Luis Prieto

Luis Prieto inquired about the reasons behind the 407 ETR's provision for lifetime expected credit loss and if it's a recurring event. He also asked if the construction division's strong Q4 margins suggest an upside risk to the long-term 3.5% EBIT margin outlook. Finally, he requested anecdotal evidence on customer segmentation measures specifically for the U.S. managed lanes, differentiating from the 407 ETR.

Answer

CEO Ignacio Madridejos clarified that the credit loss provision for 407 ETR was due to old accounts from a past process change, and new collections are now back to normal, so it's not expected to recur. Regarding construction, he reiterated the long-term average EBIT margin of 3.5%, noting Q4 included exceptional one-offs like change orders and mitigated risks on later-stage contracts. For U.S. managed lanes, Madridejos stated that customer segmentation is being analyzed but is more challenging than for 407 ETR due to not directly handling collections, implying a longer implementation timeline.

Luis Prieto inquired about the reasons behind the 407 ETR's provision for lifetime expected credit loss and if it's a recurring event. He also asked if the Q4 construction margins suggest an upside risk to the long-term EBIT margin outlook. Finally, he requested anecdotal evidence on customer segmentation measures being implemented in the U.S. managed lanes, distinct from the 407 ETR.

Answer

CEO Ignacio Madridejos clarified that the 407 ETR's credit loss provision was for old accounts from a past process change, and new collections are back to normal, so it's not expected to recur. Regarding construction, he reiterated the long-term average EBIT margin of 3.5%, noting Q4 included exceptional one-offs. For U.S. managed lanes, he stated that customer segmentation is being analyzed but is more challenging than for the 407 ETR due to not directly handling collections, implying a longer implementation timeline.

Luis Prieto from Kepler Cheuvreux inquired about the drivers behind the strong growth in average revenue per transaction for the I-77 and I-66 highways, and the reasons for the NTE's 13% revenue increase despite a traffic decline.

Answer

CEO Ignacio Madridejos attributed the growth in the I-77 and I-66 to strong local economies and dynamic pricing, as these assets lack a soft cap. For the NTE, he explained the revenue increase was driven by a favorable mix of peak hour and heavy traffic, which triggered more mandatory mode events, alongside annual inflation-linked toll adjustments.

Luis Prieto inquired about the calculation for the 407 ETR's Schedule 22 payment, suggesting that extrapolating Q1 figures might lead to a low full-year estimate. He also asked for an interpretation of the strong outperformance of the U.S. construction business despite adverse weather conditions.

Answer

Ernesto Lopez Mozo, an executive at Ferrovial, confirmed the reasoning on Schedule 22 was directionally correct but cautioned about high variance in the calculation. Regarding construction, he attributed the strong performance to the company's focus on its core competency in road and civil construction projects, which have fewer complexities and a more limited risk profile compared to other types of projects.

Luis Prieto asked about the expected seasonal traffic recovery for the 407 ETR, the potential timeline for inclusion in U.S. stock indices, and whether Ferrovial might adopt U.S. GAAP accounting sooner than expected.

Answer

CFO Ernesto Lopez Mozo confirmed expectations for seasonal traffic recovery on the 407 ETR, driven by better weather and construction on alternative routes. Regarding U.S. GAAP, he noted it's under consideration as it could add liquidity, but no decision has been made. Corporate Finance Director Ignacio Del Pino stated that growing trading volume in the U.S. is the key focus for index inclusion, without providing a specific timeline.

Luis Prieto from Kepler Cheuvreux asked for a breakdown of the H1 recurring EBIT organic growth between price over cost and volume, and for a further split of the price/cost component.

Answer

CEO Miljan Gutovic highlighted that Q2 marked the 14th consecutive quarter of positive price over cost. CFO Steffen Kindler added that while overall volumes had a slight negative impact, this was more than offset by positive pricing and effective cost management in areas like distribution and support processes. He noted that foreign exchange was a headwind but the company achieved a double-digit increase in recurring EBIT in local currency.

Luis Prieto from Kepler Cheuvreux asked for a breakdown of H1 recurring EBIT organic growth between price/cost and volume, and a further split of the price/cost component.

Answer

CEO Miljan Gutovic highlighted the 14th consecutive quarter of positive price over cost. CFO Steffen Kindler added that while volumes had a slight negative impact, this was offset by low single-digit pricing and cost improvements in distribution and support processes, driving double-digit EBIT growth despite FX headwinds.

Luis Prieto from Kepler Cheuvreux asked for a breakdown of H1 recurring EBIT organic growth between price-over-cost and volume, and for a further split of the price-over-cost component.

Answer

CEO Miljan Gutovic highlighted that Q2 marked the 14th consecutive quarter of positive price-over-cost. CFO Steffen Kindler added that while specific breakdowns are not disclosed, volumes had a slight negative impact, which was more than offset by positive pricing and cost management in areas like distribution, despite some FX headwinds.