COVID-19 impact has been limited and widely distributed throughout all geographies, with Spain and South America being the most affected by slower execution rates in works with fixed costs, workforce and supplies delays, acceleration costs and additional health and safety material.
Revenues +11.4% LfL, mainly on the back of projects in the US. International revenues accounted for 87%, focused on North America (38%) and Poland (32%). 2020 revenues have been impacted by an estimated amount of -EUR300mn due to COVID-19, given the stoppages and the slowdown of works, widely distributed throughout all geographies.
2020 revenue (EUR5,862mn) and change LfL vs 2019:
In 2020, Construction EBIT stood at EUR134mn, despite the COVID-19 impact for an estimated amount of -EUR49mn.
This impact includes real cost overruns incurred to date and provisions that affect estimates of contract ends when dealing with onerous contracts. This COVID-19 impact has been estimated with a bottom-up approach, starting with every project, which has analyzed the impact considering the following elements which have impacted the division’s results:
- Fixed costs from activity stoppages, adapted processes for project ramp ups or productivity losses on the back of slower activity (i.e. rentals of machinery, offices and equipment, and other indirect costs)
- Increase in costs required to achieve project deadlines
- Delays in supplies
- Border closures and difficulties in mobilizing teams for selfperformance
- Related expenses to new H&S new measures
- Delays in the start-up of new projects
There are claims that have been prepared and/or presented that have been estimated as future income, but these have not been recorded in the 2020 Financial Statements considering the stage to date. In 2019, EBIT –EUR365mn was impacted by the provision recorded in 1Q 2019 corresponding to three contracts in the US.
Detail by subdivision:
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- Budimex: Revenues grew by +7.3% LfL with significant growth in Civil Works, Energy, Real Estate and FB Serwis which offset the lower Residential and Non-Residential Construction. Profitability reached 7.6% EBIT margin vs 4.0% in 2019, with EBIT +103.0% LfL on the back of a positive performance in all segments, with profitability close to 30% in Real Estate and above 5% in Construction.
On June 2020, Ferrovial sold a Budimex stake (5%), with no impact on P&L. Ferrovial holds a controlling stake (50.1%). The impact on cash flow was EUR 58mn in 2020.
- Webber: revenues +29.2% LfL, as large projects entered into high execution phase, such as the I-10, I-35 and Grand Parkway, in Houston. EBIT margin reached 2.1% in 2020 vs 1.8% in 2019, underpinned by the profitability improvement in its aggregate recycling and water divisions.
In 2020 Webber sold an asphalt Plant by EUR33mn. - Ferrovial Construction: revenues grew by +8.8% LfL on the back of good execution rates in essentially all the works in the US and also affected by last year provision that was partially registered as lower revenues and despite the stoppages and slowdown of works due to the COVID-19 impact, which is estimated at -EUR274mn approximately. EBIT stood at -EUR30mn (-EUR453mn in 2019), showing an improvement compared to -EUR56mn in 9M 2020, mainly due to the claims and/or contract extensions in various contracts, whose costs have been assumed in previous periods. 2020 EBIT included -EUR40mn from the COVID-19 impact distributed mainly between Spain, Latin America, USA, Australia and Slovakia. Additionally, the internal fees of onerous contracts (the costs of which cannot be provisioned by accounting rules) have been incurred amounting to -EUR41mn.
The order book reached EUR10,129mn (-5.6% LfL compared to December 2019). The civil works segment remains the largest segment (75%) and continues to adopt highly selective criteria when participating in tenders. The international order book accounts for 86% of the total.
Cintra’s share in the construction order book, excluding Webber and Budimex, reached 37% in 2020 order book (47% in 2019).
The order book figure at December 2020 does not include preawarded contracts or contracts pending commercial or financial agreement, which amount to over EUR370mn.
2020 Order book & LfL change vs 2019:
Recent developments
Sale agreement of Prisiones Figueras and URBICSA: In December 2020 an agreement was reached with Aberdeen Infrastructure (Holdco) IV B.V to sell 100% of the Group’s shareholdings in Concesionaria de Prisiones Figueras, S.A.U. and 22% of Urbs Iudex Et Causidicus, S.A. for EUR41mn and EUR16mn respectively. The agreement is pending authorisation from the competent bodies at the reporting date.
Budimex sale agreement of real estate business: On Feb. 22, 2021, Ferrovial’s construction subsidiary in Poland, Budimex, reached an agreement for the conditional sale of its real estate business (Budimex Nieruchomości).The agreed price is EUR331mn (PLN1,531mn) and if it materializes, it would imply the recognition of a capital gain before tax and minorities of EUR152mn. The agreement is conditional as it establishes the right of the parties to withdraw in certain situations. The operation is subject to the authorization of the competition authorities, which must be obtained within six months from the signing of this agreement.