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Ferrovial hits 2009 profits despite Spain woes

Source: Reuters - Wed 24th Feb 2010

Spain's Ferrovial, which has construction, airport and toll road businesses, improved cash flow and met profit forecasts for 2009 despite the forced sale of London's Gatwick airport.

"The cash flow picture at the holding company level is the key highlight of the results," Merrill Lynch analyst Judy Shaw said in a note to clients.

Construction and services generated 749 million euros in cash and corporate debt fell to 1.17 billion euros, thanks to divestments including London's Gatwick airport last year.

The company scooped up British airports operator BAA in 2006 only to be forced by UK compettion authorities to shed Gatwick.

Its foreign investments have helped buffer Ferrovial from its exposure to Spain, which has been hit hard by the global economic crisis. In addition to BAA, its portfolio includes toll road firm Cintra and construction and services units.

"Against the backdrop of the international economic situation, Ferrovial improved its key financial figures, expanding cash flow and reducing corporate debt by 24.2 percent," it said in a statement.

It posted 2.5 billion euros in group earnings before interest, taxes, depreciation and amortisation. Spanish operations contributed about 15 %.

Its shares have lost more than a fifth of their value since last month as investors struggled to distinguish between the company's fortunes at home and abroad.

Core profit was driven by growth on Cintra's main U.S. and Canadian tollways and at BAA's Heathrow airport, it said.


group's net loss narrowed to 93.4 million euros from 811 million in 2008 and its net debt including infrastructure investments, a key factor for investors who fret higher finance costs, edged slightly higher to 22.2 billion euros in 2009.

As it battles to strengthen its balance sheet, Ferrovial also made an unprecedented call for financial investors to join it in new projects, contributing to the equity required to get their financing under way.

"It is true that we used to want majority stakes in our projects, but now we are inviting financial investors to join greenfield projects," Chief Executive Inigo Meiras said on a conference call.

"It is logical to expect a BAA bond issue in euros and pounds in 2010," Chief Financial Officer Ernesto Lopez said. BAA has returned to the bond markets to raise funds for the first time since 2006, raising over 900 million pounds through offerings.

On asset sales, Meiras said the company had not yet taken a strategic decision regarding the possible sale of a stake in its 407-ETR toll road in Canada.

Ferrovial shares were down 1.6 percent at 6.76 euros at 1233 GMT, in line with Spain's bluechip index .IBEX.

On Tuesday another Spanish builder demonstrated the benefits of diversification abroad as OHL posted a 23 percent rise in core earnings, lift it shares.

Spanish infrastructure companies Abertis, ACS and FCC all publish full-year results this week.

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