Q4 2024 Brookfield Infrastructure Partners LP Earnings Call Transcript
Key Points
- Brookfield Infrastructure Partners LP (BIP) has achieved its targeted $2 billion of capital recycling proceeds in 2024, with momentum continuing into 2025.
- The company has a strong position to benefit from higher inflation due to its essential services with regulated or contracted revenue streams indexed to inflation.
- BIP has completed over $9 billion of non-recourse asset level financings, with 90% of its debt at fixed rates, mitigating interest rate risks.
- The data sector is expected to become the largest sector within five years, driven by digitalization and a robust pipeline of capital deployment opportunities.
- BIP's midstream and utility sectors are benefiting from digitalization, with significant growth opportunities and attractive build multiples for expansions.
- Long-term interest rates have increased, and inflation remains a concern, potentially impacting future financial performance.
- The announcement by DeepSeek, a Chinese AI company, has raised questions about the future demand for data centers, potentially affecting BIP's investments.
- Development premiums for hyperscale data centers have started to compress, indicating increased competition in the sector.
- The strong US dollar may impact where BIP sees the best opportunities to invest for value, although it is not directly affecting their capital recycling lineup.
- There is uncertainty regarding the impact of the new US administration's policies, including tariffs, on BIP's business operations.
(audio in progress) backdrop and the strong positioning of our base business. There's been focus on a change in the government in the US and the resulting shift in policy including the timing and magnitude of potential tariffs on foreign imports. Simultaneously, the US economy is showing strength and employment levels remain robust.
Long term interest rates have increased recently and remain at elevated levels as investors temper their expectations around future interest rate cuts and anticipate a prolonged period of higher inflation.
As we've demonstrated, we are well positioned to benefit from higher inflation in our business. Our businesses provide essential services with regulated or contracted revenue streams, many of which are indexed to inflation. During the past three years, inflation has contributed meaningfully to our FFO growth averaging more than a 5% annual compound growth rate. Today, our business remains highly indexed to inflation which we expect will continue to drive organic growth into 2025.
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