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FERROVIAL: 1Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

1Q'20 vs 1Q'19 Results:
Sales: € 1.379 Bn (+12.2% vs. +1.5% BS(e) and -4.4% consensus);
EBITDA: € 75.0 M (€ -230.0 M in 1Q'19 vs. € 97.0 M BS(e) and € 104.0 M consensus);
EBIT: € 26.0 M (€ -273.0 M in 1Q'19 vs. € 47.0 M BS(e) and € 67.0 M consensus);
Net Profit: € -111.0 M (€ -98.0 M in 1Q'19 vs. € 28.0 M BS(e) and € 70.0 M consensus);
The 1Q’20 results were in line on the operating level and better in cash. Despite the doubts, in the end the company will pay a final dividend’19. EBITDA grew less than expected (€ 75 M vs. € 97 M BS(e) and € 104 M consensus) due to a € 39 M provision linked to the company’s plan to reduce overhead costs, which is expected to bring € -50 M of savings starting in 2021. Without this effect it would have beaten expectations. By divisions, Toll Roads (75% of the T.P.) beat expectations slightly (+0% in EBITDA vs. -4% consensus) due to better margin performance (70% vs. 67% expected), whereas Construction (3% of the T.P.) had a smaller impact than expected from Covid-19 (€ 34 M EBITDA vs. € 18 M consensus). Net Profit closed at € -98 M (vs. € 70 M consensus), due mainly to the impact from derivatives on Heathrow and a larger proportion of minority interests.
As a positive highlight, we stress the good performance of cash ex-infra, which improved slightly to € 1.645 Bn (vs. € 1.314 Bn BS(e) and € 1.632 Bn in 2019) in a traditionally negative cash quarter (€ -326 M burned in 1Q’19) thanks to the favourable evolution of working capital (€ +26 M). With this in mind, FER’s liquidity position reached €~5.9 Bn, and the company announced that it has maintained the payment of the final dividend’19 (€ 0.312/sh.; +0.3% vs. 2019; 1.4% yield), where there were doubts following the cancellation of the 407 ETR (2Q’20) and Heathrow dividends.
With this in mind, the results were in line on the operating level and better in cash, which along with the payment of the final dividend’19 could lend a positive slant to the reception, despite the fact that the share price has outperformed the IBEX by +7% since February’s highs when the impact from Covid-19 started. With the revision of estimates we plan to carry out, -27% in EBITDA’20e in our scenario of V-shaped recovery (2 quarters of deep recession with moderate recovery in the third quarter, strong in the fourth and very strong the following year), our T.P. would fall less than -10% to around € 27.00/sh. (+22% upside). Even in a negative scenario of U-shaped recovery (2 quarters of deep recession followed by modest growth in Q3 and Q4 and strong recovery next year and the following; recovery in 18-24 months), the cut would be -15%, leaving our T.P. at around +14% above the share price. BUY. T.P. € 29.70/sh. (upside +33.12%).