20-F: Ferrovial Reports Strong Operational Growth in 2025 Amid Strategic Divestments

Ferrovial SE announced a 5.2% revenue increase to €9,627 million in 2025, driven by robust performance in its Highways and Construction divisions, alongside strategic asset rotations and a remediated internal control weakness.

Summary

• Revenue increased by 5.2% to €9,627 million in 2025, up from €9,148 million in 2024, primarily due to improvements in the Highways and Construction Business Divisions.
• Net profit for the year decreased significantly to €1,150 million in 2025 from €3,490 million in 2024, mainly due to the large one-off gain from the 19.75% Heathrow Airports Holdings stake sale in 2024.
• Adjusted EBIT increased by 7.3% to €967 million in 2025 from €901 million in 2024, reflecting strong underlying operational performance.
• Adjusted EBITDA grew by 8.6% to €1,457 million in 2025 from €1,342 million in 2024.
• Completed the sale of the entire 50% stake in AGS Airports Holdings Limited for net proceeds of approximately GBP 450 million (generating a capital gain of €272 million).
• Sold the remaining 5.25% stake in Heathrow Airport Holdings for approximately GBP 455 million, completing the divestment and recognizing an additional €27 million.
• Acquired an additional 5.06% stake in the 407 ETR highway for CAD 1.99 billion (€1.3 billion), increasing total ownership to 48.3%.
• Acquired Milano Solar, LLC for USD 19 million for a 250 MW solar photovoltaic facility in Texas, and Powernet I,S.L.U. for telecommunication and network engineering activities.
• The Construction Business Division's Order Book increased by 4.1% to €17.4 billion as of December 31, 2025, with 84% from public sector clients.
• Highways Business Division revenue increased by 9.4% to €1,374 million, driven by increased toll rates in US Managed Lanes and higher traffic on 407 ETR.
• Airports Business Division revenue increased by 22.0% to €111 million, with positive commercial revenues from Dalaman airport.
• Energy Business Division revenue increased by 25.6% to €339 million, reflecting growth across all activities.
• Consolidated Net Debt decreased by €168 million to €5,893 million at December 31, 2025, from €6,061 million at December 31, 2024.
• A material weakness in the design and operating effectiveness of internal control over financial reporting, identified in the 2024 20-F, has been remediated as of December 31, 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, reflecting strong operational growth and strategic execution, despite the expected decline in reported net profit due to prior-year one-off gains. The remediation of internal control weaknesses and continued investment in core assets are favorable, though project delays and macroeconomic risks warrant ongoing monitoring.

Positives

• Strong revenue growth of 5.2% and significant increases in Adjusted EBIT (7.3%) and Adjusted EBITDA (8.6%) indicate robust underlying operational performance across core business divisions.
• Successful completion of strategic divestments, including the remaining 5.25% stake in Heathrow and the entire 50% stake in AGS Airports, generating substantial capital gains and streamlining the portfolio.
• Increased ownership in the high-quality 407 ETR highway to 48.3% demonstrates confidence in a key asset and long-term value creation.
• The Construction Business Division's Order Book reached a record €17.4 billion, providing strong future revenue visibility and supporting Ferrovial's growth strategy.
• The Energy Business Division showed significant revenue growth of 25.6%, indicating successful expansion in renewable energy and transmission infrastructure.
• Remediation of the previously identified material weakness in internal control over financial reporting enhances governance and financial reporting reliability.
• Inclusion in the Nasdaq-100 Index is expected to enhance visibility and broaden the shareholder base, reflecting market confidence.

Negatives

• Net profit for the year decreased by 67.0% to €1,150 million in 2025, primarily due to the absence of the large one-off gain from the Heathrow stake sale in 2024.
• Dalaman airport experienced a 1.1% decline in passenger traffic in 2025, attributed to macroeconomic conditions and geopolitical stressors in Turkey.
• Traffic on the NTE highway decreased due to ongoing capacity improvement construction works.
• The 407 ETR concession agreement includes potential payments to the province of Ontario if annual traffic levels do not meet minimum thresholds, with €41 million accrued as an expense in 2025, payable in 2026.
• The negative impact of exchange rate fluctuations on equity attributable to the parent company was €434 million in 2025, primarily from the depreciation of the Indian Rupee, US dollar, and Canadian dollar against the euro.

