Fomento de Construcciones y Contratas, S.A.

[Audio Gap] But before anything else, I just want to remind you, and I've done it previously, and now it's particularly important, the partial carve-out that took place in November last year with the carve-out of the Inmocemento Group. You know that this is very important because until the end of the financial year, the results in the bottom line will not be fully comparable, and I'm sure you've been able to see this.

That's the reason why last year and until September 2024, we entered EUR 148.6 million corresponding to the carve-out of the cement and real estate activities. And as we already reported on the first -- in the first quarter, the euro has become stronger against other currencies.

And so exchange rate differences have become quite significant. And this also is related to the adjustment we made in certain assets following the equity method in both areas of the environmental department.

So this, together with the negative exchange rate differences of the provisions and the adjustments made together with the EUR 148.6 million corresponding to discontinued activities that have disappeared now, but were present last year. All of this explains the fall of the attributable net profit of this financial year.

I also want to mention that it is also true that at the level of the P&L in the top line, the strength of the euro has already been noticeable with a certain impact, close to 1% of our earnings in terms of income and EBITDA. Well, having said this, our earnings are basically focused in the even quarters.

Well, if you look at the evolution of our exploitation activities starting by the environment unit, what we have seen is that the turnover of environment went up by 11.5%, reaching EUR 3.4 billion. And here, I would have to mention the contribution from new contracts, both in Spain and the United States.

This -- I should also add the effect of the acquisitions we carried out in the U.K., although this has been diluted slightly, but Urbaser, heavy recycling should be mentioned. Now in terms of geographies, you know that we have 4 platforms, starting by the Atlantic, which includes the business in Spain, which accounts for 50% of the income, and this business grew by 7%, up to EUR 1.7 billion.

And here, we have kept evolving quite normally in our activities, both for collection, street cleaning and also there's been very good performance of other municipal services and the management of industrial waste. This is waste related with the private sector.

Now as regards to the U.K. platform, income rose by double digits because of, first of all, the consolidation because of the acquisition of the U.K.

Urbaser Group, and this is why we reached over EUR 700 million. And I would also like to mention that the underlying activities at a constant perimeter had a homogeneous evolution except for the landfill activity, which did experience a lower level of activity than in the previous year.

Now in Central Europe, we are present in 6 or 7 countries in the region. As you know, in the Eurozone, income increased by 4.9%, reaching EUR 508 million.

And we had a higher contribution, particularly in Poland and in the Czech Republic with an increase in the number of contracts, both for collection and treatment. And we did record, and this is a growing trend, year-on-year, showing negative variations, the selling prices of negative raw materials that we manage, particularly in treatment, which in Central Europe is quite significant.

Now the fourth platform in environment was the United States and revenues were EUR 342.7 million, plus 24%. So we're growing very significantly.

Just remember the acquisition in the Central North area of Florida of a company called Hell Recycling, which is in charge of processing different types of waste related with residential waste, but also collection progressed very well. We do have to mention, although it didn't have much of an effect in the turnover, an acquisition we carried out in July.

So there was only a contribution for 2 months. This is a company in Fort Lauderdale devoted to the recovery of waste.

And this is the advancement we had in recovery. We started this activity in the U.S.

and also waste collection contracts evolved very well. And there's also the Hell Recycling business.

And I also want to mention in the Atlantic platform, which also includes Spain, which I mentioned first, it also includes France and Portugal. Here, we reached EUR 111 million in revenues.

The lion's share, about 7% is France, and this is the acquisition we carried out last year of the ESG group, which means that now we have our own legal presence in France for waste collection and street cleaning. And the underlying activity was also good.

And Portugal, also made progress by 4.4%. So the EBITDA for the environment unit grew to 11% over EUR 500 million.

This growth is absolutely very similar to the growth in revenues. So I don't have much to say about the stability of the margins, which persisted.

The margin is 15.6% as compared with 15.7% of the previous period. Now if you talk about the water cycle group called Aqualia, here, the turnover increased by 8.7% to EUR 1.5 billion.

