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FERROVIAL: 2Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

2Q’20 vs. 2Q’19 Results:
Sales: € 1.535 Bn (+11.7% vs. -28.5% BS(e) and -24.0% consensus);
EBITDA: € 53.0 M (-53.5% vs. -75.4% BS(e) and -64.0% consensus);
EBIT: € 6.0 M (-90.3% vs. € -24.0 M BS(e) and € -9.0 M consensus);
Net Profit: € -268.0 M (€ 92.0 M in 1H'19 vs. € -218.34 M BS(e) and € -29.0 M consensus);
1H’20 vs. 1H’19 Results:
Sales: € 2.914 Bn (+11.9% vs. -9.3% BS(e) and -6.9% consensus);
EBITDA: € 128.0 M (€ -116.0 M in 1H'19 vs. € 103.0 M BS(e) and € 116.0 M consensus);
EBIT: € 32.0 M (€ -211.0 M in 1H'19 vs. € 2.0 M BS(e) and € 17.0 M consensus);
Net Profit: € -379.0 M (€ -6.0 M in 1H'19 vs. € -329.34 M BS(e) and € -140.0 M consensus);

The 2Q’20 results were weak, as expected, but better in cash. EBITDA came in slightly above expectations (€ 53 M vs. € 41 M consensus and € 27 M BS(e)) thanks to the better performance in Toll Roads (80% of the T.P.; € 59 M of EBITDA vs. € 38 M consensus), which benefited from the quick recovery of the US assets (although slowing over the past few weeks due to new outbreaks). Construction (2% of T.P.) recorded a significant impact from Covid-19, as expected (€ 7 M of EBITDA vs. € 12 M consensus), despite recording much higher activity levels (sales +18.4% vs. -20% BS(e) and consensus). Net Profit ended the quarter at € -228 M (vs. € -219 M BS(e)), due mainly to one-off impacts in the Service division (€ -44 M from valuation adjustments in Amey and € -64 M from the sale of Broadspectrum).
The net cash position ex-infra performed well, improving slightly on the quarter (+1.4%) to € 1.67 Bn (vs. €~1.39 Bn excl. divestitures and vs. €~1.2 Bn BS(e)), despite the sharp drop in dividends received from its infra assets (€ 133 M vs. € 244 M in 1H’19), thanks to the noteworthy working capital performance (€ -10 M vs. € -440 M in 1H’19). This positive cash performance, along with the financing moves completed over the past few months, allowed the company to reach a record high liquidity position (€~7.51 Bn vs. € 5.9 Bn in 1Q’20; 2.6x NFD), putting it in a very comfortable position to continue taking advantage of growth opportunities (through capital contributions in greenfield projects) against a backdrop of sharp drops expected in infra asset dividends.
With all this in mind, the 2Q’20 results were hit hard by Covid-19, as expected, but with better cash performance, which we think could lend a positive slant to their reception, despite the recent performance (outperforming the IBEX by +2% since the pandemic hit). BUY. T.P. € 28.15/sh. (upside +32.22%).