"When the markets allow it." The CEO of Ferrovial repeated this phrase up to three times, Ignacio Madridejos, during the shareholders' meeting held last Friday, to refer to the sale of the Services division. The construction company expected to close in 2020 this operation that it launched more than a year and a half ago, but which is being delayed due to the health crisis caused by the coronavirus.
Madridejos first faced shareholders since his appointment in October last year. It was an atypical meeting, which had to be followed telematically due to the confinement measures decreed by the Government to stop the pandemic. Even so, before an empty auditorium, he made an effort to transmit, through the screen, the assurance that they will continue with the divestment of the entire service business.
"The current crisis may delay the sale process until the markets stabilize," insisted the CEO. These statements were reinforced by the words from the president, Rafael del Pino, which persevered in its commitment "with the complete sale of the Services division, although the current situation in the markets may delay the operation."
The first step is to carry out the transfer of its Australian subsidiary Broadspectrum, which represents 23% of the division, to the specialized infrastructure firm Ventia Services Group. This operation, set at 303 million euros, was agreed at the end of 2019 and Madridejos expects that "it will be completed before the third quarter of this year", once all the necessary authorizations have been obtained.
In order to place the rest of the business, the shareholders' meeting approved several proposals, such as the complete sale to an interested company or giving it out, little by little, after dividing it by country or by asset.
THE SERVICES DIVISION, A PROFITABLE BUSINESS
Ferrovial wants to get rid of this division despite the fact that its performance continues 'in crescendo', with a year-on-year increase in sales of 3.1% during last year, up to 6,995 million. It has even won new awards, such as roads in Canada and defense contracts in the United Kingdom, among others. However, the service business is not in their plans.
The construction company has a detailed roadmap for the next five years that it presented at the end of January: the 'Horizon 24'. This strategic plan contemplates a cost reduction of more than 200 million and an annual EBITDA growth of 11%, objectives that it hopes to achieve without this division.
The plan was carried out before the coronavirus pandemic broke out, but Del Pino is convinced that Ferrovial "will successfully emerge from this crisis." The President stressed that they have liquidity of around 6,000 million and a net cash flow of 1,600 million, thus covering the debt maturities expected in 2020, which amount to 1,017 million. Of course, he recognized a "great impact" due to the suspension of works and the drop in traffic on highways and airports.