In line with the strategy and the opportunities and risks discussed in Chapter 2 of this report, Ferrovial made a forecast about the development of its activities in 2016 in each business area.
The international financial situation of the markets in which Ferrovial Services operates differs between countries. In any of them there can be both situations of uncertainty and slowdown in public activities, as well as the emergence of new opportunities.
United Kingdom: The announced slowdown in activities and decreased budgets of local governments may adversely affect the volume of services contracted. However, there are opportunities for infrastructure consulting, an area in which Ferrovial Services has major capabilities differentiating it from other competitors. Equally important is the stability in the utilities which are subject to a regulatory cycle. The water sector is currently managed through 18 regional monopolies and an opening in the market is expected beginning in 2017. The energy sector is being privatized and presents significant opportunities. In 2016, the lawsuit with the City of Birmingham due to differences in the interpretation of the contract on the scope of activities in the investment phase is expected to be resolved.
Spain: The municipal elections held in May 2015 and the December general elections have slowed the bidding processes.
There are, moreover, significant opportunities in the private sector due to the tendency to outsource those auxiliary services that are not part of their core business.
Other markets: Solid sales growth in Portugal, Poland, Chile and Qatar is expected, because they are markets in which Ferrovial Services has a minor presence as yet.
The predictable behavior of the highways in operation during 2016 will depend on macroeconomic developments in the countries or States where the assets are located and their impact on traffic volumes and revenues.
The process of rotation of mature assets will be marked by the completion of agreements for the sale of the Chicago Skyway and the highways in Ireland.
In 2016 the startup of the 407 EDG (Extension I) project in Canada is expected, as is the start of work on recently awarded projects (I-77 in North Carolina in the US, Toowoomba in Australia and Ruta del Cacao in Colombia).
Also, it is expected that talks will continue with lenders in those projects in which restructuring agreements are being negotiated (SH-130 in Texas, USA and Euroscut Azores in Portugal).
During 2016 it is expected that construction revenues will remain stable, with a slight increase due to increased international activity which will offset a further decline in activity in Spain.
Spain: In 2016 a reduction in activity due to market instability as a result of strong competition and the 2015 election results, both national and local, is expected. The contracting focus will remain selective, prioritizing return on sales volume.
USA and Canada: Upon completion in 2015 of the LBJ highway in Texas several months early, the construction of major highways such as the NTE Texas Extension, I-77 in North Carolina or the 407 EDG in Canada will continue in 2016. It is also expected that work will begin on I-285 in Georgia, in which Ferrovial was designated preferred bidder.
Poland: Revenue will increase thanks to increased contracting registered in 2014 and 2015 for highway projects associated with the new framework of European funds. Results are also expected from the increase in government railroads and the increased activity in industrial construction.
United Kingdom: Increased activity supported by the planned projects in the new infrastructure plan of the British Government is expected. Added to this is the recent award of the Thames Tideway Tunnel, while continuing the implementation of other major projects such as the expansion of the Northern Line of the London Underground.
Australia: In 2015 the implementation of the first major contract for Ferrovial Agroman started, the section of the Pacific Highway from Warrell Creek to Nambucca Heads. In 2016 an increase is expected thanks to the award, together with Cintra, of the Toowoomba highway and Northern Beaches Hospital Connectivity, projects that confirm Ferrovial as a leading company in the country.
Other markets: Ferrovial Agroman is analyzing various complex infrastructure projects to be tendered in 2016 in regions with a stable presence such as Latin America (Chile, Colombia, Brazil, Peru or Mexico) and the Middle East and other countries with specific opportunities. So it was in 2015 with the designation as preferred bidder for the Bucaramanga - Barrancabermeja highway in Colombia or D4R7 in Slovakia.
In 2016 Ferrovial Airports expects to definitively consolidate operations at the airports of Aberdeen, Glasgow and Southampton under the umbrella of AGS. On the other hand, HAH will continue to work with the British government and seek the support of politicians, chambers of commerce, business associations and local communities for the expansion of Heathrow to be the option chosen to increase airport capacity in the country for its decisive contribution to boost the British economy. In addition, Ferrovial Airports will continue its bidding activity through participation in projects in France, the US and Brazil, among others.