Ladies and gentlemen, welcome to the Vafi Third Quarter 2020 Revenue Conference Call. I will now hand over the call to Mr. Christian Leberry, Executive Vice President and CFO of Vanti and Mr. Gregua CEO, Head of Investor Relations of Vafi. Sir, please go ahead.
Good evening and thank you everybody for attending this conference call. I hand today with Maria Melia Fulk with Greg Bartibault and the Investor Relations team. As usual, I will be brief in order to have more time for the Q And A session. So what are the key takeaways of this publication? First, a positive inflection in the Q3 after a Q2 hit hard by lockdowns in France in particular and in many other countries.
In a nutshell, most of VINCI's operations in France and abroad returned to normal. In particular, the contracting was close to full capacity in the 3 business lines. ROVIA and Vafi Construction. And the traffic of Vocioto was close to the 2019 level. For VINCI Airport, the slightly positive summer inflection in passenger numbers was interactive in September due to the renewed spread of the pandemic and the fact that many countries as a result, particularly in Europe, introduced 1,000,000,000, only down 6% on an actual basis and down 7% like for like after minus 28% in Q2.
In France, revenue was down around 4% on a like for like basis, after minus 36% in Q2. Outside of France revenue was down about 10% like for like after minus 18% in Q2. Now on a cumulative basis, in the 1st 9 months, 2020, revenue was EUR 30,800,000,000, down 12% on an actual basis and down 13% like for like. France accounting 3% of the total was down 15.5% on an actual basis and down 16% like for like. International operation accounting for 47% of the total was down 6.9% on an actual basis and 9.8% like for like.
As you know, revenue benefited from the Lattice acquisitions of gas synergies and by the integration of London Gatwick Airport since May 2019. Order intake remains firm, up 4% in the 1st 9 months of the year versus the 1st 9 months of last year, driven by several major contract wins in Europe, such as 2 packages on the HS 2 Rail project in the UK, some Grand Prairie packages, the Linked Toll Building in Latifan, so our Total and in Canada, rehabilitation of the Louis epolet LaFonte tunnel in Montreal and the construction of the Southern segment of the West Alvary Ring Road. But on the other hand, as a result of the electoral timetable, order intake has slowed for small and medium sized projects in France in the last few months. That being said, order book remained at an all time high of almost EUR 33000000000, up 15% year on year. It represents 14 months of activity, providing us with a good visibility.
In terms of financial position, Vences net financial debt at 30th September, 2020 amounted to 20 point 8,000,000,000, down EUR 2,400,000,000 year on year and down EUR 800,000,000 since the beginning of the year. In addition, RC maintained a very strong level of liquidity. Since at the end of September, 2020, the group had a total of EUR 18,500,000,000, of which managed net cash of EUR 6,600,000,000 resulting from good operational cash inflow during the period. Let's now have a closer look at the main divisions with the most important points to highlight. For concessions, Vansyoto Root, after falling 42% in Q2, before because of travel limitation imposed in France, traffic levels recovered strongly into the Q3.
Indeed, traffic was down only 4.3% during this quarter, of which light vehicle minus 4.7 while heavy vehicle traffic was more resilient, a decline of only 1.6%. During the summer, intra European traffic was affected by a lack of coordination between the various countries in terms of public health policies. In the 9 months of 2020, revenue of Aceto root as a result of that was EUR 3,500,000,000, down 18%. Vancier Airport after a decrease of 96% in Q2 versus last 20, we are down 79% year on year. Regarding the number of commercial flights ATM, after a decrease of 85% in Q2 2020, the decrease was only if I can say so, 60% in Q3.
The gradual reopening of borders in the Shenzhen area from 15th June and the loosening of travel restriction in many countries allowed passenger numbers to recover steadily during the summer period. Airports with significant exposure to tourists, family and domestic travel benefited most from this particularly in Portugal and France. However, the slightly positive trend came to an end in September because of new restrictions, to tackle the renewed spread of COVID-nineteen, business struggle remains very limited. In the 1st 9 months of the year, revenue was 1,000,000, down 58% actual and 63% like for like. Let's start now about contracting.
