Welcome to the Vinci Q1 2020 Revenue Conference Call. I will now hand over to Mr. Christian Labeyrie, Executive Vice President and CFO of Vinci, and Mr. Grégoire Thibault, Head of Investor Relations of Vinci. Sirs, please go ahead.
Thank you. Good evening, and thank you everybody for attending this conference call. I am today with Grégoire, but also with [Marie-Amélia Folch] and Thierry Mirville. First of all, we do hope that all of you and your beloved ones are safe and healthy in these tough times we are going through. As usual, I will try to be brief so to have more time for the Q&A. What are the key takeaways of the beginning of the year for Vinci? Vinci was performing well overall in both its concession and contracting business lines until mid-March. Obviously since then, it has suffered a very severe drop in activity following the lockdown in France in particular, and also in many other countries. Under these circumstances, we expect a pronounced decline in the group's revenue in the next few months.
For the Q1 per se, revenue remains stable at EUR 9.7 billion. France accounting for 54% of the total was down 6.3%, like for like, down 7.1%. International was up 8.5% and 1.6% like for like. As you know, revenue abroad was boosted by latest acquisitions of Vinci Energies, and also by the integration of London Gatwick Airport, which we acquired in May 2019. The currency impact was neutral in this quarter. The percentage of the total business generated outside of France increased from 42% in Q1 2019 to 46% in the first quarter of 2020. This is due in part to the group's acquisition, which were made mainly outside France, also thanks to the organic growth in the international arena, which is in contrast to the decline recorded in France.
Another takeaway is the dynamic order intake, +4% in Q1 2020 versus Q1 2019, despite high comparison, and +9% on the rolling 12 months basis at the end of March, of which +6% in France and +11% outside of France. Order book was up 8% year-on-year, reaching an all-time high of EUR 37.7 billion, which represents almost 12 months of activity and provides us with a good visibility. Please also keep in mind that the HS2 contract in the U.K. for GBP 5 billion, we won beginning of April in a 50/50 joint venture with Balfour Beatty, will enter the order book in April. It was not included at the end of March in the order book.
At the moment, about 1,000 people are already working on this project, which after the LGV high speed train line to Bordeaux, is the second largest contract ever won by the group. In terms of financial position, you notice that Vinci increased significantly its liquidity position to a very high level since at the end of March 2020, the group had a total liquidity of EUR 15 billion, comprising a net cash position of EUR 5.5 billion. On top of that, we issued commercial paper for a total amount of EUR 1.6 billion, including EUR 400 million, which were placed at the end of March following the ECB intervention with a maturity of six months. Since then, we have issued a further EUR 300 million, still under excellent conditions since we get a negative interest rate.
Also, I remind you that we have an unused confirmed syndicated bank credit facility of EUR 8 billion, which is due to mature only in November 2024. In addition to those EUR 15 billion, early April, Vinci arranged an additional EUR 2.5 billion credit facility, which is due to expire in March 2021, with a syndicate of six banking partners. The amount of this facility will be increased to EUR 3.3 billion, so EUR 900 million more early May with the addition of five more banks to the syndicate. After all these transactions, the group will have a total liquidity of more than EUR 18 billion. I should mention also that on top of that, in April, London Gatwick obtained a new GBP 300 million bank loan due to mature in April 2022.
You probably know that in April, Moody's confirmed its A3 rating with stable outlook on VINCI S.A., the holding company, and ASF. Meanwhile, S&P confirmed its A- rating on VINCI S.A., ASF and Cofiroute with stable outlook. Like Moody's versus positive outlook previously.
These decisions from the rating agencies reflect the confidence in our financial robustness, the prudence of the management of VINCI, and the quality of our business model that brings together a wide diversity of complementary activities operating in an ever increasingly varied geographical universe. As a conclusion, with the measures we have taken to adjust expenditures and revise investment programs across all our business lines, with the financial resources at our disposal, and with our record high order book, Vinci is well-equipped to get through this major crisis, even if it were to continue for a long time, which obviously no one wants to see that happen. Looking further ahead, we are confident that we will bounce back strongly. Let's now have a closer look at the main divisions. Vinci Concessions to start with. Q1 sales, EUR 1.7 billion, up 2.6%, but down 6.3% like-for-like.
