BAA owner makes profit after asset sales

The Spanish owner of airports operator BAA has swung to a net profit in 2010 from a steep loss a year ago, after a drive to trim debt produced substantial one-off gains from asset sales.

Infrastructure firm Ferrovial posted net profit of €2.16bn (£1.82bn) in 2010, compared with a forecast for €2.67bn in a Reuters poll.

Analysts said the gap was mainly due to an unexpected €734m provision against loss of value in BAA.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell three per cent to €2.51bn in 2010, but beat forecasts thanks to a return to growth at its core construction division.

“EBITDA results were just slightly below our expectation for airports, but we did not adjust these estimates for the extreme December weather. As such the modest scale of the miss is encouraging,” said RBS analyst Andrew Lobbenberg.

“The notable surprise is in construction, where Ferrovial reported year-on-year EBITDA growth despite the challenges of the Spanish market, boosted by strong trading in Poland and the US.”

However, investors are more concerned with Ferrovial's planned sale of ten per cent of BAA in the first half. The sale is intended to put its holding below 50 per cent, allowing it to deconsolidate BAA's debt on its balance sheet.

Ferrovial's net debt fell 11 per cent to €19.8bn in 2010, helped by a string of asset disposals such as ten per cent of crown jewel Canadian toll road 407 ETR and Chilean toll roads.

Its shares, which have risen about 20 per cent this year thanks to its drive to cut debt, were up 0.9 per cent in morning trading, while the blue chip IBEX index was down 0.2 per cent.

Yesterday, BAA said it expected profit to grow strongly in 2011 as an economic recovery pushes up demand for travel, helping it shrug off a year of major disruption.