Mass Energy's revenue rose 1% during the Q3, supported by its most recent acquisitions, which have mainly been done in Europe. The like for like decline in revenue was limited to 3% after 15% drop in Q3, Q2 excuse me, in Q2. Confirming that business levels are returning to normal as not seen as is, which is showing its resilience in particularly tough economic conditions. For the 9 months of the year, revenue was 1,000,000,000, down only 2% on an actual basis and 6% like for like. So, Ravi, there was a clear upturn in revenue in the Q3, down 1% like for like versus 19% decline in the Q2.
In France, the resumption or the resumption in on-site activity began in mid April, mid April and accelerated in May. That trend continued in the first quarter. Our size France business levels continued to improve in most of the for obvious countries. Over the 9 months of the year, revenue was EUR 6,900,000,000, down 8% on an actual basis, 7% like for like. Vancy Consulting.
The resumption of new worksite activity accelerated in the first quarter, revenue down 1% like for like as opposed to 28% in the second quarter, particularly in France where business levels were hit hard during the lockdown. That resumption took shape more quickly on public worksites done on building sites due to constraints related to social distancing rules. Over the 9 months of 2020, revenue was EUR 9,500,000,000, down only around 12% on an actual and like for like basis. The finish with our CMO BBA, revenue fell 8% in the Q3 much better than the 29% decline in the Q2. When revenue suffered from the shutdown of building sites for more than a month, in France.
And in the 9 in the 1st 9 months of the year, revenue of RCM OIBDA fell 8% to 1,000,000. During the same period, the number of homes reserves in France, including those of the Urbat subsidiary, the southeast of the country, that we will soon control 100% fell 37% to 3125 lots. In the third quarter, the decline was limited to 11%. Before giving you the floor for the Q and A session, I would like to conclude on the outlook. Daring any further adverse pandemic related developments and excluding exceptional events, which by definition, we cannot anticipate.
We confirm the full year forecast presented last July. Vancierteroute, a 15% to 20% contraction construction in traffic level versus 2019. Contracting a 5% to 10% fall in revenue and a 150 to 200 basis point decline in operating margin compared to 2019. The solvency Airports whereas the group previously expected the full in passenger numbers to be around 65% compared to 2019. The introduction in September of new travel restrictions in response to the 2nd wave of the pandemic led to adopt a more conservative assumption of let's say around 70%.
Based on these assumptions, the 2020 earnings are expected to fall significantly. The group's earning are likely to show a year on year decline in the second half of the year. However, that decline barring exceptional events should be much less pronounced than what's that seen in the first half of the year. On the other hand, measures taken to reduce the impact of lower business levels on cash outflows should result in a reduction in net financial debt at the end of the year. Finally, RC Management remains confident in the group's ability to bounce back in 2021, particularly with the support of economics stimulus measures announced in France and in many other countries.
So thank you for your attention. And my team and
you. We have one question from Mr. Jean Christophe from CIC. Sir, please go ahead. Mister Gonzales, your Michael has been open.
Do you hear me? Yes.
Yes. Yes, Crystal. Go ahead.
Sir, your mic has been open.
Hello? Hello? Yes? Hello? Sorry.
The line is very bad. Do you hear me? Hello?
[SPEAKER JEAN FRANCOIS
PRUNEAU:] So first question, ACS Services in those three areas, are you, are you now in the data room state or, in the, do you have, now access to the detailed account as it seems very profitable. And second issue, we have a strong sequential improvement in Vassy Construction. Over the third quarter, much better than, Raviya or Varcy Energy? Can we have, no further improvement over the first quarter? Many thanks.
Okay. On SAS Industrial Services, the data room has been recently opened and we are starting the due diligence process. Okay. Section probably the explanation of what you mentioned is the fact that Vansy Construction specifically in France has been had been more affected than the other 2 contracting division during Q2 due to the lockdown in France During the lockdown in France, Advanced Synergy never stopped completely its activities since they had their approximately around 30%, something like that of the normal level in Q2 in France. Where Arabia started to the work mid April progressively, but Danske Construction France only started its activity in the beginning of May.
So that's probably the explanation of the differences that you noted, during Q3.