Autoroutes, revenue of EUR 1.1 billion, down 5%. After a strong start of the year, since the traffic was up 9% at the end of February, of which light vehicles plus 10% and trucks + 3%, the traffic fell sharply in March, down 39%, of which - 44% for light vehicle and - 14% for heavy vehicles, after the lockdown measures were introduced across France on March 17th. The decline accelerated, the trend in late March continued into early April. However, the fall in heavy vehicle traffic has been less severe than the drop in light vehicle traffic, as France maintains a basic level of economic activity. As a whole, in Q1 versus Q1 2019, traffic was down 8.6%, - 9.7% for light vehicles and - 3% for heavy vehicles. VINCI Airports.
VINCI Airports revenue was EUR 521 million for the quarter, up 24% on an actual basis due to the consolidation of London Gatwick, down 10% like-for-like. In terms of traffic, passenger numbers in the 45 airports managed by VINCI Airports were down 21% in Q1. Not surprisingly, the traffic fell sharply in March, down 56%, affected by travel restrictions worldwide to limit the spread of the virus. The decline was particularly pronounced in late March. Air traffic is now running at very low levels and is being limited to freight and health-related and emergency transport. Contracting sales of almost EUR 8 billion, down only 0.3%, almost stable on an actual basis, and down 2% like-for-like. Please note that for the first time, international business accounted for more than half of the total of contracting activity.
In parallel with the impact of recent acquisitions, mainly by Vinci Energies, there was more than 3% organic growth outside France. In the meantime, contracting business levels fell by over 7% in France. This shows the abrupt stop that followed the country's lockdown on March 17th, while business continued to some degree in other countries and was even maintained to at almost 100% of the normal level in places like Germany, Northern Europe, Australia, and the Middle East. For Vinci Energies, to start with, revenue of EUR 3.2 billion, up 5%, stable like-for-like. Following a strong start of the year, Vinci Energies saw its activity in France fall after the lockdown. However, the business line's operation in certain essential sectors such as healthcare, energy, telecommunication, pharmaceutical, and food, enabled it to maintain around one third of its normal estimated business levels. Outside France, the situation remains better overall.
Some regions in which VINCI Energies has a large presence, such as Germany, Scandinavia, Switzerland, are continuing to show activity levels close to normal. In the Q1 as a whole, the fall in business level in late March was offset by VINCI Energies recent acquisition in countries such as Netherlands, Germany, Spain, and France. Eurovia. Eurovia revenue of almost EUR 1.7 billion, down 1.5% only, actual and like-for-like. In a nutshell, in France, after an excellent start of the year, in which it benefited from both its strong order book and favorable weather conditions, Eurovia's business levels fell sharply after the lockdown. Its activities, after having almost come to a halt, are recovering very gradually. Outside France, however, activity has continued to at least some extent in most Eurovia countries, with business level close to normal here as well in Germany and in the U.S. VINCI Construction.
VINCI Construction revenue of EUR 3.1 billion, down 5%. To bear in mind, in mid-March, like the other contracting business line, VINCI Construction saw a sharp decline in its activity in France, where most of its projects were shut down. Outside France, activity continued to a varying extent in many countries, depending on the region. The situation remains changeable as the pandemic develops. Our analysis of how countries reacted to the pandemic reveals three major areas. One, Asia, Hong Kong, Singapore, Korea, which is used to pandemics and can deal with them while maintaining business levels at a high level by having the appropriate equipment and organization. Second area, the Anglo-Saxon world and the Germanic world, where there was a pragmatic response that maintained business level as much as possible while complying, of course, with health standards.
Finally, the Latin world, which includes France, obviously, which had a knee-jerk reaction that led to business being suddenly and almost completely shut down. To end with, VINCI Immobilier, the revenue was 25% to EUR 238 million, thanks to a strong production in commercial property relating to several major projects, like the one in the Gare de la Part-Dieu station in Lyon. However, revenue fell in late March as almost all contracting projects in France came to a halt. The number of homes reserved in France, including Urbat, our subsidiary in the south of the country, fell 29% to 1,041 apartments. Thank you for your attention. I am now ready with my colleagues to try to answer your questions.
