Executive Summary / Key Takeaways

• Ferrovial is strategically pivoting towards high-growth North American infrastructure, particularly managed lanes and the New Terminal One at JFK, supported by a disciplined asset rotation strategy that divests mature assets to fund new investments.
• The company's core technological advantage in dynamic pricing and demand management for toll roads, coupled with its expertise in complex project execution, is driving robust revenue and EBITDA growth across its Highways division.
• Recent financial performance highlights strong growth in North American highways, with revenue per transaction consistently outpacing inflation and GDP, alongside solid profitability in Construction, which surpassed its long-term EBIT margin target in 2024.
• A substantial pipeline of U.S. highway assets and the ongoing development of JFK's New Terminal One underpin a positive outlook, with management guiding for a minimum of EUR 2.2 billion in shareholder distributions for 2024-2026.
• Key risks include the complexity of large-scale project execution, potential impacts from adverse weather, and competitive pressures in bidding for new opportunities, which Ferrovial addresses through strategic design and financial discipline.

A Strategic Pivot Towards North American Infrastructure

Ferrovial SE, founded in 1952 and now based in Amsterdam, the Netherlands, has undergone a significant transformation, evolving into a global leader in the design, construction, financing, operation, and maintenance of transport infrastructure and urban services. The company's overarching strategy centers on a decisive pivot towards high-growth, high-return infrastructure assets, with a primary focus on North America. This strategic shift is characterized by rigorous margin discipline, a commitment to assets with long-term pricing power, and a proactive approach to asset rotation, divesting mature holdings to fuel new, value-accretive investments.

This strategic evolution is evident in Ferrovial's recent history. The company expanded its presence in India in 2024 by acquiring a 24% stake in IRB Infrastructure Trust for €728 million, a move partially funded by the sale of a 5% stake in IRB Infrastructure Developers (IRB) for €211 million. This acquisition provides opportunities to invest directly in new assets in India, a market with robust real GDP growth and a strong pipeline of new toll roads. A crucial step in its North American focus was the commencement of Ferrovial shares trading on NASDAQ on May 9, 2024. Concurrently, Ferrovial has systematically divested mature assets, including a 19.75% stake in Heathrow Airport for €2 billion in 2024, and its remaining 5.25% stake for £455 million in July 2025. Other divestments include AGS Airports for €533 million in H1 2025 and its mining services business in Chile for EUR 42 million. These divestitures align with a value creation strategy through mature asset rotation, providing capital for strategic reinvestment.

The company's commitment to North America was further solidified in June 2025 with the acquisition of an additional 5.06% stake in the 407 ETR for CAD 1.99 billion, increasing its ownership to 48.29%. This investment underscores Ferrovial's confidence in the long-term growth prospects of the Greater Toronto Area and the enduring value of this critical Canadian highway asset. Ferrovial's strategic initiatives extend beyond traditional toll roads, exploring opportunities in other infrastructure types such as airports, energy, and data centers in the U.S. This comprehensive strategy is designed to leverage solid cash flows and maintain financial discipline, balancing new investments with attractive shareholder distributions.

Technological Edge and Operational Excellence

Ferrovial's competitive advantage is significantly bolstered by its differentiated technology and operational expertise, particularly in dynamic pricing for managed lanes and sophisticated project execution. The company's core technological strength lies in its ability to implement dynamic pricing and advanced demand management systems across its toll road portfolio. This technology allows for real-time adjustments to toll rates, enabling revenue per transaction to consistently outpace both inflation and GDP. For assets like the I-77 and I-66, which operate without a soft cap, Ferrovial can dynamically increase toll rates to capture the value provided to users through traffic savings, reliability, convenience, and safety. In managed lanes with soft caps, such as NTE, revenue increases are driven by mandatory mode events and a favorable traffic mix, including a higher percentage of heavy vehicles.

For the 407 ETR, Ferrovial employs targeted promotions and demand segmentation strategies to enhance value for users and maximize EBITDA growth. These promotions are designed to attract new users during specific peak hours and segments without compromising the service level for regular commuters, thereby actively managing congestion and optimizing revenue. The effectiveness of these strategies is evident in the 407 ETR's double-digit EBITDA growth in H1 2025, despite provisions for Schedule 22 payments.

