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FERROVIAL: 3Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'20 vs. 3Q'19 Results
Sales: € 1.655 Bn (-2.0% vs. -1.4% expected and -5.2% expected by the market consensus);
EBITDA: € 113.0 M (-24.2% vs. -27.2% expected and -28.9% expected by the market consensus);
EBIT: € 18.0 M (-80.9% vs. -35.6% expected and -29.8% expected by the market consensus);
Net Profit: € -119.0 M (€ -98.0 M in 9M'19 vs. € -110.47 M expected and n/a expected by the market consensus);
9M'20 vs. 9M'19 Results
Sales: € 4.569 Bn (+6.5% vs. +6.7% expected and +5.2% expected by the market consensus);
EBITDA: € 241.0 M (+630.3% vs. +616.7% expected and +609.1% expected by the market consensus);
EBIT: € 50.0 M (€ -117.0 M in 9M'19 vs. € 92.5 M expected and € 98.0 M expected by the market consensus);
Net Profit: € -498.0 M (€ -104.0 M in 9M'19 vs. € -489.47 M expected and n/a expected by the market consensus);

Weak 3Q’20 results and in line. Interim dividend’20 cut by -53%. EBITDA was in line with expectations (€ 113 M vs. € 109 M BS(e) and € 106 M consensus ) due to the better-than-expected performance of Construction (€ 73 M EBITDA vs. € 32 M BS(e) and € 30 M consensus), offset by the weaker performance in Toll Roads (€ 45 M EBITDA vs. € 81 M BS(e) and € 82 M consensus) due to a regimen change to traffic risk (vs. availability payment) in Autema (0% T.P.). Excluding this effect, our estimates would have been in line. Net Profit ended at € -498 M (vs. € -489 M BS(e) and evidenced, among other factors, the impact of € -69 M from the regime change in Autema (without impact on cash) already outlined.
Positive performance by the net cash position ex-infra, which improved +1.7% on the quarter to € 1.7 Bn (vs. €~1.6 Bn BS(e)), despite a sharp drop in dividends from infra assets (€ 207 M vs. € 343 M in 9M’19), thanks to solid working capital performance (€ +1 M in 3Q’20 and € -9 M in 9M’20 vs. € -336 M in 9M’19). This positive cash performance, along with the financing transactions completed over the past few months allowed the company to keep its liquidity levels practically unchanged (€ 7.54 Bn vs. € 7.51 Bn in 1H’20; 2.8x NFD). The company announced an interim dividend’20 of € 0.20/sh. (~1% yield) that we did not expect and which means a -53% drop vs. last year. FER justifies this reduction by (i) the uncertainty generated by the pandemic and (ii) the desire to keep a robust liquidity position in order to take advantage of future growth opportunities.
3Q’20 Results in line on the operating level but with limited visibility on traffic recovery in Toll Roads (in view of the impact from possible outbreaks) with a -53% dividend cut that should bring a negative bias to the reception of these results although limited bearing in mind its recent performance (-15% in absolute terms since the 2Q’20 results; -6% vs. IBEX35). BUY. Target Price: € 28.15/sh (upside 47.65%)