Ferrovial SA Reports Strong Q1 Growth Amid Challenges

Ferrovial SA ((ES:FER)) has held its Q1 earnings call. Read on for the main highlights of the call.

Ferrovial SA’s recent earnings call painted a picture of robust growth and solid financial health, tempered by some operational challenges. The sentiment during the call was largely positive, with significant achievements in North American highways and a strong cash position, although there were some concerns over weather-related impacts and slight profitability declines in certain construction segments.

Record Growth in North American Highways

The U.S. highways segment was a standout performer, showcasing a remarkable revenue growth of 19.1% compared to the first quarter of 2024. This segment now accounts for a staggering 98% of the highways revenue, with adjusted EBITDA growing at a healthy 14.6%. This growth underscores Ferrovial’s strategic focus on expanding its footprint in the North American market.

Strong Performance of 407 ETR

The 407 ETR toll road reported an impressive 23.6% growth in toll revenue, with EBITDA doubling. This success was attributed to the implementation of new toll rates and targeted traffic promotions, highlighting Ferrovial’s effective management and strategic pricing initiatives.

Solid Net Cash Position

Ferrovial ended the quarter with a robust net cash position of €1.9 billion. This was bolstered by the divestment of AGS for €538 million and a €152 million equity injection in NTO, reflecting the company’s strong financial management and strategic divestments.

Positive Developments in Airports

In the airport sector, Ferrovial reported positive developments, particularly at JFK, where development advanced by 6% and agreements with 18 airlines were reached. Additionally, Dalaman airport experienced higher than expected domestic traffic growth, indicating strong operational performance in the aviation segment.

Steady Construction Profitability

Construction segments like Budimex and Ferrovial Construction maintained solid margins, with an overall adjusted EBIT margin of 3.3%. This steady profitability highlights the company’s effective cost management and operational efficiency in its construction operations.

Weather Impact on Traffic

Severe weather conditions posed challenges, negatively affecting traffic performance across North American roadways in January and February. Despite these challenges, Ferrovial managed to maintain strong revenue growth in its managed lanes.

Construction Challenges

Budimex faced slight profitability declines compared to the previous year, primarily due to prior indexation cap updates affecting public contracts. This highlights the ongoing challenges in the construction sector, particularly in managing contract terms and costs.

Forward-Looking Guidance

Looking ahead, Ferrovial’s CFO Ernesto López Mozo provided optimistic guidance for the remainder of 2025. The company expects continued growth in the highways division, with a 14.1% overall revenue increase projected. The acquisition of a 5.06% stake in the 407 ETR is anticipated to close in Q2 2025, further strengthening Ferrovial’s position in the toll road market. The order book remains robust, with a targeted adjusted EBIT margin of 3.5%, and strategic moves such as equity injections and share buybacks are expected to solidify the company’s financial standing.

In summary, Ferrovial SA’s earnings call reflected a strong performance in key segments, particularly in North American highways and toll roads, supported by a solid financial position. Despite some challenges, such as weather impacts and construction profitability issues, the company’s strategic initiatives and forward-looking guidance suggest a positive outlook for the future.