And an additional question, Vancy Construction More Than Vancy Energy is normally, using your subcontracting as the energy is directly made by Vasy, Vasy, but Vasy Construction, you have a big part of subcontracting in your P and L. Is that true?
Is it your question?
Yes, subcontracting.
The fee construction, especially the general contracting part of our fee construction, especially in the Paris area, for instance, is issue contracting probably more than ROVR, which has its own production means of Machine Azis, which is employing essentially Ownman Power.
Okay. It's very clear. Thank you.
Question is for Mr. Nick Latimore from Morgan Stanley. Sir, please go ahead.
Two, three questions for me, please. First one, on the order book and the order intake in the third quarter. If we had in mind the few contracts you announced especially in Canada. But despite you again flagging the softness in small midsized contracts, especially in France. Actually, the order book was the order intake was very, very good.
Could you shed a little bit of color? What's happened where you've seen strength? Either in, in terms of divisions, specifically in fee construction or in terms of geography, that would be the first one. 2nd one, on Eurovia, I think one of your French peers has already flagged a bit of a warning for the fourth quarter due to the lack of local authority spending. And weak tenders over the past 6 months.
Do you feel as well that we are we've got a very soft patch ahead of you at Eurovia, with second question. And last one on the tow roads, French tow roads, Just trying to work backwards the slowdown in traffic in September and seems you were down 10%, 11% I mean, is this the kind of trend you're seeing right now on the French network? Are you worried this might go down a bit further and clean could in jeopardy your guidance there. That would be it.
On the last 1, we reconfirm our guidance for Vasio II for the traffic numbers of a decrease on a full year basis between minus 15, minus 20 percent. We have no reason for the moment to change it. This being said, you remember that we benefited at the end of last year from an exceptional increase of traffic due to the strikes which affected SNCF to train operator, which we don't expect to have this year. But we have factored in all these elements in our forecast which is a forecast. It's not a it's always you have always a risk that the forecast cannot be met, but we confirm the guidance for the moment.
The first question as a second are linked. We are obviously having the same worries about the situation of the road work activity in France. Not so much in terms of activity level for this year. Because considering the high level of the order book, the participation for activity level for 2020 are are not jeopardized. The concern is more on 2021.
The beginning of 2021, And this is due to the fact that, at this moment, that no many decisions are taken at the level of our local public customers, the municipalities, or the intercommunalities, which are by far our largest customer in this activity of Arovya, And this is not due to the fact that they don't have money. They have money. And they can benefit from more money coming from the Central Development. It's more a program or decision, taking a process, availability of people with see the constraints of the pandemic, it's more complicated, maybe for some administration to organize auctions and so on. But we are putting a lot of pressure through our union, professional unions, FNP Pay in particular.
To make sensitive, the decision makers, at the level of the departure more, the preferred, the mails, etcetera, to make them aware that if they don't take decision now for organizing auctions, no new projects will be awarded before a certain number of months, which should jeopardize the activity level of people like Olivia, but maybe some other guys like Vesey Construction France, in the beginning of next year.
Okay. And if I may last one on ACS Industrial Services. Do you have an idea of when the deal might close today? Bookbox figure. And when you expect to update the market on basically your plan, because we talked about 1,000,000,000 EBIT, just expecting worth a little bit more than a than a one pager statement?
No, because you can imagine that the focus is on the due diligence process, which is supposed to last a few months from now. So I will not anticipate what will be the outcome of this process. As a result, what can the signing take place? And after that, when can the closing take place? Because you know that between the two we will have to go through an antitrust checking.
So no, it's too early to say at this time.
All right. Thank you, Christian.
Thank you, sir. Our next question is from Madam ELD Paul from JPMorgan.
If I may come back, first of all, on ACS industrial services acquisition and the perimeter of the acquisition, given I think you are still looking on exactly what you would be interested in buying, especially in the energy concession businesses. Could you give us a little bit of thinking down how you are judging the risk in energy concessions, given it's not something that Vrancei used to do. And a sub question on the acquisition as well. Why considering paying in shares, part of the acquisition? When you could actually pay it all in cash.
So that's on ACS. 2nd question on airports, given where the trends going. Could you update us on the different assets and the risk for capital injection on some of your assets there if there are any And last question, you mentioned being encouraged by the stimulus measures that have been announced in France and therefore, the impact on your activities. Could you give us a little bit more detail on where you see a positive impact on which sectors? And any news on the negotiation of green CapEx on the door?