Risks

• Major conflicts, acts of violence, and geopolitical unrest could negatively impact business, particularly NTO at JFK traffic estimations (due to Russian airspace closure affecting U.S.-China market) and Polish operations (Budimex) due to the Ukraine conflict, potentially increasing raw material costs and decreasing availability.
• Slow economic growth or contraction could adversely impact demand for highways and air travel, reducing related income and the availability of future projects.
• An inflationary environment could negatively affect operating margins in construction contracts (especially unhedged design and build projects) and disincentivize long-term off-take agreements in renewable energy, impacting predictable cash flows.
• Exchange rate fluctuations, particularly for the Canadian dollar, U.S. dollar, Indian rupee, Polish zloty, pound sterling, Chilean peso, and Australian dollar, could materially affect financial results, and hedging contracts may not provide adequate protection.
• Interest rate fluctuations may increase net financial expense for variable rate indebtedness and refinancing costs, potentially not fully offset by hedging arrangements.
• Dependence on public and private sector projects makes the company vulnerable to changes in government infrastructure strategy, funding availability, and incentives, which could impact project volume.
• Operating in highly regulated environments means changes in aviation, toll road, waste management, public procurement, construction, and energy sector regulations could impose significant costs or hinder business growth.
• Increased risks due to climate change, including extreme weather events affecting infrastructure and project progress, and transitional risks (economic, regulatory, reputational) associated with decarbonization efforts.
• Natural or man-made disasters and health emergencies could disrupt operations, damage infrastructure, lead to legal claims, and harm reputation, with potential for uninsured or underinsured losses.
• Reliance on a small number of major projects (e.g., 407 ETR, NTO) means termination or material alteration of any of these could have a significant adverse effect on overall business.
• Operating in a highly competitive global market with scarce high-value opportunities could lead to pressures on prices and profit margins, and limit the ability to secure new projects on favorable terms.
• Risks related to past and future acquisitions or divestments, including integration difficulties, failure to achieve anticipated benefits, uncollected payments, and transmission of liabilities (e.g., environmental, tax).
• Flaws in estimates, changes in underlying assumptions, or amendments to project plans could result in financial losses, contractual penalties, or reputational damage, as seen with the NTO project delay.
• Accidents at project sites or infrastructure assets could cause harm, disrupt operations, trigger legal claims (e.g., NTE 35W accident litigation), and damage reputation, with potential for uninsured losses.
• Growth of alternative infrastructures or changes in transport trends could reduce traffic and revenues for highways and airports.
• Dependence on subcontractors and service providers, and access to skilled labor, poses risks of delays, increased costs, and impact on competitiveness if these resources are unavailable or underperform.
• Increased digitalization exposes the company to cyber threats, technology failures (including AI and quantum computing), and misuse, potentially leading to operational disruptions, data breaches, legal claims, and reputational damage.
• Litigation risks, including claims and lawsuits arising in the ordinary course of business (e.g., CNMC anti-competitive behavior fine, Turów Power Plant lawsuit), could have a material adverse effect on reputation and financial results.
• As a foreign private issuer, U.S. investors may face difficulties bringing actions and enforcing judgments against the company or its non-U.S. directors/executive officers.
• Joint venture and partnership operations expose the company to partners' financial condition, performance, and decisions, potentially leading to disputes, loss of business opportunities, or financial liabilities.
• Liquidity risk, including limitations in accessing capital markets, increases in financing costs, and credit risk from counterparties, could adversely affect the ability to fund operations and growth.
• Equity swaps linked to the company's share price, used to hedge incentive share plans, could result in losses if the share price decreases below the reference price, impacting the income statement.
• Exposure to complex and evolving tax laws in multiple jurisdictions, with potential for reassessments, fines, and penalties, and uncertainty regarding the use of carry-forward losses and tax attributes post-Merger.
• Risk of being classified as a passive foreign investment company (PFIC) for U.S. federal income tax purposes, which could subject U.S. investors to adverse tax consequences.
• Volatility in the market price of ordinary shares due to various factors, including internal contract reviews, seasonality, non-recurring events, and general market conditions, could lead to investment losses.
• Future dividend payments are discretionary and depend on financial condition, potentially impacting the market price of ordinary shares.
• Future issuances of additional ordinary shares or convertible securities could dilute existing shareholders' holdings, especially for those unable to exercise pre-emptive rights.
• Multiple listings of ordinary shares on different exchanges (Nasdaq, Euronext Amsterdam, Spanish Stock Exchanges) may adversely affect liquidity and price due to market fragmentation and arbitrage opportunities.
• Compliance with public company requirements, including Sarbanes-Oxley Act, may strain resources and increase costs, and future material weaknesses in ICFR could negatively affect financial markets.