Beyond revenue optimization, Ferrovial demonstrates technological prowess in complex infrastructure project execution. The New Terminal One (NTO) project at JFK Airport exemplifies this, with construction advancing 72% as of Q2 2025 and remaining on schedule and budget. This project involves intricate system integrations and coordination of numerous stakeholders, showcasing Ferrovial's capability to deliver large-scale, high-tech infrastructure. The company is also an anchor client for DXC Technology (DXC)'s AI Workbench, indicating a commitment to integrating artificial intelligence for scaling outcomes and enhancing operational efficiency across its global operations.

Ferrovial's dedication to sustainability further differentiates its approach. The company has defined new CO2 reduction targets aligned with the science-based target initiatives 1.5 degrees Celsius trajectory, aiming to reduce Scope 1 and 2 absolute emissions by 42% by 2030 (versus 2020) and Scope 3 absolute emissions by 25%. This focus on sustainable and energy-efficient construction and operations not only aligns with global environmental goals but also positions Ferrovial to attract environmentally conscious clients and potentially achieve higher margins through optimized resource utilization. These technological and operational strengths collectively form a robust competitive moat, contributing directly to Ferrovial's financial performance, market positioning, and long-term growth strategy.

Competitive Landscape and Strategic Positioning

Ferrovial operates within a highly competitive global infrastructure market, contending with diversified giants like Vinci SA (VCISY) and ACS (ACSAY), as well as specialized players such as MYR Group Inc. (MYRG). Each competitor brings distinct strengths and strategic focuses to the table. Vinci, a French multinational, boasts a broader operational scale and efficiency, particularly in European construction and concessions. Its extensive global network and integrated project experience often translate into faster project delivery and robust cash flow generation. While Ferrovial's revenue growth and profitability are comparable, Vinci's potentially superior margins and cash flow could make it a more stable investment for some.

ACS, a Spanish counterpart, competes intensely in construction and energy infrastructure, particularly in Europe and Latin America. ACS often exhibits a more aggressive cost structure, potentially leading to greater efficiency in project delivery. Ferrovial differentiates itself with a stronger emphasis on sustainable and innovative infrastructure solutions, which could appeal to environmentally conscious clients and provide a unique value proposition in green energy segments. However, Ferrovial may need to enhance its operational effectiveness to match ACS's efficiency in certain areas.

MYR Group Inc., a U.S.-based specialty contractor, focuses on electrical infrastructure, including data centers and grid modernization. MYR's specialized focus gives it a targeted market position in North America, potentially leading to stronger cash flow in high-tech infrastructure projects. Ferrovial's broader portfolio, encompassing airports and toll roads, offers greater diversification, but MYR's expertise in areas like data center cooling and power distribution could provide significantly greater efficiency in energy projects. Ferrovial's global reach and integrated services, however, differentiate it in international energy infrastructure.

Ferrovial's overall market positioning is that of a diversified leader, leveraging its global network and expertise in public-private partnerships. The company's strategic adaptability and focus on high-growth regions like North America enhance its competitive edge. However, it faces vulnerabilities such as potential over-reliance on specific markets and regulatory dependencies, which could impact financial performance. Barriers to entry in Ferrovial's industries, such as stringent regulatory approvals and high capital requirements, favor established players, helping Ferrovial defend its market position. The company strategically positions itself by focusing on local markets in construction and reducing exposure to large design-and-build projects without group company involvement, thereby mitigating macroeconomic uncertainty and project risks.

Robust Financial Performance and Liquidity

Ferrovial's strategic pivot and operational focus have translated into a robust financial performance, particularly evident in its North American assets. For the first half of 2025, the company reported a strong performance across all business divisions, with highways delivering robust revenue and EBITDA growth. The Highways division saw its revenues grow by 14.9% on a like-for-like basis, with adjusted EBITDA improving by 17.1%. Notably, U.S. highways represented 88% of total highways revenues and 97% of total adjusted EBITDA, underscoring their critical contribution.

The 407 ETR demonstrated exceptional performance, with revenue growing 19.7% and total revenue increasing 19.3% in H1 2025, primarily driven by higher toll rates effective January 1, 2025. Despite a CAD 45.2 million Schedule 22 provision in H1 2025, the asset delivered double-digit EBITDA growth of 13%. U.S. Managed Lanes also performed very well, with revenue per transaction consistently outpacing inflation and GDP, despite some negative impacts from adverse weather. For instance, NTE's revenue per transaction increased by 13.5%, LBJ's by 8.8%, NTE 35 West's by 9.2%, I-66's by 22.5%, and I-77's by 23.8% in H1 2025.

