Graham Hunt

Graham Hunt asked about Ferrovial's perspective on the impacts of AI and autonomous vehicles on its discretionary lane plans, and whether these developments are being considered in upcoming project bids. He also questioned the company's strategy for increasing upstream dividends from its U.S. and Canada assets, including the 407 ETR and managed lanes.

Answer

CEO Ignacio Madridejos stated that autonomous vehicles are expected to increase traffic and congestion in the short term, which is positive for managed lanes, and Ferrovial will incorporate research into models and bidding. CFO Ernesto López Mozo added that the 407 ETR has comfortable ratios, allowing for potential dividend uplift, and I-66 could see additional leverage in the future, indicating some headroom for increased distributions.

Graham Hunt asked about Ferrovial's perspective on the impacts of AI and autonomous vehicles on its discretionary lane plans, specifically how these developments influence preparations for upcoming project bids. He also inquired about the company's strategy regarding upstream dividends from its U.S. and Canada assets, and whether there's potential to increase these distributions.

Answer

CEO Ignacio Madridejos stated that autonomous vehicles are expected to increase traffic and congestion in the short term, which is positive for managed lanes. He noted that AI implications are more complex but will be incorporated into models and bidding as more research becomes available. CFO Ernesto López Mozo added that the 407 ETR has comfortable financial ratios, allowing for potential dividend uplift. He also mentioned that I-66 could see additional leverage for dividends in the not-too-distant future, confirming some headroom for increased distributions.

Graham Hunt from Jefferies questioned if higher-than-expected upstream dividends could lead to increased shareholder returns and asked for comments on the expansion of the U.S. TIFIA framework.

Answer

CEO Ignacio Madridejos confirmed that strong asset performance is driving higher dividends but reiterated the company's commitment to its existing €2.2 billion shareholder distribution guidance for 2024-2026. He described the TIFIA framework expansion as very positive for financing large projects and noted potential benefits from streamlined environmental permits.

Graham Hunt asked for more detail on the exceptionally strong pricing in Q1 across the 407 ETR and Managed Lanes, focusing on customer segmentation strategies and demand elasticity. He also inquired about increasing U.S. investor engagement and the potential for a Capital Markets Day for the New Terminal One (NTO) project.

Answer

Executive Ernesto Lopez Mozo explained that customer segmentation involves tailored promotions for different user types on the 407 ETR and differentiated pricing for heavy traffic on U.S. Managed Lanes. He noted that demand elasticity is low as the trips are essential. Regarding the U.S., he confirmed trading volumes are supportive of a NASDAQ inclusion and that a Capital Markets Day for NTO would be natural post-opening, though none is currently scheduled.

Graham Hunt asked about Ferrovial's investment allocation priorities between the U.S. and other global markets, and the strategies being considered to stimulate U.S. trading volumes to support index inclusion.

Answer

CFO Ernesto Lopez Mozo affirmed that the primary focus for capital allocation is the U.S. pipeline, particularly in toll roads, though attractive global assets would be considered. Corporate Finance Director Ignacio Del Pino added that the company will focus on continued investor education, proactive engagement, and conference attendance in the U.S. to boost trading volumes.

Sought clarification on comments about potential traffic weakness for the summer, asking if this was based on specific data points or general uncertainty, particularly regarding the U.S. market.

Answer

The comment was specific to early indicators of potentially less strong demand from the U.S. market and some weakness in domestic traffic, not a general summer slowdown. The company's overall guidance remains unchanged, though various industry uncertainties persist.

Graham Hunt from Jefferies asked for the mid-to-long-term ambition for U.K. Construction margins, whether the bidding environment is becoming more competitive, and for an update on the capital allocation framework and expected shareholder returns.

Answer

CFO Phil Harrison reiterated the 2-3% U.K. margin target, while CEO Leo Quinn stated a more ambitious goal of 4-5% is achievable with the right contracts. Quinn noted the bidding environment is competitive but the increased selling expense is to handle volume. Harrison confirmed the commitment to a multiyear buyback, with specifics to be decided at year-end.