Ferrovial - Annual Report 2011

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Spanish version

Letter from the Chairman

Rafael del Pino

Fellow shareholder,

Ferrovial obtained net profit of 1.269 billion euro in 2011, further strengthening its financial position, with cash flow that outstripped market expectations. The improvement in operating results is evidenced by an 8.9% increase in EBITDA in like-for-like terms, the result of growth in all activities due to the positive performance of the international business. Additionally, the net cash position increased (excluding infrastructure projects) while we notably reduced our level of debt. The company also obtained major new contracts in Construction and Services, which increased the backlog to new highs, guaranteeing business for the coming years. Ferrovial was granted an investment grade rating with a stable outlook by Fitch Ratings and S&P, while refinancing 1.314 billion euro in gross parent company debt.

The sale of 5.88% of BAA changed Ferrovial's consolidation scope; as was the case with the 407 ETR, it is now equity accounted. This transaction valued BAA at 4.762 billion pounds, provided capital gains of 847 million euro and enabled Ferrovial to deconsolidate the debt. As in 2010, the asset rotation policy enabled Ferrovial to realize value through a number of transactions in 2011.

The economy was the predominant concern in 2011, and the situation obliged governments to adopt measures to reduce the deficit and contain public spending. Projections by international organizations suggest close to zero growth by the main developed economies in 2012. Moreover, governments and companies face increasing difficulties in obtaining funding. The combination of these circumstances is driving the need to implement public-private partnerships as the model of the future for infrastructure worldwide.

I would like to draw your attention to our notable achievements in 2011:

Earnings.- Net profit amounted to 1.269 billion euro. EBITDA totaled 818 million euro, an 8.9% increase in like-for-like terms, boosted by revenues of 7.446 billion euro.

Cash flow and financing.- Cash flow from operations maintained the positive trend of the last few years, totaling 1.446 billion euro, driven by Construction, Services and Cintra. This figure, together with divestments of 1.264 billion euro, provided a net cash position of 907 million euro at 2011 year-end (excluding infrastructure projects), compared with 31 million euro at 2010 year-end. Ferrovial continued to diversify its funding sources: 407 ETR and BAA issued close to 2 billion euro in bonds, and BAA successfully completed its first issue in US dollars.

Financial data.- Ferrovial improved its main financial metrics. Consolidated net debt, including infrastructure projects, totaled 5.171 billion euro, compared with 19.789 billion euro in 2010.

Share price.- The share performed very well in the year, appreciating by 25% and beating the IBEX 35, its reference index, by 38%.

Internationalization.- Ferrovial's international activity remained robust, although its figures changed with respect to last year due to deconsolidating BAA. International activities accounted for 55% of total revenues and 48% of EBITDA.

Backlog.- The Construction and Services backlog amounted to 22.422 billion euro, setting a new record. The Services backlog reached 12.424 billion euro, of which 51% corresponds to international contracts, and the Construction backlog totaled 9.997 billion euro, of which 68% corresponds to projects in other countries.

All business divisions performed well, especially in the international arena. This enables us to approach 2012 with a positive outlook despite the complex scenario.

Services.- In like-for-like terms, Ferrovial Servicios maintained growth in revenues (9.4%), EBITDA (4.9%) and EBIT (3.3%). This positive performance is attributable to cost control, new contracts in the UK and Spain, and customer management initiatives in the domestic market. Revenues totaled 2.821 billion euro and EBITDA, 312 million euro.

Toll roads.- The main items in the income statement performed favorably in like-for-like terms. Revenues grew by 4.6%, EBITDA by 14.4% and EBIT by 38.8%. Traffic numbers reflected the situation in the local economies. This division obtained revenues of 390 million euro and EBITDA of 283 million euro.

Construction.- Growth in the international construction business once again offset the lower activity in the domestic market. The division's revenues amounted to 4.244 billion euro in 2011, a 4.5% decline in like-for-like terms. EBITDA increased by 4.3%, to 247 million euro, and EBIT by 8.4%, to 215 million euro (like-for-like, in both cases).

Airports.- Traffic at BAA increased by 4.4% year-on-year to 108 million passengers, with Heathrow alone accounting for 69 million. BAA revenues rose 9.2% in like-for-like terms in 2011, to 2.524 billion euro, and EBITDA expanded by 17.8%, to 1.260 billion euro.

This good performance would not have been possible without our superb employees, whom I would like to thank for their hard work, skill and commitment.

I would also like to express my gratitude to all of our shareholders for their support of Ferrovial. We will continue working hard to address the current circumstances and to bring our strategic plans to fruition.

 Firma de Rafael del Pino

Rafael del Pino
Chairman of Ferrovial
March, 2012

© Copyright 2012. Ferrovial

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This is an electronic version of the 2011 Annual Report prepared by Ferrovial S.A. for its stakeholders, which aims to be complete and accurate. The contents of this version can be checked by referring to the print version. A copy of the print version in PDF format is available to download on this web page