Here, we had quite a homogeneous growth, both in integrated cycle, we -- in general, although there's been a little bit of everything, but we've increased both in terms of volumes and rates. And this was accompanied by a growth in the technology and network activity, which is essentially linked to the development of ESP, specific ESP for the Water sector.

And it is very closely connected to our concession-based business. So it is induced by our activities -- our integrated activities.

Now if you look at the different jurisdictions in Spain, we rose by over 11%, our revenues. Here, there was quite a significant increase, and this is a reflection of the activities, the health of the activities in the country.

So in Spain, everything was very positive over the period. Now if we look at Central and Eastern Europe, but before that, I just want to remind you that the main stays here are the business that we own in the Czech Republic and Georgia, where we increased by 5.4%, EUR 196 million.

In the Czech Republic, rates were revised. This was within the plans linked to our proprietary structure and the fact that we are a fully regulated business.

And this has to do with the CapEx that we are -- so rates are reviewed as we review our CapEx. In Georgia, there was a significant increase in consumption.

So this increase was more related with the increasing consumption rather than with an increase in rates, both in residential and industrial customers. And this made it possible both in the Czech Republic and Georgia to reach this 5.4%, and it's allowed us to compensate for the effect of the exchange rate, which I mentioned at the beginning because in Georgia, the local currency lost value, lost 5.4% with respect to the euro.

In other European countries such as Portugal, Italy, France, here, the increase was 6.6%, EUR 87 million. Just to give you some color, there was a rate review in Sicily, although we still experienced the effect of the lack of water -- of crude water as a result of the drought.

This is something that we managed to compensate for with increases in our rates. Now if we look at other markets, leaving Europe behind, if we look at the Americas, here, the turnover also rose by double digit, 12.6%, EUR 156.4 million.

There was a consistent growth and quite a substantive growth in the U.S. based on the activities in that country.

We reached EUR 67 million. And here, there was an increase in rates, and also there was an increase in consumption, similar to the consumption in Colombia, another important country in the Americas.

And in Technologies and Networks, we also carried out the development of some plants in Mexico and Peru. Lastly, the last platform I want to mention within Aqualia, apart from Europe and the Americas is MENA, the Middle East and Africa.

Well, it's really Northern Africa, Algeria and Egypt. Here, we did experience a slight fall of 4.8%, EUR 115 million.

And this was because of the effect of the rate review in our contract in Algeria in the desalting plants where there were some adjustments introduced according to some rate measures. But this was compensated for because we had higher activity in countries like Saudi Arabia in our counseling and execution business in the -- in 2 clusters we have been awarded in the country.

It's really 2 regions in Saudi Arabia. And we also had to compensate for the negative effect of the strengthening of the euro against the riyal.

So all in all, the EBITDA followed a very stable pattern. It grew a little bit less than revenues, 5.2% to EUR 319.2 million.

I would just mention that the margin, which was 23.8% as compared with 24.6% experienced a small variation because the contribution of Technology and Networks was slightly higher moving towards integrated cycle. So margins were structurally lower.

And this, as you know, tends to give rise to small adjustments in the increase of EBIT versus revenues and the operational margin. Right.

As far as construction is concerned, in the 9 months, the turnover became positive to over EUR 2 billion. Here, there were no surprises.

I wouldn't mention any unexpected occurrence, everything went according to plan. Perhaps I should mention that at present, the infrastructure contracts are the most important ones, both roads and railways.

Now in terms of the main markets, in the Spanish market, the turnover rose by 4.9% to EUR 921 million. We also made progress in works both -- well, it's rehabilitation of roads and some other works that we had to cut it out, which were unexpected.

We carried out some work for the flash floods in Valencia. Now in other European countries, the increase was similar to that of Spain, about 5%, EUR 645 million.

