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FCC Group reported strong financial results for the third quarter of 2025, showcasing significant growth across its business segments. The company’s performance was bolstered by strategic acquisitions and expansions, particularly in its waste management and water cycle operations. The stock experienced a modest increase of 0.36%, reflecting positive investor sentiment. Trading at $12.98, FCC appears undervalued according to InvestingPro analysis, with impressive year-to-date returns of 31.36% and a one-year return of 28.32%. The company maintains a "GOOD" overall financial health score of 2.51.
Key Takeaways
- FCC’s revenue in the environment segment rose by 11.5% to €3.4 billion.
- The construction segment turned positive, exceeding €2 billion in turnover.
- Strategic acquisitions in the US, UK, and France expanded waste management capabilities.
- FCC’s portfolio grew by 46.8%, with two-thirds of contracts now international.
Company Performance
FCC Group’s Q3 2025 performance was marked by robust growth in key areas such as waste management and the integrated water cycle, which together account for over 85% of the company’s activities. The company’s strategic focus on geographic expansion and selective investments has strengthened its international presence, with significant contributions from the Atlantic, UK, Central Europe, and US markets.
Financial Highlights
- Revenue: €3.4 billion in the environment segment, up 11.5% year-over-year.
- Aqualia (water cycle) turnover: €1.5 billion, an increase of 8.7%.
- Construction turnover: Exceeded €2 billion, turning positive.
- Concessions segment: Grew by 38% to €81.4 million.
Outlook & Guidance
FCC anticipates continued growth in its construction segment, with expected investment levels of approximately €1 billion for both 2025 and 2026. The company remains focused on long-term, complex infrastructure contracts and is committed to maintaining a selective investment strategy, particularly in the environment and water treatment sectors.
Executive Commentary
Company executives emphasized the strength of FCC’s core activities. One executive noted, "We are a group that has over 85% of its activity coming from waste management and integrated water cycle businesses." Another highlighted the company’s strategic focus, stating, "We are very selective in our activities... concentrated in environment and water treatment."
Risks and Challenges
- Currency fluctuations, particularly the strength of the euro, could impact international revenues.
- Potential regulatory changes in key markets may affect operations.
- Economic slowdowns in major regions could dampen growth prospects.
- Competition in the waste management and water treatment sectors remains intense.
FCC’s strategic expansions and solid financial performance in Q3 2025 position the company well for future growth, despite potential challenges. The company’s focus on sustainable and innovative solutions continues to drive its success in the global market. With a Price to Book ratio of 1.96 and a solid Altman Z-Score of 5.41, FCC demonstrates financial stability. InvestingPro analysis suggests the stock remains undervalued, offering potential upside for investors seeking exposure to the environmental services sector. For a complete financial health assessment and detailed valuation metrics, explore FCC’s comprehensive Pro Research Report on InvestingPro.
Full transcript - Fomento de Construcciones y Contratas SA (FCC) Q3 2025:
Company Executive/CFO, FCC Group: Antes de nada, volver a recordaros, lo he hecho en los trimestres anteriores, pero de nuevo en este tiene importancia especial el hecho de la escisión financiera parcial que se produjo en noviembre del año pasado, con la escisión de lo que hoy ya es el Grupo Inmocemento. Recordar que tiene importancia porque hasta el fin de ejercicio los resultados en la parte baja de la cuenta de resultados no tendrán plena comparabilidad.
That’s fully comparable, and I’m sure you’ve been able to see this. That’s the reason why last year and until September 2024 we entered EUR 148.6 million corresponding to the caveat of the cement and real estate activities. As we already reported in the first quarter, the euro has become stronger against other currencies, and so exchange rate differences have become quite significant. This also is related to the adjustment we made in certain assets following the equity method in both areas of the environmental department. This, together with the negative exchange rate differences of the provisions and the adjustments made, together with the EUR 148.6 million corresponding to discontinued activities that have disappeared now but were present last year, all of this explains the fall of the attributable net profit of this financial year.
I also want to mention that it is also true that at the level of the P&L in the top line, the strength of the euro has already been noticeable, with a certain impact, close to 1% of our earnings in terms of income and EBITDA. Having said this, our earnings are basically focused in the even quarters. If you look at the evolution of our exploitation activity, starting by the environment unit, what we have seen is that the turnover of the environment went up by 11.5%, reaching EUR 3.4 billion. Here I would have to mention the contribution from new contracts, both in Spain and the United States. I should also add the effect of the acquisitions we carried out in the U.K., although this has been diluted slightly, but Viridor heavy recycling should be mentioned.