It would be helpful.
On the stimulus package, honestly, I don't have visibility. Since it doesn't depend on us, it depends on the central government and the speed at which central government will implement the different programs. And particularly, what I was saying before to Nicola, will they inject rapidly new financing as the level of the departure more cities, etcetera, as well as this money will be a rapidly or not spent by those people who are our clients. Our clients are mainly local, not the central government. And we have no visibility.
We can only do some lobbying, which I explained before, on Vancy Airport, you probably noted that we obtained a waiver from our lenders at Gatwick where the issue was probably the most sensitive that you mentioned. And as a result of those weather, and considering that additional financing have been negotiated by the Gatwick Management with its banks and considering also that they might benefit from the program set up by the Bank of England for short term financing support. We don't see any liquidity issue on the basis of the present trends of traffic for the full year 2021, okay. After that, we will see what can happen. We are are unable to make projection longer.
Industrial Services, the terms of the deal, I can say more. I can't say more than what was explained on the press release. I'm sorry. I can provide more details. We have a confidentiality agreement, obviously, with ACS, Grupo, We obviously will be in a position to disclose more information after the due diligence are performed.
And there was another question. I don't remember.
Well, one was on ACS. About why considering paying in shares?
But it's a possibility we want to have because we have to take into account what will be the analysis of the deal once it can be detail explained by the rating agencies. We want to protect our credit rating and having the possibility to pay part of price in share can be useful with regard to the constraints of the rating agency. But again, the details will be, explained when we are able to do it and not to rise to the which we see in the case now.
Okay. And I had a last question on the green CapEx and potential for concession extension. Can you confirm you're still talking to the government about that? Potential?
The contact is still in place, but you can imagine with the recent events that we have been facing in France, the government has maybe other priorities at this moment than extending the concession duration.
But do you see the recent report from the regulator? Is it the operator or not?
It's not the first, neither the last report on the motorways, which will be printed in France.
Thank you, madam. Next question is from Mr. Nelly Ahmed from Barclays. Sir, please go ahead.
Yes, good evening, Christian. Thanks for taking my questions. I had 3 activities, maybe bouncing back on, what Nicolas was saying about order intake in France. And yes, we can understand what's going on with municipalities in particular. Can you maybe talk a little bit on the private side of things, how other impacts are evolving from the private sector?
Second questions, maybe just a detail about airport revenues. We were used to see revenues declining less than traffic. That's not exactly the case in Q3. So is that related to foreign currency weakening in the quarter? Or is there any change to math or fixed revenue streams that you are getting on some of the key assets?
And finally, could make some comments as well, on cash flows. I mean, it looked pretty strong in the quarter given where the net debt position is. So any sort of view on where you would expect net debt to land by the end of the year would be useful. Thank you.
To answer your question about customers, nature of customer. The best answer is maybe Vansy Energy. Vansynergy revenue in is down more than 80%, maybe 85%, 86% with private customers in France, for instance. And Vastien Archie is the one which is resisting the best among our different activities. So but probably due to the fact also that they are very diversified.
Are not just working for 1 or 2 sectors of the economy, but many different sectors, pharmaceuticals, distribution cars, new technologies. So there are a wide bunch of customers. And for the moment, at least it persists quite well, probably also because they are not just doing, providing services for new work, new project for this for this customer, but also for maintaining the existing equipments of the customers. It's more difficult to answer the question, for instance, for construction because the average size of the project is much bigger. So for instance, when you signed a contract with Groupama for the Link Tower for Total.
It's a huge contract for a single private customer, not necessarily representative of the global activity of the division. But I would say that the private sector for the month resist reasonably well. It should be the case also of the public sector, our customer, providing as I explained before, that there is more reactivity in the decision taking process at the level of our local communities.
Then
About the delta, the difference between traffic and revenue in the Q3 for airport. Honestly, I don't have the answer. Maybe my colleagues, I ask my colleagues. Hold on. We don't we are not completely sure of the answer, but it that there are some one off effect in Q2, which can explain why the revenue decrease was less than the traffic decrease.
