Brisa working in challenging times

BusinessWeek reports on how Brisa, the Portuguese toll road concessionaire, is facing stagnant revenues and growth, in part due to the parlous state of the Portuguese economy slowing demand.

In the first half, sales rose 2.2 percent to 323.7 million euros ($466 million), and toll revenue declined 1.7 percent to 261.7 million euros. Ebitda dropped 1.2 percent to 221.8 million euros...The shares have fallen about 38 percent this year, giving the company a market value of 1.94 billion euros.

However, the company is still in a sound position, due to sale of its shareholding in Brazilian concessionaire Companhia de Concessões Rodoviárias, it has cash reserves of half a billion Euro. It has since been diversifying its portfolio, expanding into the Netherlands, and into rail and airport concessions, as well as being strict on operating costs (aiming for higher than the 60% DSRC tag takeup it currently gets on its roads.  Having over 1500 out of the 1800km of Portuguese toll road concessions makes it a clear leader in that market

Yet a presentation of Brisa a year ago indicated that it considered the Portuguese market to be less exposed to demand risk than one may think. Reasons given include:

- Immature car ownership in Portugal (20% below EU average with scope to grow, although this is unlikely during recession);

- Low exposure to heavy vehicle traffic, which is itself highly elastic in demand according to economic conditions (as well as imposing substantial marginal costs in terms of maintenance);

- Low exposure to tourism/transit traffic.

In addition, it states that in 2009 whilst the Portuguese economy contracted 2.7% traffic only dropped 0.8%. In other words, traffic demand for Portugal is relatively inelastic.

So whilst it is exposed to a stagnant economy, it looks to be in a better position than one may otherwise assume.  

Besides its Portuguese concessions, its businesses include:

- 100% of Brisa Operations and Maintenance (providing motorway operations services including road user assistance);

- 100% of Brisa Inovação (research, design, development, production, installation, support and maintenance of the equipment, system and intelligent services related to motorway management);

- MCall (call centre operations and marketing services);

- 100% of  BEG (project management company);

- 75% shareholding in Via Verde (the Portuguese DSRC based electronic toll service provider);

- 60% of ControlAuto (a Portuguese vehicle safety inspection company);

- 36% of TIIC (a transport infrastructure investment company);

- 100% of the Northwest Parkway concession in Denver, Colorado;

- 30% of Dutch company Movenience, which is responsible for toll collection at the Westerschelde Tunnel in the Netherlands.

It has a strategy to go further afield and has been involved in an interesting project in the Netherlands using ITS to reduce traffic congestion in the Netherlands (more on that to come).