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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good afternoon, ladies and gentlemen, and welcome to the Brisa first half results. I would now like to hand it over to your chairperson, Mr. Vasco de Mello. Please begin your meeting.
VASCO DE MELLO, CHAIRMAN AND CEO, BRISA-AUTO ESTRADAS DE PORTUGAL: Thank you very much. Good afternoon to all. We are going to have the first half 2008 results presentation of Brisa, and we thought that it would be useful to have first, a brief word on the environment, the actual environment, with the impacts on traffic, oil and GDP analysis, and then, the presentation of the results as such. And I will ask Luis d'Eca Pinheiro to do this first traffic, oil and GDP analysis, and then I will come to the first half results. Luis?
LUIS D'ECA PINHEIRO, CORPORATE AND IR MANAGER, BRISA-AUTO ESTRADAS DE PORTUGAL: Hi. Good afternoon to all. So first of all, to start, we believe -- I believe we have distributed a presentation on the subject, a PowerPoint presentation, so I will go through it.
First of all, I would just like to remind that Brisa -- we have, on the last ten years, a very strong multiplier, GDP and traffic growth, of 1.9. That multiplier of the last ten years has applied to high year GDP growths and low year GDP growths.
Also, when we look at the Portuguese GDP, on the last five years, we see that on average, the Portuguese GDP was below 1%. It was 0.9% on the last five years. And like other European countries, Portugal did not have an economic boom, nor did we have a construction bubble, or big development in other areas. So our idea is when we see that, there will be an economic slowdown all over Europe.
In the case of Portugal, it will be business as usual. So as we usually say, we believe that we'll have no boom, so no burst. So for Portugal working, and for Brisa, with an economy below 1% is what we've been having on the last five years. So in that front, there is no major news.
Also, to recall that when we talk about negative GDP -- traffic growth, that in fact, Brisa have already two negative years regarding traffic growth. One was 2003, and I recall that in 2003, we have a recession in Portugal. GDP was down 0.8%, and at that year, we had a negative like-for-like traffic growth of 0.2 negative, slightly flat, but negative.
The first thing that we can conclude is that when we have a recession, the multiplier does not apply on the downturn. Traffic is quite resilient regarding GDP.
Also, in 2005, we have also a negative traffic growth on a like-to-like basis. And on 2005, the major reason, it was that we had a very steep increase in oil prices in the -- to the consumer. Actually, 2005 was a very similar year to what we are living in 2008. So, negative like-to-like growth is not -- unfortunately, it is not something new, out of space. It's something that we already have in 2003, and 2005.
We believe that oil prices, steep oil prices, do have an impact on traffic. When we have moderate or record oil prices increase, there is no significant impact. Actually, oil historically has not been an issue on the Brisa network but when it increase on a regular basis, but when it has strong increases like we have in 2005, and like we are living now in 2008, it does have an impact.
We can divide the impact of oil in two areas. One is a direct impact, is the impact of oil on GDP on the economy, and then through the (inaudible) supplier, the impact on traffic. The second impact is a short-term impact, which is when prices go up quite fast and significantly, drivers retract from their usual consumption, and then after -- this is a short term -- and then, the pattern comes back to normal. So after a short-term reaction, growth rates stabilize to a regular pattern.
When we look at this year, as I've said before, and to 2005, we see very similar patterns regarding either the economy, and also, the increase in gasoline. Actually, petrol prices to consumer increased this year so far, in Portugal 16%. That is, 18% increase in diesel, which is the most popular petrol that is used by car drivers. It accounts to around 75% of the consumption, and leaded gasoline went up 8%. So on average, petrol to consumers went up so far 16%.
When we look at year 2005, and I believe it's a good case study to understand what's going on this year, we see that we have a GDP growing 0.9%, petrol prices went up 17%, and by year-end, we got a negative like-to-like organic growth of 1.3%. That year, ADT, on a like-to-like basis, was negative 4.8%, but most of it was viewed to the shadow toll competition, as we all recall, that the main shadow toll in Portugal, Costa de Plata, was open in -- to traffic, on November 2004, but the most significant impact was during 2005. If we exclude the impacts of the shadow toll on like-to-like traffic, we come out with that figure of 1.3% negative, which was due mostly to the very steep increase in gasoline and diesel prices to consumer.
Then, when we look at the year 2006, we see that GDP went up, grew 1.2%. The petrol prices kept on growing. They grow 11.2%, and like-to-like traffic grew a little bit, so 0.4%.
Then, when we look at last year, we see that GDP went up 1.9%, fuel went up -- or, petrol prices went up 3.6%, so a regular increase, and then, the like-to-like was around 3%. So after a year of 2005, where we have a negative like-to-like, then we have a 2006, with still some oil increased prices, but with positive like-to-like, and then in 2007, we came back to regular, normal years.
And that is what we should be expecting as we move forward. We should have a 2008 similar to 2005, and then, we should have a...
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