Ferrovial profits dive

Ferrovial, the Spanish infrastructure group that controls BAA, unveiled a sharp drop in first-half profits on Monday, as the strong euro and escalating costs at the UK airports operator took their toll.

The Madrid-based company said that net profits for the six months to the end of June were €58.7m ($86m), compared with €756m at the same stage last year.

However, the comparison was distorted by extraordinary items, including €705m worth of asset sales last year, compared with €213m this time.

Revenues, down 5 per cent to €6.7bn, were ahead 4 per cent after stripping out these sales, along with currency factors, and lost sales from divested business, according to the company.

BAA, in which Ferrovial holds 56 per cent, contributed revenues of €1.5bn, down 16.4 per cent on the same period last year.

The Spanish company attributed this mainly to the depreciation of sterling against the euro.

The inauguration of Terminal 5 at Heathrow, BAA’s main London airport, also added to security costs and depreciation charges, pushing earnings before interest and taxes (Ebit) down 55.5 per cent to €186.6m.

The company said that an increase in passenger tariffs at Heathrow and Gatwick airports, in force since April, would help offset the heavy start-up and security costs.

Ferrovial and its partners at BAA recently closed a £13bn ($23.4bn) deal with banks to refinance acquisition debt and raise funds for capital expenditure.

An original plan, to tap bond markets, was torpedoed by last year’s credit squeeze.

Nicolás Villén, Ferrovial’s chief financial officer, said on Monday that there were still hopes of replacing bank debt with long-term bonds “before the end of this year”.

“BAA has traditionally been an important bond issuer and we expect it to be that again,” he said.

UK passenger traffic was down 0.6 per cent, at 70.4m, as increased international activity offset a domestic downturn.

Mr Villén said the fact that the consumer downturn and higher fuel prices had not reduced traffic by more showed the “robustness” of the business.

Cintra, Ferrovial’s toll road and car park business was also hit by softening demand, although this was offset by higher average tariffs.

The company said sales were up 7 per cent year-on-year, to €515.7m.

Earnings before interest and taxes were up 11 per cent at €252.8m.

In construction, the sharp downturn in Spain was partly offset by an increase in international activity. Ebit in the division was down 5.5 per cent at €122.3m.

Growth at the services business, which includes Amey and Tubelines in the UK, was steady, although the result hit hard by the weak pound.

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