Compared to the difference in Q3. It's not that material, by the way, but there is not a simple answer to your question. I'm sorry. As for the free cash flow, for the time being, what I explained to you during the confinement, during the lockdown, has not happened. I was expecting a deterioration of the cash coming from the operation during the summer because we were assuming that, due to the recovery of activity, we would have to spend more in the OpEx, CapEx, etcetera.
Apparently, it hasn't happened and the cash evolution is very satisfactory so far. Now you're asking me what would be the forecast for the indebtedness at the end of the year. I will not answer your question because I don't want to extrapolate the very good evolution of the cash flow until the end of the year because I don't know, and there are still uncertainties regarding the working capital in particular. I hope to have a good surprise, but I cannot guarantee you. I'm sorry.
So far, so good.
Okay. Fair enough. Thank you.
Thank you, sir. Next question is from Mr. Gibo Mostel from HSBC.
Mr.
Of third from HSBC. Your microphone has been open. So we have the next question from Mr. Tobias Byrne from MainFirst. Sir, please go ahead.
Yes, good afternoon. Yes, three questions from my side. Please, if I may. So number 1, just on the airports, you've obviously lowered your guidance a little bit for this year for understandable reasons. But I just wanted to get a sense whether that already includes the potential of a second wave impact in your traffic estimates?
The second question is around, permits on the non residential side. When I look at them in France, they seem to be holding up better. You talked about sort of the private side to an extent already, but why would that be, or am I looking at the wrong data? And then just lastly, ACS is obviously an interesting move, at least from my side. Could you give us a little bit more sort of background or flesh around your motivations here and the rationale, but you're thinking about?
And maybe if I may be cheeky, hear whether this was an unsolicited approach from you or whether there was an auction ongoing?
I'm not sure I can tell you too much about the way we have been positioned to make this proposal. What can I tell you? We know ACS top management for a long we have been knowing them for a long time. You probably know that we are working with Assier's Agados in the U. S.
At present on a very big project in Virginia for a link in the in the Bay, nearer Navy base. It's a several $1,000,000,000 project, but we have been working with Assier's on many other instances. So they had been contacts with the top guys of Lagados of SAS for many years. We knew that within SAS, there was particularly interesting business, which was the Cobra Industrial Services, Ariadot Business. But we the business was not for sale.
It was part of the group sales group. And we had some information at one point during the year that this business could be for sale, not through an auction, but through negotiated transaction. That's all what I can tell you for the moment. And we think it's an interesting business for us because it would be very complimentary from what we have already in this business, which is RC Energy, both in terms of geography and in terms of type of projects, size of projects. But the two companies have in common a culture which is based on decentralization, strong control and focus on cash and bottom line.
I mean, the particular division, I'm not taking of the whole assays group, but the particular energy division is of assays has a very close, couture on values compared to the synergy. Okay, residential and non residential permits. About the permits, I will answer about the residential permits because the residential permits depend to the large extent, and it's the same story than the one I told about earlier. The residential permits are depending probably that in France from the local authorities and due to the lockdown and due to the lag it took after the election end of June. Decision have not been taken as rapidly as they should have been for delivering new permits, which explains why the real estate developer at this moment are facing a situation in which the lack of offer they don't they don't develop new enough new projects due to the fact that the permits have not been delivered.
Now for the particular non residential segment that you mentioned, I have not been informed of a particular evolution on this respect. Maybe those projects being bigger in general than the residential projects they had been instructed in advance. And as a result of that, the permits have been delivered, but I don't have other explanation to give. The issue about nonresidential market is more about the evolution of the demand. Whether the present situation in terms of telechronic monitor.
So
working from home, will have or not an impact on the demand in the medium and long term for new office buildings. We don't have the answer for sure. As for the project and the course, like for instance, our head office, which we are building in non air. And which will be ready for occupying mid-twenty 21. We have already taken the necessary steps to reorganize the layout of the building so that people can work together.
We've without risking to be contaminated, the one with the other. And I suppose that it will be the case for any new office building that will be launched in the future. That's what I can say for answering your question.
