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1. Company Snapshot

1.a. Company Description

Fomento de Construcciones y Contratas, S.A., together with its subsidiaries, engages in the environmental services, water management, and infrastructure development businesses in Europe and internationally.The company offers services related to urban sanitation, industrial waste treatment and waste recycling, street cleansing, conservation of green areas, maintenance of sewerage networks, recovery of contaminated soils, and facility management.It also provides end-to-end water management services relating to the integrated water cycle, such as collection, purification and distribution of water for human consumption; sewage collection, filtration and purification; design, construction, and operation and maintenance of water infrastructure for municipal, industrial, agricultural services, etc.


In addition, the company undertakes infrastructure works and building construction, such as motorways, roads, tunnels, bridges, hydraulic works, ports, airports, housing estates, housing, non-residential building, lighting, industrial climate control installations, environmental restoration, etc.Further, it is involved in the operation of quarries and mineral deposits; production of cement, limestone, plaster, and prefabricated by-products; and production of concrete.The company was founded in 1900 and is headquartered in Madrid, Spain.


Fomento de Construcciones y Contratas, S.A. is a subsidiary of Control Empresarial de Capitales, S.A. de C.V.

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1.b. Last Insights on FCC

Fomento de Construcciones y Contratas, S.A.'s recent performance was bolstered by the securing of a significant contract for the Yonge North Subway Extension, a design-build-finance project involving the construction of twin 6.3km tunnels. This contract, awarded under IO's P3 framework, underscores the company's expertise in complex infrastructure projects and its ability to secure high-profile contracts. The project's scope and magnitude are expected to drive revenue growth and contribute to the company's expanding presence in the North American market.

1.c. Company Highlights

2. FCC Group's 2025 Earnings: A Resilient Performance Amidst Challenges

FCC Group reported a mixed financial performance in 2025, with revenues and EBITDA showing a robust growth in certain segments, while facing challenges in others. The company's net revenue reached EUR 800 million, and EBITDA stood at over EUR 1.4 billion. The actual EPS came out at -0.0063, missing estimates at -0.00266. The company's financial debt closed at EUR 5.3 billion, with a net financial debt of EUR 2.3 billion, representing a 23% decrease in financial leverage. The CapEx to revenue ratio was 12%, indicating a robust financial performance.

Publication Date: Mar -02

📋 Highlights
  • Parent Company Result Contraction:: Declined by EUR 267 million, driven by EUR 166 million in adjustments and EUR 53 million from exchange rate effects.
  • Construction Segment EBITDA Drop:: Fell 49.9% to EUR 85.8 million due to project closures and provisions, despite revenue growth to EUR 3.02 billion.
  • Environment Division Performance:: Revenues rose 9.1% to EUR 4.74 billion with a 16.7% EBITDA margin, aided by organic growth and acquisitions.
  • Net Financial Debt Reduction:: Decreased 23% to EUR 2.3 billion despite EUR 1.2 billion in investments, with a debt-to-EBITDA ratio below 2x.
  • Future Revenue Portfolio Growth:: Expanded 11.4% to EUR 51 billion, highlighting strong visibility for sustained revenue momentum in 2026.

Segment-wise Performance

The Environment division reported a 9.1% growth in revenues to EUR 4.74 billion, driven by organic growth in France and Spain, and acquisitions in the US and UK. EBITDA increased similarly, with a gross margin of 16.7%. In contrast, the Construction division saw a 49.9% drop in EBITDA to EUR 85.8 million due to project closures and provisions. The Water division, led by Aqualia, reported a 6.9% increase in revenues to EUR 1.7 billion, with EBITDA growing to EUR 450 million, and a margin of 25%.

Financial Highlights

The company's net financial debt of EUR 2.3 billion and EBITDA of EUR 1.4 billion represent a debt-to-EBITDA ratio of less than 2x. The EV/EBITDA ratio stands at 6.75, indicating a relatively reasonable valuation. The P/E Ratio is 21.82, and the P/B Ratio is 1.86, suggesting that the stock may be slightly overvalued. The company's focus on growth, profitability, and safety is expected to drive future performance.

Outlook and Guidance

The company expects a significant recovery in 2026, with the Environment division anticipating a higher volume of endowments. The Construction division aims to return to a recurrent stable margin of around 5%. Analysts estimate next year's revenue growth at 2.7%. The company's guidance emphasizes growth, profitability, and safety, without providing a specific dividend payout.

Valuation and Metrics

The company's valuation metrics, including the P/E Ratio, P/B Ratio, and EV/EBITDA, suggest a relatively reasonable valuation. The Net Debt / EBITDA ratio stands at 2.58, indicating a manageable debt burden. The ROIC is 4.03%, and the ROE is 8.49%, indicating a relatively stable return on equity. The Free Cash Flow Yield is 7.89%, suggesting a decent cash return for investors.

3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.86%)

6. Segments

Environmental Services

Expected Growth: 2.5%

Fomento de Construcciones y Contratas' Environmental Services segment growth of 2.5% is driven by increasing demand for sustainable infrastructure, government initiatives promoting eco-friendly practices, and the company's strategic expansion into waste management and renewable energy services.

