Ferrovial Construction (UK) started 2022 with a £1bn order book; a year later it was down 20% at £795m; it started 2024 at £648m as a result of securing no new contracts last year.
The Spanish company is particular abut the work it takes on, preferring major complex projects, like Crossrail and HS2.
“We target complex infrastructure schemes,” Ferrovial Construction (UK) managing director Karl Goose said in an interview with The Construction Index. “We don’t buy contracts. It has to be the right project.”
Ferrovial’s BFV joint venture with Bam Nuttall and Vinci was shortlisted for the £9bn Lower Thames Tunnel contract but lost out to Bouygues-Murphy. BFV was also shortlisted for the associated £450m LTC Kent approach roads contract but lost out to Skanska.
Despite this, financial results for Ferrovial Construction (UK) Ltd, published today, show revenue at a record high, reaching £527m for 20223 (2022: £493m), thanks to its work on HS2 in the EKFB joint venture with Eiffage, Kier and Bam Nuttall, its now-completed work with Laing O’Rourke on the Thames Tideway super-sewer and the £2.2bn Silvertown road tunnel in London as part of RiverLinx CJV with Bam Nuttall and SK E&C. The latter project is due to complete in 2025, with no such major projects in the UK coming on stream to replace it.
Against this background, Karl Goose said, Ferrovial has teamed up with local contractors in the Republic of Ireland to bid for major projects over there. Ferrovial Agroman, as it was then, had a strong presence in Ireland before the 2010 economic collapse and always planned to return when the time was right. The Irish government has an enticing €165bn National Development Plan that includes major new roads and rail schemes.
Goose said that as well as diversifying geographically, Ferrovial UK is also looking to enter new segments in the UK, particularly water. Ferrovial is not on any water company frameworks for the new AMP8 investment period, but “there are ore projects outside of the frameworks that you might think,” he said. Ferrovial UK will seek to leverage the experience and expertise of sister companies PLW Waterworks in the USA ad Cadagua in Spain to bring to bear in the UK, he said.
“Our model has always been organic growth,” he said.
The 2023 results also show, as well as record turnover, a return to profit at pre-tax level for Ferrovial Construction (UK) Ltd, making £5.5m profit before tax (2022: £30.1m pre-tax loss).
The 2022 result was particularly hit by a provision for forecasted losses on a single contract, understood to be Silvertown Tunnel. Without any similar provision in 2023, the numbers have improved substantially, but it still made an operating loss of £1.2m (2022: £30.4m operating loss).
Financial income of £7.7m gave it a pre-tax profit of £5.5m but after a £12m tax bill the bottom line loss was £6.5m for 2023.
However, Karl Goose, who joined Ferrovial in 2007 and has been managing director since February 2020, is satisfied with how things are going and expects to deliver operating margins at around industry norms next year.
“I think we are going in the right direction,” he said. “Our projects are going super-well.”
The cash position remains strong at £189m (2022: £212m) with the decrease attributed to the lifecycle of existing projects.
He added: “We remain optimistic about the future and opportunities to build on our strong operational track record in the UK.”
The publication of Ferrovial Construction (UK)’s financial results follows the 2023 annual results of the Spanish parent company earlier this year showing 13% revenue growth to €8,514m (€7,070m from construction worldwide) and €460m net profit.
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