Future Outlook

Ferrovial expects traffic to increase in most highway assets in 2026, with continued optimization and cost control for 407 ETR. US highways anticipate soft cap toll rate increases based on CPI. India's IRB and Private InvIT are expected to reach significant project milestones. The Airports division plans global investment growth, focusing on North America and Europe, with NTO at JFK's Phase A completion targeted for Fall 2026. The Construction division anticipates stable sales in 2026, supported by a record order book, and will continue to pursue complex greenfield projects. The Energy division aims for continued growth through greenfield projects and acquisitions in renewable energy. The Digital Infrastructure business line expects rapid growth in data centers, while the waste management business is exploring divestment opportunities.

Management Comments

• The Plan is intended to align the Participants interests with those of the Company and its shareholders, and to provide the Company and its Group with an instrument to attract and keep the best managers and executives.
• Ferrovial is focused on developing and operating sustainable infrastructure that creates value for our shareholders and other interested parties.
• We believe that our experience and wealth of proprietary data related to urban congestion enables us to be competitive in product offering and revenue optimization.
• We believe that our integrated business model is based on four business units: Highways, Airports, Energy, and Construction.
• We believe that the future of energy depends largely on two global trends: (i) electrification of transportation and industrial processes, (ii) increasing power demand from digitalization, artificial intelligence and data centers.
• We believe that our sources of liquidity and available working capital are sufficient to comply with our present requirements and future obligations for at least twelve months following the date of this Annual Report.

Industry Context

StockSavvy.ai notes that Ferrovial's strategic focus on complex greenfield infrastructure projects, particularly in North America, aligns with global trends of increasing demand for modern, efficient transportation and energy infrastructure. The company's emphasis on dynamic pricing schemes in highways and terminal-related opportunities in airports positions it to capitalize on urban congestion solutions and air travel growth. The expansion into renewable energy and digital infrastructure (data centers) reflects a proactive response to global electrification and digitalization trends. However, the highly competitive nature of the global infrastructure market, coupled with macroeconomic pressures like inflation and geopolitical instability, presents ongoing challenges for securing profitable contracts and managing project costs, a common theme across the industry. The remediation of internal control weaknesses is a positive step in an environment of increasing regulatory scrutiny for multinational corporations.

Comparison to Industry Standards

• Ferrovial's Adjusted EBIT Margin of 4.6% in Construction in 2025, up from 3.9% in 2024, indicates an improvement in profitability in a sector often characterized by low margins and aggressive commercial strategies, as noted by the company itself.
• The 407 ETR's revenue compound annual growth rate of 8.3% for 2009-2025 demonstrates strong performance for a toll road concession, outperforming many traditional infrastructure assets globally.
• The NTO at JFK project's all-in interest cost of approximately 5% for its Phase A financing (approximately USD 6 billion) is competitive for a large-scale airport infrastructure project, especially given the current interest rate environment.
• Ferrovial's credit ratings of BBB and BBB with a stable outlook from Standard & Poor's and Fitch, respectively, place its corporate senior debt within the Investment Grade category, indicating a solid financial standing compared to industry peers.
• The company's commitment to the Science Based Targets Initiative (SBTi) since 2017, with targets to reduce Scope 1 & 2 emissions by 42% and Scope 3 emissions by 25% by 2030 (base year 2020), positions it favorably against global benchmarks for sustainability in the infrastructure sector, such as Vinci and ACS.