Now, in terms of geographies, you know that we have four platforms, starting by the Atlantic, which includes the business in Spain, which accounts for 50% of the income, and this business grew by 7%, up to EUR 1.7 billion. Here we have kept evolving quite normally in our activities, both for collection, street cleaning, and also there’s been very good performance of other municipal services and the management of industrial waste. This is waste related with the private sector. Now, as regards to the U.K. platform, income rose by double digits because of, first of all, the consolidation, because of the acquisition of the U.K. Viridor Group, and this is why we reached over EUR 700 million. I would also like to mention that.
The underlying activities and a constant perimeter had a homogeneous evolution, except for the landfill activity, which did experience a lower level of activity than in the previous year. Now, in Central Europe, we are present in six of seven countries in the region, as you know, in the eurozone. Income increased by 4.9%, reaching EUR 508 million. We had a higher contribution, particularly in Poland and in the Czech Republic, with an increase in the number of contracts, both for collection and treatment. We did record, and this is a growing trend year on year, showing negative variations. The selling prices of negative raw materials that we manage, particularly in treatments, which in Central Europe is quite significant. Now, the fourth platform in environment was the United States, and revenues were EUR 342.7 million, plus 24%. We are growing very significantly.
Just remember the acquisition in the central north area of Florida of a company called Hell Recycling, which is in charge of processing different types of waste related with residential waste, but also collections. Progressed very well. We do have to mention, although it did not have much of an effect in the turnover, an acquisition we carried out in July, so there was only a contribution for two months. This is a company in Fort Lauderdale devoted to the recovery of waste. This advancement we had in recovery, we started this activity in the U.S., and also waste collection contracts evolved very well. There is also the Hell Recycling business. I also want to mention in the Atlantic platform, which also includes Spain, which I mentioned first, it also includes France and Portugal. Here we reached EUR 111 million in revenues.
The lion’s share, about 7%, is France, and this is the acquisition we carried out last year of the ESG Group. Which means that now we have our own legal presence in France for waste collection and street cleaning. The underlying activity was also good. Portugal also made progress by 4.4%. The EBITDA for the environment unit grew to 11% over EUR 500 million. This growth is absolutely very similar to the growth in revenues. I do not have much to say about the stability of the margins, which persisted. The margin is 15.6% as compared with 15.7% of the previous period. Now, if you talk about the water cycle of a group called Aqualia, here the turnover increased by 8.7% to EUR 1.5 billion. Here we had quite a homogeneous growth.
Both in integrated cycle, we in general, although there’s been a little bit of everything, but we’ve increased both in terms of volumes and rates. This was accompanied by a growth in the technology and network activity, which is essentially linked to the development of ESP, specific ESP for the water sector. It is very closely connected to our concession-based business. It is induced by our activities, our integrated activities. Now, if we look at the different jurisdictions in Spain, we rose by over 11% our revenues. Here there was quite a significant increase, and this is a reflection of the activities, the health of the activities in the country. In Spain, everything was very positive over the period. Now, if we look at Central and Eastern Europe, but before that, I just want to remind you that the main.
Stays here are the business that we own in the Czech Republic and Georgia, where we increased by 5.4%, EUR 196 million. In the Czech Republic, rates were revised. This was within the plans linked to our proprietary structure and the fact that we are a fully regulated business. This has to do with the CAPEX that we, so rates are reviewed as we review our CAPEX. In Georgia, there was a significant increase in consumption. This increase was more related with the increase in consumption rather than with an increase in rates, both in residential and industrial customers. This made it possible both in the Czech Republic and Georgia to reach this 5.4%, and it has allowed us to compensate for the effect of the exchange rate, which I mentioned at the beginning, because in Georgia, the local currency lost value, lost 5.4% with respect to the euro.
In other European countries such as Portugal, Italy, France, here the increase was 6.6%, EUR 87 million. Just to give you some color, there was a rate review in Sicily, although we still experienced the effect of the lack of water, of crude water as a result of the drought. This is something that we managed to compensate for with increases in our rates. Now, if we look at other markets, leaving Europe behind, if we look at the Americas, here the turnover also rose by double digit, 12.6%, EUR 156.4 million. There was consistent growth and quite a substantive growth in the U.S. based on the activities in that country. We reached EUR 67 million. And here there was an increase in rates and also there was an increase in consumption, similar to the consumption in Colombia, another important country in the Americas. And in technologies and networks.
