Ferrovial SE Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Growth Strategy: Focus on North American toll roads with a record pipeline of new managed lanes. Opportunities in US airports, energy, data centers. Rotate mature assets for value creation.
• Sustainability: Reduced serious injury/fatality frequency rate by 26% vs 2022, Scope 1&2 CO2 emissions by 35.8% vs 2020, water consumption by 26.7% vs 2017. Defined new CO2 reduction targets.
• Financials: Ended with ex-infrastructure net debt of -€1.8B. Received €947M in dividends from infra assets. Collected €2.6B from divestments. Invested €1.6B, returned $831M to shareholders, repurchased shares worth €272M.

Segment Performance

• Toll Roads: North American assets showed strong traffic and revenue growth. 407 ETR in Toronto area had 4.8% traffic growth, 14% revenue increase, and 15.1% EBITDA growth. Texas managed lanes saw varying traffic and revenue per transaction growth. I-66 and I-77 paid first dividends. Toll Road dividends totaled €895 million in 2024, €191 million more than prior year. Revenue contribution from Toll Roads was significant.
• Airports: New Terminal One at JFK had 60% physical progress. Disposed 19.75% stake in Heathrow for €2B and 5.25% stake for £455M. Dalaman Airport had record 5.6M passengers, €82M revenue, and €64M adjusted EBITDA.
• Construction: Revenues €7,274M (+3.8% like-for-like), adjusted EBITDA €430M (+95.4%), adjusted EBIT margin 3.9% (surpassing 3.5% target). Order book €16.8B, 49% from North America.

Guidance

• Dividends: Upgraded distribution guidance for 2024-2026 to minimum €2.2B, potentially higher based on investment opportunities.
• Investments: Focus on North American toll roads, airports, energy, data centers. Maintain financial discipline for value creation.

Risks

• Tariffs: Uncertainty from potential Trump administration tariffs on imports, impacting economic growth and traffic in affected regions.
• Seasonality: Uncertainty around seasonality of Schedule 22 payments and their impact on quarterly accruals.
• Project Execution: Uncertainties in executing new projects like New Terminal One at JFK and potential delays/cost overruns.

Question and Answer

Q: What is the current status on investments in US infrastructure projects like airports and data centers?

A: Looking at opportunities but too early to specify exact projects.

Q: Does the guidance for 407 earnings in 2025 include Schedule 22?

A: No specific guidance, but 407 management is optimistic about new tariffs and promotions.

Q: Can the additional buyback program be extended based on investment pipeline?

A: Focus on North American toll roads, airports, energy, data centers; flexibility to invest or buy back shares based on opportunities.

Q: What is the timeline for US listing and index inclusion?

A: Focus on increasing investor awareness in US, working towards index inclusion but no specific timeline given.

Q: Traffic ramp-up status of I-66 and LBJ project?

A: I-66 still ramping up, LBJ construction ongoing with expected improvement in traffic.

Q: Role of Budimex in Ukraine reconstruction?

A: Hopeful for end of war, Budimex may participate but too early to determine impact.

Q: Data center strategy?

A: Early stage, working with hyperscalers in Spain, potential to expand in US.

Q: Impact of US tax plans?

A: Lower corporate tax rate could boost economic activity and asset valuation.

Q: Proceeds from Heathrow stake disposal and buybacks?

A: Proceeds factored into buyback plans, flexibility based on investment opportunities.