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Asset sales and foreign exchange fluctuations muted the global infrastructure owner’s results.
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Brookfield Infrastructure Partners' (BIP +0.01%) financial results continued heading higher during the first quarter. However, two notable headwinds -- asset sales and foreign currency fluctuations -- pushed back against the company's overall results. That muted a strong underlying quarter for the global infrastructure owner.
|
Metric |
Q1 2019 |
Q1 2018 |
Year-Over-Year Change |
|---|---|---|---|
|
Funds from operations (FFO) |
$351 million |
$333 million |
5.4% |
|
FFO per unit |
$0.88 |
$0.85 |
3.5% |
Data source: Brookfield Infrastructure Partners.
Recent acquisitions and organic growth helped boost results:
Image source: Getty Images.
CEO Sam Pollock commented on the company's results and strategic initiatives:
Brookfield Infrastructure had a strong start to 2019, delivering 10% organic growth. We also invested $430 million into two previously announced transactions and progressed the integration of recently acquired assets. As we advance a number of asset sales, we will seek to replicate our recent capital recycling success to create further long-term unitholder value.
Brookfield Infrastructure Partners is in the midst of reshaping its portfolio to grow at a faster pace. It's selling slower-growing mature assets and reinvesting the proceeds into businesses that can expand at a higher rate. It raised $1.1 billion from asset sales last year, which it's reinvesting into five deals. It closed two more of those transactions during the first quarter, investing $430 million into a South American data center business and a natural gas pipeline in India. The company expects to complete the last of these deals -- the second phase of its transaction with Enbridge -- in the third quarter. That should boost the company's annual FFO run rate to 22% above where it was when Brookfield sold the Chilean electricity business last year.
The next phase of Brookfield's capital recycling strategy is already well underway. Not only did it close the sale of a 33% interest in its Chilean toll road operation, it also recently agreed to sell its European bulk port operations. The company expects to complete this sale in June, which will bring in about $130 million in after-tax proceeds that it can reinvest in future deals. That's one of several sales the company has in various stages as it seeks to raise $1.5 billion to $2 billion in cash by the end of next year. That will give it the money to invest in other exciting infrastructure opportunities that should create additional value for investors.