And maybe on the airports, whether a second wave is already built into the 70%
decline? The guidance, yes, takes in guidance, the change of the guidance, which is relatively fine tuning. It's not a crystal rocket science. Is based on our present experience, recent and present experience. So we can say, yes, it takes into account the fact that there are more strict at present for traveling within Europe in particular, not talking about long haulers, which are in a very bad situation.
Thank
you. Question from Mr. Raco Cobich from UBS. Please go ahead.
Hi there. Hi. Thank you for taking my questions. I've got 3 actually. So the first thing, apologies if this was, already commented on, but I see in your disclosure that you appointed, a previous executive from Sentra in the United States.
So would be particularly interested if that signals anything regarding your intentions, to enter the managed lane market in the United I think you've traditionally not really been involved. Obviously, Carlos being quite big. I don't know if that's what we should take from that, but that's something now you're taking more seriously. Secondly, on ACS, can I maybe ask 2 things? So I guess maybe or 2 or 3 things really relating to the deal?
I think 1, if you could just give us some sense what you think the risk profile is of the EPC side of the business. So the project side rather than the sort of service side. And then perhaps related to that, what I think there's quite a bit of oil and gas in there. So if you could just give us a sense why you think that's not an issue. And then finally, if you as a group are thinking about investing directly into renewables, obviously, that's one of the attractions, I think, of the assets, if that's a new area of growth.
And then one, maybe small one, and again, apologize if it's been commented on, but the can you just give us a sense what the run rate of traffic is? Is it kind of starting to trend in France motorways I'm talking about? Is it kind of down double digit? Is that roughly where we are now in terms of run rate?
The last question, the answer is no. We are not a double digit decrease of traffic, but I would not give more precision of that. About SAS, about the risk on APC, the answer is in the question. Obviously, the risk, our bigger on large projects, large EPC project and on service business. But so far, so good.
I mean, if you look at the track record of SAS Industrial Services in the last 10 years, They have always been involved in EPC, both in EPC and in services and they delivered a steady performance, both in terms of result and in terms of cash, which is the best evidence that it's a particularly well run business with strong positives, and we don't see why this should change. So oil and gas, yes, has been one of the markets of ACS Industrial Services in the past. In the recent period, you can imagine that this part of the business has significantly decreased but has not disappeared completely. So it's still there, but we have a smaller exposure. And what was the last question on SES?
[SPEAKER UNIDENTIFIED
COMPANY REPRESENTATIVE:]
Why we okay. They have developed and expertise at SAS Industrial Services in the developing of new greenfield projects in the energy sector and particularly in the renewable energy sector. It means that they have a team in Madrid. I don't remember the number of people, but quite significant who have the capacity to win projects, greenfield projects, which means that first, they have to be able to build generally through an EPC contract to bill and then eventually to operate at the SPV level, taking a stake, generally a minority stake in the SBV. So they have the ability to find partners, equity partners to share the risk at the SPC level.
But what happened is generally after a while, after a few years, when they once they have built the project, they have real achieved the project, they have built the facility. They tend to resell their equity share at a gain, at a capital gain, which is no more because your risk you take at the time you build, you're not the same at the risk once you operate. And they are about to sell a significant portfolio of assets to the Portuguese energy player with a significant capital gain, which is the best evidence of their strong ability to do this type of thing. So maybe which could change what could change in the future being VINCI and no longer our sales agados subsidiary. Is that we could imaging to keep longer for a longer time, those equity investments if it makes sense for us or we might also decide to do exactly what they did in the past, but we will have being VINCI and having more financing ability and power, we might imagine to keep and build a portfolio, a bigger portfolio of of stakes in these type of projects.
Our Belen Marcos used to be the head of Syntra in the U. S. She has been living in Texas for a very long time, so she has been at the heart of the development of Ferrovial in the managed lanes segment starting with Texas. So yes, it's a person that will bring a lot of value to VINCI considering the potential of this U. S.
Market. It doesn't mean that we will sign tomorrow a contract because we will need to analyze very closely all the risk, which are not just linked to the operation, but which are sort of linked to a large extent to the construction part of the Managed Lane project. But yes, we are very pleased have convinced Madam Marcus to join us. He's certainly a very good person to have with us.