We also carried out the development of some plants in Mexico and Peru. Lastly, the last platform I want to mention within Aqualia, apart from Europe and the Americas, is MENA, the Middle East and Africa. It is really Northern Africa, Algeria, and Egypt. Here we did experience a slight fall of 4.8%, EUR 115 million. This was because of the effect of the rate review in our contract in Algeria, in the desalting plants, where there were some adjustments introduced according to some rate measures. This was compensated for because we had a higher activity in countries like Saudi Arabia in our counseling and execution business in the two clusters we have been awarded in the country. It is really two regions in Saudi Arabia. We also had to compensate for the negative effect of the strengthening of the euro against the real.
All in all, the EBITDA followed a very stable pattern. It grew a little bit less than revenues, 5.2% to EUR 319.2 million. I would just mention that the margin, which was 23.8% as compared with 24.6%, experienced a small variation because the contribution of technology and networks was slightly higher. Moving towards integrated cycle, margins were structurally lower. This, as you know, tends to give rise to small adjustments in the increase of EBIT versus revenues and the operational margin. Right. As far as construction is concerned, in the nine months, the turnover became positive to over EUR 2 billion. Here there were no surprises. I would not mention any unexpected occurrence. Everything went according to plan. Perhaps I should mention that at present, the infrastructure contracts are the most important ones, both roads and railways.
Now, in terms of the main markets, in the Spanish market, the turnover rose by 4.9% to EUR 921 million. We also made progress in works. It is rehabilitation of roads and some other works that we had to carry out, which were unexpected. We carried out some work for the flash floods in Valencia. In other European countries, the increase was similar to that of Spain, about 5%, EUR 645 million. Here we kept advancing in our important contracts in the Netherlands, then the railways in Romania, where we have a traditional presence. I just want to mention that the motorway exploited by FCC concessions in the country was completed in Wales, in the U.K. Since it has been completed, it ceased to contribute. I would like to mention other areas where there were large works.
In the United States and Canada, particularly in Toronto. This was a large road in Pennsylvania. As I said, for Europe. These compensated for the satisfactory completion of the MEA train in Mexico. Finally, in the Middle East and Africa, the MENA area, like in Aqualia, we incorporated Australia into this region. We did have a reduction in revenues, EUR 119 million. Here we were not able to compensate for this loss with new works because we completed the works of the Riyadh Metro in Saudi Arabia, and also the customer completed the works that were conducted in the Neo tunnel. Both projects were extremely successful. There was some compensation from our project to develop social infrastructure in Cairns in Australia, in the northeast of the country. The EBITDA, however, went down a little, 0.3%, EUR 121 million. Now, the margin EBITDA sales stayed stable, 5.6%.
I think that last year it was 5.7%. This is just the effect of a combination of the programming of different works. In construction, I’m sure you’ve seen this in the report we have sent. The most important thing to mention here has to do with the increase in our portfolio because since December last year to the end of September, we had a growth of 46.8%. Our portfolio is approaching EUR 10 billion, EUR 9.3 billion. Here, we had quite a significant amount of international contracts, which account for two-thirds of total, with an increase of 60.8%, over EUR 6 billion. We can talk about the platforms where we are already consolidated. One of the most important projects was the Scarborough project in Canada, together with a line of the New York Metro and the enlargement in Canada of another metro line.
Spain, we also had increases in our portfolio, which of 23.8%. These were new contracts in Spain. We are specialized in the construction of stadiums, particularly in Valencia, and also high-speed lines that are being built by the railway authority. It is important to mention that the increase of the improvements are happening across our different departments. I just wanted to make a specific mention to construction because the increase was particularly high. Now, to finalize, I just want to talk about concessions. Here, the turnover reached EUR 81.4 million, growing by 38%. Given its relative size and its good evolution, you will have seen that this is the area that made the greatest progress. Here, there are two effects to be mentioned. One of them is the development of new business, and the other one is the perimeter. I want to say that.
Traffic and the number of passengers in the infrastructures that we exploit have also made some contributions. The organic perimeter also evolved healthily. The business is basically our concessions are concentrated basically in Spain, EUR 77.9 million, an increase of 48.4%. Here, I just want to remind you that there’s the kickoff of the eighth itinerary, a concession we have in the region of Aragon, and a new project, which is for a motorway in Ibiza Island. They started in June last year. Now, internationally speaking, I just want to mention a concession that does make a contribution to our revenues. We have another one, but that follows the equity method. We have the Cotsacualtes underwater tunnel, which evolved very well. We decided to remove one of the businesses in Portugal. All in all, internationally.
