Ferrovial falls on the stock market after announcing dividends of 1.7 billion until 2026 | Companies

Ferrovial’s promise to pay $1.7 billion in dividends between 2024 and 2026 has not convinced the market. Shares lost 3.16% on the day Rafael del Pino, Ignacio Madridejos and other members of senior management presented the infrastructure firm’s plans to potential North American investors.

For the first time, Ferrovial celebrated its Capital Markets Day in the United States, namely in New York, which served as a prelude…

Ferrovial’s promise to pay $1.7 billion in dividends between 2024 and 2026 has not convinced the market. Shares lost 3.16% on the day Rafael del Pino, Ignacio Madridejos and other members of senior management presented the infrastructure firm’s plans to potential North American investors.

This was the first time Ferrovial celebrated its Capital Markets Day in the United States, specifically in New York, which serves as a prelude to its Nasdaq stock market debut scheduled for this first quarter. This 1.7 billion over three years will include treasury stock transactions.

Ferrovial will receive 2,200 million in dividends from its concession assets over the same period, signaling a recovery following the end of the Covid-19 crisis. The bill no longer includes London Heathrow Airport, where Ferrovial has put up a 25% stake for sale. The expected revenue of approximately $2.8 billion, agreed with Ardian and PIF, will serve to drive growth as well as reward investors.

Those in the room, many of whom are new to this type of Ferrovial event, were given an outline of the strategic plan, which will be published in the coming weeks. The jump into the New York stock market is aimed at raising capital in North America and increasing stock liquidity, attracting the attention of large institutional investors. Chief Financial Officer Ernesto López Moso noted that the liquidity of shares on the Dutch and Spanish stock exchanges will be analyzed as “they tend to be concentrated.” It is possible that Ferrovial will eventually leave the Madrid or Amsterdam trading floors and focus its efforts on New York.

President Del Pino highlighted the “great opportunities for investment and infrastructure development offered by the United States, where the company has been operating for 25 years.” Immediately afterward, CEO Madridejosa outlined Ferrovial’s trajectory of offering shareholders annual returns of 12% over the past ten years. The executive also touted financial discipline that merits a “BBB” credit rating from S&P and Fitch.

With a market capitalization of just over $25.1 billion, Ferrovial has 80% of its value in assets located in North America. Over the last decade, the company, based in the Netherlands and with a strong presence and listing in Spain, has rewarded its members to the tune of $5 billion, generating $4,800 million from its highways and airports. The average annual dividend of 500 million paid to shareholders is 13% below the average 565 million per year planned for 2024, 2025 and 2026.

On the investment side, the infrastructure giant has invested $2.8 billion in equity capital into new concessions over the past ten years, with 58% of its efforts going toward US highway development. .with a maturity of 1,800 million. Madridejos put Ferrovial’s U.S. interest in context, citing reports that estimate the need for transportation infrastructure development through 2040 at four trillion dollars.

Enterprises with free tariff

In addition to establishing itself as a benchmark virtually unparalleled in the U.S. stock market, Ferrovial has highlighted its ability to freely charge above-inflation tolls on highways that account for 80% of their cost. The company has developed and operates concessions such as LBJ, NTE and 35W in the Dallas (Texas) area; I-66 in Virginia and I-77 in Charlotte, North Carolina. And its main asset, 407 ETR Toronto, is located in Canada. The company expects the first dividends this year in 2024 from the I-77 and I-66 highways.

From this basket, Cintra’s highway subsidiary is implementing seven new toll roads in the United States: I-285 E, I-285W and SR-400 in Atlanta, Georgia; I-77S from Charlotte, North Carolina; I-495 SW in Alexandria, Virginia, and two facilities in Nashville, Tennessee, I-24 and I-65.

Also in the United States, the largest airport project to date is being implemented, associated with the creation of a new terminal combining T1, T2 and T3 of New York’s JFK Airport. Ferrovial owns a 49% stake in the concession consortium, and New Terminal 1 will remain in operation until 2060 in exchange for a total investment of $9.5 billion (€8.87 billion). Ferrovial Airports chief executive Luc Bugeja outlined an initiative aimed at increasing the terminal’s capacity from the current 8 million travelers to 23 million travelers. The consortium of concessionaires already has agreements to host five airlines that will account for 25% of traffic expected in 2027: Korean Air, Air France, KLM, LOT and Etihad.

With the opening of the first phase of the New York Terminal (NTO) scheduled for June 2026, Ferrovial says it is in advanced talks with other airlines to occupy their gates. The first dividends from NTO are expected before 2027.

Infrastructure CEO Ignacio Gaston expressed caution about Ferrovial’s approach to the construction business. The group is committed to countries with proven legal security and prioritizes actions to resolve the group’s own differences, such as concessions. The goal is for 25% of the income from the works to match the work of the group itself. The construction portfolio reaches 14.7 billion, and engineering bases are located in Austin (Texas, USA), Santiago de Chile (Chile), Bogota (Colombia), Madrid (Spain), London (UK), Warsaw (Poland) and Sydney (Australia).

The company has been the subject of intense controversy for much of 2023 over the move of its headquarters from Madrid to Amsterdam. It also bares its chest with a balance sheet in which debt weighs 6,600 million, leaving the Treasury’s net position at 600 million if infrastructure is excluded. The near-term horizon appears to be free of significant maturities, and 93% of the debt is protected from interest rate fluctuations because it is signed at a fixed rate. Liquidity, not counting infrastructure projects, reaches 5 billion.

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