Our next question is from Mr. Jean Coutel. Sir, please go ahead.
Yes, Jean Krista, Florent, again, a follow-up question. First, Regarding the specific road building activity in the U. S, how do you see the outlook over the coming months. And the follow-up question on SAS Renuvial Renewable Energy, if that means that you could carry the assets on your balance sheet as as GDF Suez does in the same sector, many tanks?
It all depends on the magnitude of what you are talking. At present, we are virtually 0 in terms of investment in this sector. We can imagine to invest a few 100,000,000 of euro means that we'll never compete with a Total BePay or ENGIE. We are developer of projects. We are not just investor in existing projects.
That's what makes us different from the guy I mentioned before. When Total wants to penetrate a new market like they want apparently to do it. They buy an existing business, which is operating Wind Farms or solar panel fund, etcetera, etcetera. We'll never do that. We will try to win a new project in the countries where we feel comfortable because we have a good knowledge of the country and we have local management, etcetera.
And then we once we have a build the facility or the farm, then we can think of keeping the equity share for some time in our balance sheet. Yes, we are capable of doing that providing, we are not talking of dozens of 1,000,000,000, but a few 100,000,000, why not? We are just at a very early stage about road building in the U. S. Yes.
Honestly, it has been very well managed. The crisis of the Q2 and our Q3. Has been very well managed probably also the way the U. S. Government has managed the pandemic has been quite different from the way the France, French government has managed a pandemic in our country, which means that activity has never been stopped during Q2.
And as a result of that, the performance is really satisfactory considering the constraints we are facing. And I should have mentioned obviously that now we don't make the distinction between the old Arovia settlement in the U. S. And the Lane plants and paving asset acquisition. The 2 are fully integrated within the same management.
Thank you. Next question is from Mr. Eric L'Oreal from Brand Downier. Next question is from Mr. Eric Lemarie from Ryan Garnier.
Sir, please go ahead.
Yes, excuse me, I just got one question from my side. I understand ENGIE is interested to divest some of these assets, some assets comparable to VINCI Energies or to VCS in services, by the way, would you be interested to look at them to make an offer or because of ACS? It is just the possible for you to
1st, we don't exactly know what is for sale. So I cannot say that we are not interested at all in the infancy in the ENGIE assets, which will be put for sale since we don't know what is for sale. What we know for the moment is that apparently, if we are talking of the whole thing, it's much too big for us compared to our existing size. And also the apparently, the financial performance is not truly at the top presently. Which means that if you acquire such an activity, you will have to spend a lot time, energy and probably money to put such a business at a good level of profitability can take years we prefer to keep our energy, managerial energy for integrating new companies, which are already at the level of performance, which is at least the level of Vansy Energy performance and eventually higher in order to have a profit enhancing impact.
But again, we don't know in detail what will be put for sale. So I can tell you more for the moment. And it's true that we cannot follow all the same targets at the same time. We don't have infinite resource, managerial resources. And for the time being, we concentrate on our sales industrial services.
That's very clear. Thank you.
Thank you, sir. We have our next question from Mr. Jose Agnes from Santander. Sir, please go ahead.
Yes, good afternoon. Three questions please on the French toll roads. What reasons can you give us for the softness in traffic in September Is there any particular segment, committed traffic or heavy traffic that is doing worse or better? And can you share your outlook maybe for 21 and especially if airport traffic presumably improves next year. And my last question is on the Kenyan PPP contract.
Pansy announced the total revenues from this contract would be 1,300,000,000. How much would be construction revenues and how much would be concession revenues? Thank you very much.
On the Kenyan project, we are talking essentially of construction. Since it's not a concession, it's a PPP. It means that it's a contract it's a long term contract by which the Kenyan authority pays us for reimbursing the cost of the new work and the cost of the maintenance of the road during the length of the project. So it's essentially construction job. But remember that we mentioned in the press release that there is still a lot of time to spend for closing the deal.
Especially financially speaking. Well, for auto route, we are not commenting the variation of traffic on a monthly or a weekly basis, it makes no sense because we are not comparing the same thing. So I think quarterly is a reasonable time for trying to compare things. I wouldn't dare making a projection for next year because we can do it at this moment. Nobody has visibility on what is going to happen with the pandemic, neither on our businesses nor on other businesses.