The Construction division also delivered solid profitability, with an adjusted EBIT margin of 3.5% for H1 2025, in line with its long-term target. This follows a strong performance in FY 2024, where the adjusted EBIT margin reached 3.9%, surpassing the 3.5% target. Budimex maintained a strong 7.3% adjusted EBIT margin in H1 2025, while Webber held a stable 2.7% margin, and Ferrovial Construction improved to 1.6%. The construction order book reached a record high of EUR 17.3 billion in H1 2025, with 45% originating from North America.

From a liquidity perspective, Ferrovial ended H1 2025 with a net debt position of negative EUR 223 million for ex-infrastructure project companies, a figure that does not include proceeds from the Heathrow divestment, which closed in early July.

The company's capital allocation strategy in H1 2025 included the acquisition of an additional 5.06% stake in 407 ETR for €1.3 billion, the divestment of AGS Airports for €533 million, and an equity injection of €244 million into the New Terminal One. Dividends collected from infrastructure projects totaled €323 million, and €334 million was distributed to shareholders in H1 2025. The 407 ETR and I-66 have identified headroom for further re-gearing their capital structures, potentially supporting future distributions.

Outlook, Guidance, and Risk Assessment

Ferrovial's outlook is characterized by continued growth opportunities and a disciplined approach to capital management. The company anticipates an attractive pipeline of U.S. highways assets, with bids for projects like the I-24 in Nashville and the I-285 East Atlanta expected in the first half of 2026. Management views the expansion of the TIFIA framework, increasing CapEx from 33% to 49%, as "very positive news" for improving the financeability of large projects. Additionally, potential streamlining of environmental permits in the U.S. could reduce project timing and costs.

In the Construction division, Ferrovial maintains its average long-term adjusted EBIT margin target of 3.5%. The order book is considered healthy, with limited exposure to inflation and macroeconomic uncertainty. Management remains optimistic about Budimex's prospects in Poland, citing European funds, investments in infrastructure and energy, and potential future involvement in Ukraine's reconstruction. Webber also holds a "record order book".

The New Terminal One (NTO) project at JFK Airport is a critical component of Ferrovial's airport strategy. 2025 is a "crucial year" for NTO, with key project milestones, system integrations, and advanced negotiations with several airlines. The project remains on schedule and on budget for its expected opening in June 2026, although management acknowledges the final year is the most challenging due to complex system integrations. Commitments have been secured from 21 airlines, comprising 13 executed agreements and 8 letters of intent.

Regarding shareholder distributions, Ferrovial has upgraded its guidance to a minimum of EUR 2.2 billion for the 2024-2026 period, with the possibility of further upward revisions. The company emphasizes that winning new managed lanes in 2026, where capital deployment occurs over several years, should not limit additional distributions. The underlying average tax rate is expected to be "around 20%" from an accrual perspective, with accelerated depreciation in U.S. projects providing a delay in tax outflows.

Despite the positive outlook, several risks warrant consideration. The execution of large-scale projects like NTO carries inherent complexity, particularly in the final year of system integration and coordination. Increased bidding costs in Ferrovial Construction are also noted as a potential drag on margins. Adverse weather events, such as heavy rain and hurricanes, have negatively impacted traffic performance in U.S. managed lanes. For the 407 ETR, the ongoing Schedule 22 payments, which are accrued quarterly, are expected to continue in the coming years to maintain service quality, although promotions are actively working to mitigate these costs. While the impact of potential U.S. administration tariffs is "too early to say," it could affect Canadian GDP growth and traffic if significant.

Conclusion

Ferrovial SE is executing a well-defined strategic pivot, concentrating its resources and expertise on high-growth North American infrastructure markets. This strategy, underpinned by a disciplined asset rotation program and a strong emphasis on technological differentiation in dynamic pricing and complex project execution, positions the company for sustained value creation. The robust financial performance of its North American highways, coupled with a healthy construction order book and the promising development of JFK's New Terminal One, provides a compelling investment thesis.

While challenges such as project execution complexities, weather-related disruptions, and competitive bidding pressures exist, Ferrovial's proactive management of these risks through strategic design, financial discipline, and innovative solutions reinforces its competitive standing. The company's commitment to shareholder returns, evidenced by its upgraded distribution guidance, further enhances its attractiveness. As Ferrovial continues to leverage its technological leadership and expand its footprint in critical infrastructure, it is well-positioned to capitalize on the significant opportunities within its target markets, driving long-term growth and shareholder value.