Management Changes

Corporate Governance

Legal Proceedings

• Ongoing litigation related to a multiple vehicle accident on the NTE 35W highway in Fort Worth, Texas (February 11, 2021), involving 133 vehicles, six fatalities, and numerous injuries. 29 claims were filed, with six fatality cases fully resolved and 21 injury cases ongoing. No provision recorded due to expected insurance coverage.
• Civil lawsuit against Cintra Infrastructures SE regarding the invalidity of its purchase of shares in Auto-Estradas Norte Litoral, S.A. (Portugal) was settled and approved by the Court on December 18, 2025, with res judicata issued on January 16, 2026.
• Penalty proceedings initiated by the Spanish National Markets and Competition Commission (CNMC) against Ferrovial Construcción, S.A. for alleged anti-competitive behavior. A fine of €38.5 million was imposed, but enforcement was suspended by the Spanish National High Court pending appeal. No provision recorded as outcome is considered unlikely to be unfavorable.
• Four environmental matters involving D4R7 Construction s.r.o. (Slovakia) related to alleged technical violations during the D4R7 highway project, seeking monetary damages. Considered improbable to result in financial risk; no provisions set aside.
• Fine imposed by the National Infrastructure Authority (NIA) of Colombia on the concessionaire for the Ruta del Cacao project for project delays. Arbitration proceedings initiated against NIA, with a force majeure decision issued on September 15, 2025. Risk is provisioned.
• Lawsuit filed by FAM Construction, LLC (I-66 project, USA) in January 2024 for costs incurred due to the COVID-19 pandemic, which remains open. Claims considered in future loss provisions.
• Lawsuit received by Budimex S.A. on January 17, 2025, claiming €248.2 million in liquidated damages for reduced availability and alleged delays at the Turów Power Plant. Risk duly provisioned based on Budimex's share in the consortium.
• Ongoing tax-related litigation in Spain for a disputed sum of €198 million, mainly related to corporate income tax (CIT) and VAT for periods 2002-2019. Provisions of €84 million recorded.
• Favorable decision from the Court of Justice on June 26, 2025, regarding tax amortization of financial goodwill on acquisitions of Amey and Swissport, leading to an expected recovery of €45 million plus delay interest from the Spanish Tax Agency for years 2006-2021.
• Webber Infrastructure Management Inc. is undergoing a tax audit by the State of Florida for Sales & Use Tax (June 2021-June 2024), with a Notice of Proposed Assessment (NOPA) of approximately USD 1.44 million issued on November 13, 2025. Informal protest filed.
• Centella Project (Chile) faces two pending force majeure proceedings that could lead to penalties for construction delays. A provision covers the estimated risk.

Related Party Transactions

• Transactions with Banco Sabadell, S.A. (where Alicia Reyes served as a non-executive director until March 20, 2025) included financing obligations, bank guarantees, and expenses totaling approximately €190 million from January 1, 2025, through March 20, 2025.
• Service agreements with Executive Directors are in place, with details on compensation provided in the filing.
• A company controlled by Rafael del Pino (Chairman) hired Ferrovial Construcción, S.A. as project manager for building construction and refurbishment works, carried out on market terms.
• Rafael, Ignacio, and Juan del Pino Fernández-Fontecha (sons of Rafael del Pino) entered into a construction contract with Ferrovial Construcción, S.A. for real estate, completed between October and November 2025 on market terms.
• Transactions between Group companies and equity-accounted companies in 2025 included €2 million in services received, €62 million in services provided, €21 million in net financial expenses/income, €50 million in payables, €29 million in receivables, and €139 million in net receivables due to financial transactions.
• Construction work performed by the Construction business line for the Group's infrastructure concession operators, not eliminated on consolidation, amounted to €179 million billed and €178 million in recognized sales in 2025, resulting in a profit of €4 million attributable to the Company's holdings, net of taxes and non-controlling interests.