Except maybe the new technologies, but it's not our business. And Sure. I think that's all. Okay.
Thank you, sir. We have one another question from Mr. Tobias Byrne from MainFirst. Sir, please go ahead.
Yes, just a follow-up question with regard to your construction business. I mean, when I listen to you, it sounds to me as if the situation around orders and the municipalities in the local businesses is a practical problem. It's not that on the basis of stimulus these orders will come through eventually. Is this the way you see it or is there something more fundamental at work?
It's the way we see it at present. And when I look at the paper is coming from the federation led travel public, for instance, on this matter, they clearly say that it's a matter of organization, maybe motivation, maybe availability of civil servants to take decision. It seems a bit stupid, but it's the way it is money apparently for the moment is not an issue because the situation financial situation of the municipality is quite good. It can seem strange, but it's the case. It's quite good.
And on top of that, the central government is prepared to inject even more money if necessary to stimulate the economy. So it's more a problem of organization. I think than a problem of fundamental projects, a problem linked to the market situation. To my knowledge, at present, when I read the different papers on the issue,
Understood in the future is the future. And following up from that, on the residential side, Is that a similar similar logic? I our residential is not good for you.
Right? Yes. Yes. It's a similar logic. There's still a strong demand in France, not everywhere, but in many different places, especially in the big cities.
And even now in smaller cities, because more and more, the people living in the big cities would like to live in more friendly areas. Avoid the problem of VICTis. The problem is that it takes time between the time you identified a piece of land then you analyze whether it's feasible or not to set up a project, a determined project on this piece of land. And then do all the administrative work to go through the local civil servants to obtain the permit, etcetera. Can take years, at least months for sure.
And then you start the work and it takes again 2 years before the project is completed. So it's a very long process, which is making which is being made more complicated due to the pandemic. Which has finally almost stopped the work during a few months in Q2 and beginning of Q3. At the level of the municipalities.
Thank you, sir. We have one last question from Mr. Jean Melagier from Kempen. Please go ahead.
Hi, good evening. This is Charmaine from Kempen. Just have one question. On the M and A side, on the concession side, if you could give us an update there. And if you could also comment on your commitments to to grow that part of the business, still considering the quite large size of the potential deal with the ACS?
The focus in concession at this moment is mainly on Greenfield project more than on Brownfield acquisitions. But it's also true that there are not very many opportunities. So, we mentioned the Kenya project. We have I don't know if we have mentioned some project we have in Europe, Germany, Czech Republic. So we are still working to try to win new PPPs in this part of the world.
Manage them. Again, it's a bit too early to we cannot just invent the project, find the construction abilities and so on, but are interested in the U. S. Market, but we are not in a hurry. You never make good deals if you are in a hurry.
You must be patient and take your time. But in the airport business, you can imagine that there are not very many deal on the table at present. Also because the sellers are not prepared to sell at a low price, but it's impossible to put a price on an asset at this moment. Because we don't have any visibility on the recovery of the traffic. So the pipe of new project in Concess is relatively limited at present and essentially, concentrated on greenfield projects.
In the motorway business. Okay, let's see. No more question.
We have one last question from Mr. Nabil Ahmed from Barclays. Please go ahead.
Sorry, Christian. Just one follow-up from me, on the managed lanes. It's fair to assume you've given the story the group and the way you've been building the concession portfolio historically, is it fair to assume that acquiring construction capabilities in the U. S. Would be a prerequisite before we see, vastly more active on management.
Not necessarily because we can also find local partners. We are the only PPP to my knowledge in the recent past that we have been able to win and execute very well in the U. S. Was for the construction of a bridge and the construction of a bridge and a tunnel in Louisville, Indiana. And we did that in a joint venture, in a construction joint venture between Vansy construction, Jean Projette, and the local partner, which is the worst group from Chicago.
So we could imagine why not trying to team up with this partner or another one to try to win together a management contract But we will like to have some input in the construction job, not subcontract 100% of the job, to an external partner. That's for sure, no. So thank you very much for your question. And you can follow-up with my colleagues, the legoir and Alexanderise, if necessary. Bye bye.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.