Which is just Cotuco, we had an increase of 6.8%. The EBITDA for concessions is EUR 44.6 million, an increase of 8.3% with respect to the previous year. As you know, and I want to mention it again, the EBITDA advanced less than revenues, but that was because of the development of the concession in Aragon before it starts operating. That is why its gross margin went down quite significantly. There was no other effect for provisions or any other incident that could explain that difference between the variations of revenues and of EBITDA. That is about all I had to share with you. As you may have seen, the results as compared with previous quarters were quite good, with increases in excess of 7%. I might perhaps mention the evolution of the portfolio. You know that we are a group that has over 85% of its activity coming from.
The waste management business and the integrated water cycle business. Our portfolio makes us, well, it means that we are very reassured in terms of our future prospects. That is all from me. If you have any questions, please do not hesitate to ask them. First question, why are the EBITDA margins going down for water and services in the third quarter? Services, I guess you mean environmental services. As I said before, for the environment, it is 15.6% as compared with 15.7%. I do not think it is a huge reduction. This variation is really very small. We did increase quite some, well, perhaps we increased in waste collection and other services. The difference is really very, very small, practically negligible. In the case of water, which is, I think, important to mention, the thing is that technology and networks is now more significant.
That is where we include two types of projects. First of all, the things we do to develop. Works when we have a contract that we call essentially BOT, that is, we obtain a partial water cycle to construct a water treatment plant, a desalting plant. That normally is attached to a lower margin. The area of technology and networks has to do with our integrated cycle concessions because these are works that cannot be postponed. This is just water consumption for drinking water for families. We need to do this as fast as possible. 80% of the work we do under technology and networks falls in this category. Even if the margin for us is very satisfactory, it is a lot lower than the margins of other businesses in concessions that may go from 25% to 40%.
When there is more in technology and networks, when there is more work in technology and networks, of course, it is logical that there should be a fall in the margins. That is the only explanation. Next question, what was the reason for the selling off of an additional share in the services unit? How are you going to use the money obtained from the sale? As you know, in this transaction, we have an agreement. We have signed the selling agreement. The money has not yet been paid to the group. I would say that the reason is the same as in 2018, when we sold a share of our water business. Obviously, it was a minority share, so we retained full control of the activity. What we did there is circulate the capital used in an efficient way. We retained the operational control of the business.
The know-how still lies with us and with our units. The idea is basically to optimize the use of the capital invested by the group. This is the same thing we did for Aqualia. What are we going to use the money for? We have to wait, first of all, for the money to be paid to us. When that happens, we will decide how to put it to the best use. Next question, what can we expect from the working capital for the end of the year? With respect to the working capital, the evolution that we have experienced in the first nine months has been quite homogeneous with respect to the activity we had until June. Let me look at the figures because I do not remember them off the top of my head. In December.
2024, it was also homogeneous year on year. The expansion we recorded was quite similar. I would say that what we can expect is that we will have a recovery. We always recover. It is difficult to quantify things under the working capital heading. The expansion we had in September is quite similar to the one published in June. It should go down by the end of the year. This is only normal. It is part of the ordinary pattern of this chapter. Next question, what investments can we expect for 2025 and 2026? In terms of investments, as any other group, there is a combination of the ones that have been contracted and the ones we aspire to achieve. Last quarter, we achieved EUR 1 billion in payments for investments.
This is quite a significant figure given the size of our activity and our generation of cash flow. Now, with investments we have made until now, I think that this year we could stand at a similar level. For 2026, we could also achieve similar levels. I mentioned some investments that will have to be materialized and that we’re very selective in our activities. Last year, for example, they were concentrated in environment and water treatment. These are the two activities that demand the largest amount of CapEx. Of course, we aspire to grow, but in a very selective way. In 2023, we could stand at similar levels in terms of the application of our cash flow, similar to 2025, I mean. Next question. Will you have growth in construction at the end of 2025? Yes, I think we should. From the first half.
To the ninth month to the third quarter, you’ve seen that there’s been some increase already. I would just like for you to analyze our portfolio. Of course, you can’t really apply a simple equation. You can’t say that if the portfolio has grown by 45%, revenues will also increase by the same measure. This cannot be done because some of our new contracts are long-term contracts, railway contracts. We want to establish a close connection with the customer, with a heavy contractor involvement format where customers become more involved in the design phase. By their very nature, these are long contracts with great technical complexities, but this also requires a greater collaboration from the customer so that the contract is longer term. This, of course, makes it easier to manage the complexities of a contract.
What I want to say is that these contracts are going to be longer term. Of course, we could end up at the same variation of 1.2, but for a project based on projects, for an activity based on projects such as construction, we feel really very comfortable because there is quite a large amount of visibility. There are no further questions. If there are no further questions, I just want to thank you very much for your time. I guess that you will now have time to review all the documentation we have sent. As I said, we remain at your entire disposal through the usual channels. Thank you.
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