Stakeholder Impact

• Shareholders: Potential for long-term value creation through strategic investments and divestments, improved operational performance, and inclusion in the Nasdaq-100 Index. However, net profit was lower due to the absence of one-off gains, and share price volatility and dilution risks from future share issuances remain.
• Employees: Participation in performance-based share plans and restricted stock unit plans aims to align interests and attract/retain talent. Increased demand for skilled labor may lead to higher compensation but also increased competition for talent.
• Customers: Continued focus on delivering complex infrastructure projects and optimizing services, but project delays (e.g., NTO) could impact service delivery and relationships. Inflationary pressures may affect project costs and pricing.
• Suppliers/Subcontractors: Reliance on subcontractors for a significant portion of operating costs (75.5% in Construction) means their performance and financial health are critical. Reverse factoring arrangements offer early payment options.
• Creditors: Decreased consolidated net debt and maintained investment-grade credit ratings (BBB/BBB stable outlook) indicate a solid financial position, enhancing access to capital markets. Project debt covenants are being complied with.
• Regulatory Authorities: Ongoing compliance with diverse and evolving regulations across multiple jurisdictions, including environmental, data privacy, and anti-corruption laws. Remediation of ICFR weakness demonstrates commitment to regulatory standards. Tax audits and litigation remain a factor.

Next Steps

• Continue investing in current assets and analyze potential new opportunities, particularly in the Airports Business Division (NTO at JFK) and Energy Business Division (Leon and Milano solar plants).
• Pursue bidding activity in target regions (North America, Europe, Australia, Colombia, Peru) for complex greenfield projects, including I285 East Express Lanes in Georgia, I24 Southeast Choice Lanes in Tennessee, and I77 South Express Lanes in North Carolina.
• Monitor the process and timeline for the completion of the first phase of construction at NTO at JFK, now targeting Fall 2026.
• Continue negotiations with airlines for NTO at JFK, building on the 25 existing agreements (16 executed contracts and 9 letters of intention).
• Assess future growth of Private InvIT on a project-by-project basis, primarily funded by asset distributions.
• Continue implementing improvement plans at Dalaman airport, including the second phase of solar power plant installation expected to be fully operational in 2026.
• Maintain the selective tendering strategy in the Construction division, focusing on profitability and diversification in sectors like energy, renewables, and specialized construction.
• Continue with the execution of greenfield projects in renewable electricity generation and transmission, and seek further acquisitions to accelerate growth in the Energy division.
• Continue developing data center campuses in Warsaw, Poland, and Alcobendas, Spain, under Ferrovial Digital Infrastructure.
• Explore opportunities to divest or exit the waste management business in the UK, as it is not aligned with the core strategy, with the Isle of Wight contract exiting by March 31, 2026, and Milton Keynes contract ending in 2026.
• The 2026-2028 Performance-Based Share Plan for Executive Directors is expected to be approved by the General Shareholders' Meeting in April 2026.

Key Dates

Recommendation

Ferrovial's 2025 results show strong operational performance with increased revenue, Adjusted EBIT, and Adjusted EBITDA, indicating healthy core business growth. Strategic divestments of non-core assets like Heathrow and AGS, coupled with increased stakes in key assets like 407 ETR and investments in new growth areas like renewable energy and digital infrastructure, demonstrate a clear and disciplined capital allocation strategy. The remediation of the material weakness in internal controls is a significant positive for governance. However, the substantial drop in reported net profit (due to the absence of a large one-off gain from 2024), ongoing project delays (NTO), and various macroeconomic and litigation risks present headwinds. While the long-term outlook remains promising given its strategic positioning in high-demand infrastructure, these factors suggest a 'hold' recommendation for seasoned investors, allowing for further observation of project execution and risk mitigation efforts before a more aggressive stance.

Keywords

Infrastructure, Construction, Highways, Airports, Energy, Toll Roads, Managed Lanes, Concessions, Divestments, Acquisitions, Financial Results, SEC Filing, 20-F, Ferrovial, ESG, Capital Allocation, Share Repurchase, Dividends, Cybersecurity, Risk Management, International Operations, Spain, United States, Canada, Poland, India, United Kingdom, Chile, Digital Infrastructure