Abertis Infraestructuras : ’ net profit reaches €897Mn euros in 2017, 13% more compared to the previous year

The Group's revenue exceeds €5,000Mn for the first time ever

• Results surpassed forecasts:
  • Revenue: €5,323Mn (+13%).
  • EBITDA: €3,480Mn (+14%)
  • Net profit: €897Mn (+13%)
• More than €3,600Mn invested in growth and extending the lifespan of concessions.
• Abertis strengthens its position in key markets through the acquisition of minority stakes: in France, over €2,100Mn; and in Italy, close to €200Mn.
• Award of a new concession in Brazil, ViaPaulista, and a new public-private partnership agreement in Argentina for new investments in its road network, in exchange for an extension of the Ausol and GCO concessions.
• Robust traffic growth in the Group's main markets such as France (+1,5), Spain (+3.9%), Italy (+3.2%), Chile (+4%), Brazil (+3.2%) and India (+9.6%).
• Road safety: declines in the accident (-3%) and fatality (-6%) rates. Particularly noteworthy were the improvements in Brazil and Chile.
• Successful completion of the 2015-2017 Strategic Plan, with all targets achieved:
  • Focus: IPO of the terrestrial telecoms business (Cellnex) and sale of the last airport assets.
  • Efficiency: accumulated annual savings of €416Mn in the period.
  • Growth: close to €7,000Mn invested
  • Shareholder remuneration: a 10% annual increase in the dividend; around €2,200Mn paid out in dividends.

Abertis posted better than initially forecast improvements in all its key indicators in 2017, with net profit of around €900Mn (+24% like-for-like), EBITDA of €3,480Mn (+14%) and revenue which, for the first time ever, surpassed €5,000Mn (+13%). Profit for the year was boosted by the improvement in the gross margin and the greater contribution from the business in France and Italy following an extensive minority interest purchase plan.

In 2017, the Group invested over €3,600Mn in organic expansion, the largest outlay in the company's history. Of this, around €3,000Mn was invested in acquisition-led growth: acquisitions in France and Italy, the purchase of two toll roads in India, and the award of the ViaPaulista concession in Brazil.

2017 was also the final year of the 2015-2017 Strategic Plan, with success achieved in the four priority areas: growth, focus, efficiencies and increasing shareholder remuneration.

Traffic performance

Traffic continued to grow in 2017, surpassing all estimates. Average Daily Traffic grew in all the Group's main markets, with advances in Spain (+3.9%), France (+1.5%) and Italy (3.2%).

In the Americas, notable increases were posted in Chile (4%) and Brazil (3.2%). In India growth stood at around 10%, confirming it as an economy with significant growth potential.

In the sphere of road safety, the Group posted improvements in both its accident (-3.2%) and mortality (-6.1%) rates and in the number of fatalities (-3.4%). Especially noteworthy was the performance in Brazil, where road safety indicators improved considerably.

Income statement

Revenue in 2017 totalled €5,323Mn, up 13% year-on-year (restated due to the reclassification of Hispasat as 'Discontinued activities'), thanks to the increase in traffic and the inclusion of new assets in the consolidation scope.

EBITDA totalled €3,480Mn (+14%), due to, among other things, the consolidation of the Group's efficiency plans, which underpinned an improvement in the EBITDA margin to an average of 65.4%.

Discretionary cash flow reached almost €2,000Mn, like-for-like up 11.5% compared with 2016. Net profit grew to €897Mn (+13%). In like-for-like terms, net profit increased by 24% compared to previous year.

Investment in growth

Investment in 2017 exceeded €3,600Mn, a new record for the company. Of this amount, around €3,000Mn was invested in acquisition-led growth, including the purchase of new shareholdings and of new assets, with the aim of increasing the lifespan of the asset portfolio.

In France, outright control was secured of Abertis' subsidiary in the country. In total, Abertis has spent over €2,200Mn on this growth project in the Group's main market. This transaction has had a positive impact on the income statement, contributing €157Mn to net profit.

Abertis also increased its interest in its Italian subsidiary, A4 Holding. Through different agreements, the Group acquired additional minority interests, achieving around an 84% stake in the concessionaire for the A4 and A31 toll roads, with a total outlay of €179Mn. The Group has continued to pursue this strategy at the start of 2018 and now has a shareholding of more than 90% in A4 Holding.

