Ferrovial SE (FER) Income Statement

The TTM revenue growth of 5.2% in 2026Q2, compared to 11.3% in 2025Q4, indicates a slowdown in top-line expansion. This likely reflects the absence of new large-scale concession wins and the divestment of mature assets like Heathrow, which may have contributed to prior growth. The construction segment, which drives volume, remains cyclical, while the higher-margin toll roads and airports provide stability but are not growing rapidly. Investors should monitor whether the US managed lanes pipeline can reaccelerate growth.

The gross margin of 88.3% is exceptionally high, reflecting the concession-heavy revenue mix where COGS is minimal. However, the operating margin of 11.0% in 2026Q2 is down from 15.8% in 2025Q2, suggesting that SG&A expenses (which were $468M in 2026Q2 vs. $471M in 2025Q2) are not the sole driver; rather, the mix of lower-margin construction revenue or one-off items may be pressuring profitability. The 100% gross margin in 2025Q4 is likely an anomaly due to revenue recognition, warranting caution in interpreting margin trends.

In 2026Q2, revenue grew 5.2% YoY, but operating income declined from $353.0M in 2025Q2 to $259.5M, a 26.5% drop. This suggests that the company is not scaling its cost base efficiently; SG&A remained roughly flat at $468M, but the revenue mix shifted toward lower-margin activities or concession costs increased. The operating margin compression from 15.8% to 11.0% highlights that the high gross margin does not translate into proportional operating profit growth, possibly due to higher depreciation or project development costs.

While SG&A in absolute terms was roughly flat, the increase in SG&A as a percentage of revenue from 21.4% in 2025Q2 to 19.5% in 2026Q2 actually shows improvement, yet operating margin still fell. This suggests that the cost pressure is coming from other lines, such as COGS or depreciation, which are not fully captured in SG&A. The absence of R&D expenses is notable, but for an infrastructure operator, R&D is minimal. The cost structure appears sensitive to project mix, with construction costs potentially rising due to inflation.

The 2024Q4 and 2024Q3 quarters show a dramatic spike in operating and net income, with operating margin of 52.4% and net margin of 57.9%, far exceeding any other period. This is likely due to a large one-time gain, possibly from the sale of an asset or a revaluation. The subsequent quarters have reverted to more typical margins (operating margin around 11-16%), indicating that the spike was not operational. This inflection highlights the importance of adjusting for non-recurring items when evaluating Ferrovial's earnings power.