Construction

Expected Growth: 3.5%

FCC's 3.5% growth in Construction is driven by increasing infrastructure investments in Europe, particularly in Spain and the UK. Strong demand for residential and commercial buildings, coupled with a solid backlog of projects, supports revenue growth. Additionally, FCC's diversification into concessions and services, such as water management and waste treatment, contributes to its growth momentum.

Comprehensive Water Management

Expected Growth: 2.8%

Comprehensive Water Management from Fomento de Construcciones y Contratas, S.A. growth of 2.8% driven by increasing water scarcity, urbanization, and infrastructure development, coupled with stringent regulations and rising demand for efficient water management solutions.

Cement

Expected Growth: 2.2%

Fomento de Construcciones y Contratas, S.A.'s cement segment growth of 2.2% is driven by increasing infrastructure development, government-backed construction projects, and rising demand for sustainable building materials. Additionally, the company's strategic expansion into emerging markets and cost-saving initiatives contribute to its growth momentum.

Real Estate

Expected Growth: 3.2%

FCC's Real Estate segment growth of 3.2% is driven by increasing demand for residential and commercial properties in Spain, fueled by economic recovery and low interest rates. Additionally, FCC's strategic focus on developing high-quality, sustainable projects and its strong brand reputation contribute to its growth momentum.

Concessions

Expected Growth: 3.8%

Fomento de Construcciones y Contratas' concessions segment growth of 3.8% is driven by increasing infrastructure investments in Europe, particularly in Spain and the UK, as well as the company's successful bidding process for new projects. Additionally, the segment benefits from the growing trend of public-private partnerships and the company's expertise in managing and operating infrastructure assets.

Corporation

Expected Growth: 2.9%

FCC's 2.9% growth is driven by its diversified business model, strong presence in European markets, and increasing demand for infrastructure development. The company's focus on sustainable construction, water management, and environmental services also contributes to its growth. Additionally, FCC's strategic acquisitions and partnerships have expanded its service offerings and geographic reach, further supporting its growth momentum.

7. Detailed Products

Construction

Fomento de Construcciones y Contratas, S.A. provides construction services for buildings, infrastructure, and industrial projects.

Civil Engineering

The company offers civil engineering services for infrastructure projects, including roads, highways, bridges, and railways.

Industrial Services

Fomento de Construcciones y Contratas, S.A. provides industrial services, including maintenance, repair, and operation of industrial facilities.

Concessions

The company participates in concession projects, managing and operating infrastructure assets such as toll roads, airports, and ports.

Energy and Services

Fomento de Construcciones y Contratas, S.A. offers energy and services, including energy efficiency solutions and facility management.

Water Management

The company provides water management services, including water treatment, distribution, and wastewater management.

8. Fomento de Construcciones y Contratas, S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Fomento de Construcciones y Contratas, S.A. is medium due to the presence of alternative construction companies and infrastructure development firms.

Bargaining Power Of Customers

The bargaining power of customers for Fomento de Construcciones y Contratas, S.A. is low due to the company's strong brand reputation and diversified customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Fomento de Construcciones y Contratas, S.A. is medium due to the company's dependence on a few key suppliers for raw materials and equipment.

Threat Of New Entrants

The threat of new entrants for Fomento de Construcciones y Contratas, S.A. is low due to the high barriers to entry in the construction industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Fomento de Construcciones y Contratas, S.A. is high due to the competitive nature of the construction industry, with many established players vying for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 52.37%
Debt Cost 4.90%
Equity Weight 47.63%
Equity Cost 9.36%
WACC 7.02%
Leverage 109.96%

11. Quality Control: Fomento de Construcciones y Contratas, S.A. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Logista

A-Score: 6.9/10

Value: 7.0

Growth: 4.8

Quality: 5.6

Yield: 10.0

Momentum: 4.0

Volatility: 10.0

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Strabag

A-Score: 6.6/10

Value: 7.5

Growth: 4.7

Quality: 6.5

Yield: 8.1

Momentum: 10.0

Volatility: 3.0

1-Year Total Return ->

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Wallenius Wilhelmsen

A-Score: 6.0/10

Value: 10.0

Growth: 8.2

Quality: 6.7

Yield: 6.2

Momentum: 2.5

Volatility: 2.3

1-Year Total Return ->

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FCC

A-Score: 5.7/10

Value: 6.0

Growth: 2.7

Quality: 3.5

Yield: 7.5

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

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Secure Energy Services

A-Score: 5.4/10

Value: 3.8

Growth: 8.3

Quality: 3.5

Yield: 2.0

Momentum: 8.0

Volatility: 6.7

1-Year Total Return ->

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Mo-BRUK

A-Score: 4.7/10

Value: 1.0

Growth: 6.7

Quality: 4.3

Yield: 8.1

Momentum: 1.0

Volatility: 7.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

10.74$

Current Price

10.74$

Potential

-0.00%

Expected Cash-Flows