The heavy load of pre-crisis excess and cutbacks to public spending tied to Spanish infrastructure companies continue to plague the sector. But divesting of projects to reduce debt is not allowing the companies to de-leverage themselves.
Between 2008 and 2011, experts predicted that the sector would only reduce its debt by 6.8% of net profits (ebitda). OHL and Acciona are forecasted to be the most leveraged in 2011 and their reduction ratios are 4.6% and 5.4% respectively.
The divestments that infrastructure companies are forced to make are not working out as expected. FCC is one of the last companies to begin divesting projects, but now it has several offers to sell its industrial cement company in the United States. Company president Baldomero Falcones affirmed that it has received six offers for the American subsidiary, Giant, which saw its stock price skyrocket more than 25% this week. This amount would not be sufficient to reduce its leverage, however. For 2012 it is forecasted at 5.6X, and only Ferrovial and Sacry have worse ratios in Spain (9X and 17.6X respectively).
Further, FCC is tied hand and foot for investing in its own shares in the past because it now owns 9.379% of proprietary share as of June of last year, which is dangerously close to the 10% limit imposed by Spanish law since 2009.
Balance sheet improvements?
So that debt ratios do not shoot up, the company should not discredit its earnings. The deteriorating debt/ebitda ratios of some companies in the past few years have not only occurred due to increases in net debt, but because of stagnant profits in since 2008.
