group was able to report organic revenue growth of 9% YoY in FY20A, and total revenue up 20% YoY. Aided by strategic acquisitions, non-core business disposals, and investments made within the group, the company should be well placed to benefit as trading conditions normalise. With visibility improving, we release new forecasts for FY21E and FY22E (Adj EBITDA of £4.2m and £5.1m respectively). Given the improving outlook, and a record order book (£6
Companies: TP Group Plc
Tern plc* (TERN.L, 23.75p/£78.5m) | CAP-XX Ltd* (CPX.L, 8.15p/£36.0m) | MTI Wireless Edge Ltd* (MWE.L, 64.5p/£57.1m) | Newmark Security plc* (NWT.L, 1.2p/£5.6m) | Blackbird plc* (BIRD.L, 32.0p/£107.9m)
Companies: TERN CPX MWE NWT BIRD
Staffline’s raise has generated £44m of net proceeds. The debt re-fi simplifies the bank lending and provides ample head-room. The circular points to FY results in line. Staffline has also reported a strong start to the year, with potential upside from Restart. FY 21 FD EPS increased by 57% and FY 22 reduced by 8% to reflect the mechanics of the re-fi and no tax. We expect the conversion rate to continue increasing. The B/S looks sound with expected FY 22 covenant net debt / EBITDA of 3.0x. We h
Companies: Staffline Group plc
We increased our forecasts on 3 June as SThree pre-announced the strength of Q2. Today’s full release shows Q2 NFI +22% y-o-y and H1 NFI +3% on H1 19. The contractor order book is up 33% and productivity +36%. We make no changes to forecasts today, but now expect H1 21 PBT of £27.4m, up 14% on H1 19. Our H2 estimates are cautiously set, reflecting more normalised contractor working hours and selective headcount investment. We see the risks to be on the upside. Maintain Buy.
Companies: SThree plc
Today's news & views, plus announcements from ICP, BATS, OXIG, PAG, NCC, OTMP, XPD, PPC
Companies: BATS OTMP XPD
As midsummer’s day looms (where has this year gone?), there is greater optimism, in general, than may have been anticipated a few months ago. A post-pandemic, ‘vaccine-driven’ recovery demonstrated by increased consumer spending as lockdown measures are lifted has been one of the catalysts. The FTSE 100 has been range-bound in the last month 6,900-7,100. We have seen a combination of broadly positive company results across a range of sectors, further examples of M&A activity and a sequence of ne
Companies: AMYT ARBB ARW BAG BEG BONH BWNG CWK DNK EML EPWN FBD FA/ GPH GSF GNC HUW IGC INSE KAPE KP2 MMAG NRR NESF OTMP ROL RUA SEN SUR TON TOU TXP TGL VLS WINK
The appointment of an engineering consultancy on the Polish project demonstrates progress. Powerhouse has said that it hopes to complete the project by Q1 2022, in line with development progress in the UK. We see Powerhouse as having considerable international opportunities for the deployment of its DMG technology.
Companies: Powerhouse Energy Group PLC
Last week Metalcraft (part of AVG’s PRSE division) and Sellafield mutually agreed to exercise the option to enter into the second phase of the contract to provide a total of 1,100 high integrity 3M3 stainless steel storage boxes for Sellafield. This is a significant milestone, following commencement in 2015 of prototyping and refinement, and the establishment of dedicated, state of the art 3M3 box production and supply. We think It clear that Metalcraft has now established the leading position i
Companies: Avingtrans plc
Despite an unparalleled disruption caused by Covid-19, Getech grew its subscription-based revenues and the order book remained strong. Despite a drop in revenue driven by Getech's customers reducing short-term project service work and related data sales, gross margins were protected by Getech's cost saving measures. Furthermore, the Services division swung back into operating profit. Following the Company's £6.25m equity raise, Getech is well positioned to grow and diversify its activities acros
Companies: GETECH Group plc
The robustness of the operating model and management's action to support customers and manage the cost base led to Vianet generating positive operating cash flow in FY21A. There is a strong pathway to recovery but the full extent is somewhat caveated on a full reopening profile that is yet to be confirmed. We are forecasting the Group to be free cash flow positive this year and see upside in the price as new order momentum returns.
Companies: Vianet Group plc
Epwin has entered FY21 with positive revenue momentum, having successfully navigated some extreme market conditions in the prior year. The company has built a solid base from which to grow volumes, and a positive cash generation profile provides headroom to invest organically and via acquisition as post-pandemic markets begin to normalise.
Companies: Epwin Group PLC
AVO’s goal is to deliver an affordable and novel PT system, called LIGHT, based on state-of-the-art technology developed originally at the world-renowned CERN. Over the past two years, important technical milestones have significantly derisked the project. Now, AVO is working on the verification and validation phase, prior to LIGHT being used on the first patients to support CE marking. In its recent technical update, the company highlighted progress made over the past three months towards a ful
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN RECI STX SPO SCE TRX VTA
Power reliability and drilling tools specialist Northbridge has confirmed in today’s AGM update that it is “firmly on track to meet management expectations” for FY21F and indicated momentum is likely to continue beyond that, driven by growth in datacentres and renewables and a 50% enlargement of its UK factory. It has also announced a £10m refinancing, including the redemption of its convertible loan notes. Lower interest costs nudge up our FY21F adjusted PBT from £2.0m to £2.1m. Northbridge als
Companies: Northbridge Industrial Services plc