And here, we kept advancing in our important contracts in the Netherlands, then the railways in Romania, where we have a traditional presence. And just as the -- I just want to mention that the motorway exploited by FCC concessions in the country was completed in Wales in the U.K.

Which -- since it's been completed, it ceased to contribute. Now in -- then I would like to mention other areas where there were large works that we -- in the United States and Canada, particularly in Toronto.

This was a large road in Pennsylvania. And as I said, for Europe, these compensated for the satisfactory completion of the Maya train in Mexico.

Finally, in the Middle East and Africa, the MENA area, like in Aqualia, we incorporated Australia into this region. And we did have a reduction in revenues, EUR 119 million.

And here, we were not able to compensate for this loss with new works because there was -- we completed the works of the Riyadh metro in Saudi Arabia and also the customer completed the works were conducted in the NEOM tunnel, but both projects were extremely successful. There was some compensation from our project to develop social infrastructure in Cairns in Australia, in the northeast of the country.

So the EBITDA, however, went down a little, 0.3%, EUR 121 million. Now the margin EBITDA sales stayed stable, 5.6%.

I think that last year, it was 5.7%. But this is just the effect of a combination of the programming of different works.

And in construction, I'm sure you've seen this in the report we have sent, the most important thing to mention here has to do with the increase in our portfolio because since December last year to the end of September, we had a growth of 46.8%. Our portfolio is approaching EUR 10 billion, EUR 9.3 billion.

Here, we had quite a significant amount of international contracts, which account for 2/3 of total with an increase of 60.8%, over EUR 6 billion. And again, we can talk about the platforms where we are already consolidated.

One of the most important projects was the Scarborough project in Canada together with a line of the New York Metro and the enlargement in Canada of another metro line. In Spain, we also had increases in our portfolio.

So this increase was of 23.8%. So these were new contracts in Spain.

We are specialized in the construction of stadiums, particularly in Valencia and also high-speed lines that are being built by the railway authorities. So it is important to mention that the increase of the -- the improvements are happening across our different departments, but I just wanted to make a specific mention to construction because the increase was particularly high.

Now to finalize, I just want to talk about concessions. Here, the turnover reached EUR 81.4 million, growing by 38%.

And given its relative size and its good evolution, well, you will have seen that this is the area that made the greatest progress. And here, there are 2 effects to be mentioned.

One of them is the development of new business and the other one is the perimeter. But I want to say that traffic and the number of passengers in the infrastructures that we exploit has also made some contributions.

So the organic perimeter also evolved healthily. But the business is basically -- our concessions are concentrated basically in Spain, EUR 77.9 million, an increase of 48.4%.

Here, I just want to remind you that there's the kick-off of the 8 itinerary, a concession we have in the region of Aragón and a new project, which is for a motorway in Ibiza Island, and this started in June last year. Now internationally speaking, I just want to mention a concession that does make a contribution to our revenues.

Another one -- we have another one that follows the equity method, but we have the Coatzacoalcos underwater tunnel, which evolved very well. But then we decided to remove one of the businesses in Portugal.

But all in all, internationally, which is just COTUCO, we had an increase of 6.8%. So the EBITDA for concessions is EUR 44.6 million, an increase of 8.3% with respect to the previous year.

As you know, and I want to mention it again, the EBITDA advanced less than revenues, but that was because of the development of the concession in Aragón before it starts operating. That's why its gross margin went down quite significantly, but there was no other effects for provisions or any other incident that could explain that difference between the variations of revenues and of EBITDA.

Well, that's about all I had to share with you. As you may have seen, the results as compared with previous quarters were quite good with increases in excess of 7%.

I might perhaps mention the evolution of the portfolio. You know that we are a group that has over 85% of its activity coming from the waste management business and the water integrated cycle -- integrated water cycle business.

But our portfolio makes us -- well, it means that we are very reassured in terms of our future prospects. That's all from me.

So if you have any questions, please do not hesitate to ask them.

Well, services, I guess you mean environmental services. As I said before, for the environment, 15.6% as compared with 15.7%.

