Ferrovial Construction UK plans to expand into new sectors

The Spanish construction giant’s UK arm is eyeing new growth markets such as water and electricity for future growth amid concerns over UK transport work following the cancellation of the second phase of HS2.

Karl Goose, managing director for the UK and Ireland, revealed a plan to diversify into new geographies with a greater presence in Ireland and a broader infrastructure business, after UK construction company Ferrovial reported a record 7% rise in turnover to £527m and a return to pre-tax profit in 2023 after a £30m loss the previous year.

Although the company made a pre-tax profit of £5.5m, most of the profit increase came from interest payments of £7.6m on large cash balances of £189m.

Ferrovial reported an operating loss of £1.2m due to ongoing challenges from its Silvertown Tunnel project in east London, which resulted in large provisions for 2022.

Goose said: “We are confident that we will return to industry norms in terms of profitability in 2024.

“We continue to deliver on our strategic objectives, which form part of our overall global business plan, and have made significant progress in diversifying our revenues, with early successes in several large-scale joint venture projects.”

He revealed that in the longer term, the diversification that has begun in the UK will enable the company to leverage the expertise of its Spanish parent group to expand into the water and energy sectors.

“Ferrovial Group has strong water businesses in Spain and Portugal and part of our diversification strategy is to bring this expertise to the UK.

“We also have energy companies focusing on transmission, which we can leverage in the UK.”

The ongoing development of HS2 under the EKFB joint venture is expected to drive growth in the near future.

Looking to the future Ferrovial is working on a £107m 4.5 year contract to design and build the Norwich Western Link.

This includes the construction of 6.1km of dual carriageway and seven structures, including a 670m-long viaduct over the River Wensum.

Another major civil project has also been completed, the Thames Tideway, which the company was working on in a joint venture with Laing O’Rourke.

The order backlog fell from £795 million to £648 million during the year.