In addition, in March Abertis completed the acquisition of two toll roads in India, the NH-44 and the NH-45, for a total of €135 million. The transaction marks Abertis' entry into the Asian market, a key step in the company's geographical diversification process.

In October, Abertis' Brazilian subsidiary Arteris secured the 30-year, 720-kilometre ViaPaulista concession for €396Mn.

With regard to organic growth, the Group invested over €700Mn, mainly in the programme to improve the toll road network of Arteris in Brazil (€458Mn) and Plan Relance projects in France (€151Mn).

Public-private partnership agreements

The Group negotiated major public-private partnership deals in 2017 entailing further investment in exchange for the extension of the length of concessions and rate increases.

In France, Sanef reached agreement with the French government to implement a new upgrade plan for the country's toll road network. Under the terms of this agreement, Sanef will invest €147Mn in its network in exchange for an additional rate increase between 2019 and 2021.

In Argentina, the Group reached new agreements with the Argentine Transport Ministry on fresh investment in the toll road network of its concessionaires Ausol and Grupo Concesionario del Oeste. Total investment commitments for the coming years amount to $680Mn and will entail the extension of the two companies' concession period until 2030.

Efficient debt management

In 2017 the Group continued to pursue a debt management policy aimed at increasing the life of concessions and reducing financing costs, highlighting the efficiency of the company's active balance sheet management and reducing exposure to financial risks.

In 2017, the company completed two bond issues in France totalling €1,000Mn while in Brazil Arteris was involved in the third largest corporate bond issue in the country (BRL 2.100Mn). Bonds were also successfully repurchased in France, Italy and Chile.

In addition, the Group has signed a sustainable loan whose cost is linked to the environmental, social and corporate governance performance of the company (ESG), combining thus the company's strategy for the active management of cost of debt with its efforts to improve sustainability.

The average cost of the Group's consolidated debt was reduced from 4.8% to 4% in 2017, while the cost of corporate debt eased from 3.1% in 2016 to 2.1% at the end of 2017.

Abertis' consolidated net debt in December 2017 stood at €15,367Mn, compared with €14,377Mn in 2016. This increase was largely due to the impact of the investment in organic and acquisition-led growth in the period. The net debt/EBITDA ratio decreased from 4.6x in 2016 to 4.4x in 2017.

2015-2017 Strategic Plan: commitment and delivery

In 2017 the Group successfully completed the 2015-2017 Strategic Plan, delivering on all the core commitments made.

Abertis has invested up €7,000Mn in growth since 2015, enabling it to bolster its presence in key markets such as France, Brazil and Chile and enter new ones such as Italy and India, thereby boosting the Group's geographical diversification.

With regard to focus, Abertis is now a pure toll road operator following the flotation of the terrestrial telecoms business (Cellnex) and the disposal of the final airports assets in 2015.

With regard to efficiencies, the Group has registered cumulative savings of more than €400Mn over the last three years, surpassing the target initially set.

Finally, the Group has fulfilled its pledge to deliver growing shareholder remuneration, with 10% annual dividend growth between 2015 and 2017. In total, Abertis has distributed €2,166Mn in dividends over the last three years.

Board of Directors resolutions

The Board of Directors of Abertis resolved to propose to the 2018 General Shareholders' Meeting, which will take place on 13 March 2017, the payment of a second dividend against 2017 earnings of €0.40 gross per share.

This second dividend payment, together with the first dividend paid in November, brings the total gross ordinary dividend per share to €0.80, in keeping with the commitment in the Strategic Plan. The total shareholder payout in 2017 will be €792Mn.

The Abertis' Board of Directors decided yesterday, unanimously and with immediate effects:

To arrange, in agreement with the Vicepresident-Chief Executive Officer Mr. Francisco Reynés Massanet, his dismissal as Vicepresident-Chief Executive Officer and member of the Board of Directors, thanking him for the services rendered to the Company.

To appoint, by cooptation at the proposal of the Appointments and Remuneration Committee, Mr. Francisco José Aljaro Navarro as Executive Board Director, in the position of Chief Executive Officer, in order to cover the vacancy occurred as a consequence of the above mentioned dismissal.

Accordingly, the Board of Directors agreed to propose to the Annual General Shareholders' meeting the ratification of the appointment of the new Board member.