I don't think it's a huge reduction. This variation is really very small.

We did increase quite -- well, perhaps we increased in waste collection and other services, but the difference is really very, very small, practically negligible. In the case of Water, which is, I think, important to mention, the thing is that Technology and Networks is now more significant.

That is where we include 2 types of projects. First of all, the things we do to develop works where we have a contract that we call essentially BOT that is we obtain a partial water cycle to construct a water treatment plant, a desalting plant and that normally is attached to a lower margin.

But the area of Technology and Networks has to do with our integrated cycle concessions because we are -- these are works that cannot be postponed. This is just water consumption for drinking water for families.

So we need to do this as fast as possible. So -- and 80% of the work we do under Technology and Network falls in this category.

And even if the margin for us is very satisfactory, it is a lot lower than the margins of other businesses in concessions that may go from 25% to 40%. So when there's more in Technology and Networks, when there's more work in Technology and Networks, of course, it's logical that there should be a fall in the margins, but that's the only explanation.

Well, as you know, in this transaction, we have an agreement. We have signed the selling agreement.

The money has not yet been paid to the group. I would say that the same -- the reason is the same as in 2018 when we sold a share of our Water business.

Obviously, it was a minority share. So we retain full control of the activity.

But what we did there is circulate the capital used in an efficient way. So we retain the operational control of the business.

And this -- and so the know-how still lies with us and with our units. And the idea is basically to optimize the use of the capital invested by the group.

This is the same thing we did for Aqualia. And what are we going to use the money for?

Well, we'll have to wait, first of all, for the money to be paid to us. And when that happens, we will decide how to put it to the best use.

Well, with respect to the working capital, the evolution that we have experienced in the first 9 months has been quite homogeneous with respect to the activity we had until June. And let me look at the figures because I don't remember them off the top of my head.

In December, yes, 2024, it was also homogeneous year-on-year. So the expansion we recorded was quite similar.

And I would say that what we can expect is that we will have a recovery. We always recover.

You know that -- you know it's difficult to quantify things under the working capital heading, but the expansion we had in September is quite similar to the one published in June. And it should go down by the end of the year.

But this is only normal. It's part of the ordinary pattern of this chapter.

Well, in terms of investments, as any other group, we -- there's a combination of the ones that have been contracted and the ones we aspire to achieve. Last quarter, we achieved EUR 1 billion in payments for investments, and this is quite a significant figure given the size of our activity and our generation of cash flow.

Now with the investments we have made until now, I think we -- I think that this year, we could stand at a similar level. Now for 2026, we could also achieve similar levels.

I mentioned some investments that will have to be materialized. And you know that we are very selective in our activities.

Last year, for example, they were concentrated in environment and water treatment. These are the 2 activities that demand the largest amount of CapEx.

And of course, we aspire to grow, but in a very selective way. And in 2023, we'll stand at similar levels in terms of the application of our cash flow, similar to 2025, I mean.

Yes, I think we should. From the first half to the 9 months to the third quarter, you've seen that there's been some increase already.

But I would just like for you to analyze our portfolio. Of course, we can't -- you can't really apply a simple equation.

You can't say that if the portfolio has grown by 45%, revenues will also increase by the same measure. But this cannot be done because some of our new contracts are long-term contracts, railway contracts, but we want to establish a close connection with the customer, with early contractor involvement format where customers become more involved in the design phase.

So by their very nature, these are long contracts with great technical complexities, but this also requires a greater collaboration from the customer so that the contract is longer term. And this, of course, makes it easier to manage the complexities of our contract.

So what I want to say is that these contracts are going to be longer term. Of course, we could end up at the same variation of 1.2.

But for a project based on projects -- for an activity based on projects such as construction, we feel really very comfortable because there's quite a large amount of visibility. There's no further questions.

So if there's no further questions, I just want to thank you very much for your time. I guess that you will now have time to review all the documentation we have sent.

And as I said, we remain at your entire disposal through the usual channels. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]