Ferrovial’s main market is the United States, with assets reaching a valuation of 18,509 million euros (including the 407 ETR in Canada), which means that it is practically equal to the company’s current capitalization – at Friday’s close it stood at 19,290 million euros-.
This value is increasing with the projects that it already has in its portfolio and, in addition, its expectations to add new works and concessions are high, especially with the visibility in this market that, in its opinion, it will achieve when it is listed on Wall Street. However, In its North American journey, Ferrovial has also had setbacks. Some, in fact, still have an effect on your income statement today.
The company run by Rafael del Pino and Ignacio Madridejos is still facing cash consumption this year due to failed works -in terms of profitability- in the country that forced it to provision 345 million euros four years ago. The company’s 2019 annual accounts they collected losses of 98 million Euros caused by this allocation derived from the problems in the contracts of three highways in the United States (I-77, in North Carolina, I-66, in Virginia and I-285, in Georgia).
The company estimate is that the work on Georgia’s I-285 will still cause a relevant cash outflow in the first half of 2023
The provisions, without which the group he would have earned 114 million that yearwere carried out to cover potential losses in the projects due to the increase in the prices of subcontracting and raw materials, as well as the extension of the approval periods of the design phase.
Of the contracts for the three highways, those for I-66 and I-77, in addition to their construction -carried out both by Ferrovial Construcción and by the subsidiary of the US branch Webber-, include their exploitation. Both are already fully operational -I-66 did so last November- and, in fact, they will begin to pay dividends next year. The largest impacts that have yet to be recorded are those related to I-285. The company estimate is that this work will still cause a significant cash outflow in the first half of 2023. Ferrovial reached financial closure for this contract, with an investment of 458 million dollars, in 2016 and the original construction completion projection was 2020.
In the 2022 results, Ferrovial refers in the analysis of the construction business to the negative evolution of the construction activity in North America due to the completion of the construction phase of some projects.
Win an arbitration in Oman
Ferrovial has scored a relevant victory in one of the arbitrations it faces in the world. The consortium made up of the Spanish group and FSB Batco, at 50%, and which built the Batinah Expressway in Oman, initiated an arbitration against the Sultanate in which he claimed for significant delays and increased costs that, in the opinion of the companies, and in accordance with the contract, generated the right to be compensated. In July 2022, the arbitration award admitted the facts and quantified the compensation for the ‘joint venture’ at 50.3 million euros. The award has been executed after the deadline for presenting allegations expired on February 27 and the Omani Government did not forward any.