Ladies and gentlemen, if you wish to ask a question, please press 01 on your telephone keypad. Thank you. The first question comes from Elodie Rall from JPMorgan. Please go ahead.
Hi. Good afternoon, Christian and everybody, Grégoire, [Maria, Mia]. Hope you're well too. Thank you. Thanks for taking my questions. First of all, I have three if I can. The first one is on motorway traffic. I was wondering if you could share the views that you have on how you think traffic will recover once the lockdown is lifted. On the one hand, presumably people are going to be more comfortable driving, than taking any sort of public transportation. On the other hand, we hear governments talking about potential travel restrictions, between regions. I was wondering if you could share your views with us on this. The second question is on working capital. I know you don't like to comment on that, I know.
I was wondering if you could give us a little bit of your thinking and how we should think about the impact from this sharp fall in contracting activity right now, and then the progressive recovery on the working capital requirement for this year. Lastly, you haven't mentioned anything on dividend. You officially still are maintaining it. Given you haven't mentioned anything else, I don't know if you could give us some more color. I know the AGM is delayed. We've seen other peers postponing the dividend. I was wondering if you could share a little bit of your views on that as well. Thank you very much.
Okay, Elodie. On the dividend, obviously, I am not the one who takes the decision. The assembly has been postponed. The new date for gathering the shareholders has not been set up yet. In any case, it should take place for legal reason before the end of June at the latest. Board of Directors will take the decision to organize a new meeting. This should take place, I think, beginning of May, let's say during the first two weeks, and it will be up to the Board to decide about the dividend for the previous year. I have no more information at this stage. For the motorway, I cannot comment because I don't know, and nobody knows at present what will be the detailed measure that will be implemented after the 11th of May, whether it will be possible or not to travel on the motorways.
What I understand, it was a statement made by the president this afternoon, it doesn't intend to have different situation from one region to the other in terms of deconfinement. This doesn't mean that traveling will be authorized. We don't know. We have to wait until the government makes up its mind. Obviously, if it's authorized again to run on the motorways, I think the traffic should be good because people would prefer definitely to take their car rather than taking a plane, providing it's possible or taking a train. For the working capital, you know we have a negative variation of the working capital during the first half, which varies from one year to another, but it's in the range of, let's say, EUR 1.5- EUR 2 billion during the first half of the year.
This is, I would say, the normal change of working capital during the first half, which normally is reversed in the second half. This is due to the fact that we have less collections in the first half as in the second half compared to the fixed cost we have to incur and pay. Surprisingly, the working capital has been quite good in the first quarter of the year, which is probably linked to the fact that we had a higher level than normal of activity and as a result of collection during the first quarter due to, in particular, the weather, which was pretty good. This has benefited to Eurovia in particular and the other contracting activities.
Obviously, since the activity has almost been stopped since March 17th, we will have very little activity in April, and as a result, very little collection, let's say in next June. We might have more consumption of working capital than usual, but I cannot tell you how much because I have no idea. All will depend on the pace at which we will resume the work. For us it's clearly, but not just for us, for most of our colleagues and most of the French companies, the priority is to resume the work as soon as possible, which means that we first have to address the sanitary constraints, obviously, and agree with our clients on the resumption of the work.
That's clearly what we are focusing on at this moment in all our activities in contracting, because on the concession side, there is not much we can do at present.
Great. No, that's very clear. Thank you.
Thank you. The next question comes from [Jean-Christophe Lefer-Moulin] from CIC. Please go ahead.
Hello?
Jean-Christophe.
Good evening. I have two specific questions, if you don't mind. First one, in terms of U.S. activities of Eurovia, there is, I think, a lockdown in some states and even more counties, mainly in the eastern parts. Are you now impacted or not? Are you obliged to stop the works of Eurovia in U.S.? The second issue, real estate. How is the situation of cash in and cash out with this very cyclical activity? Many thanks.
About Eurovia in the U.S., the activity is almost normal. More than 90%. We have been obliged a figure which in any case changes week after week. The bigger ones, in particular the office buildings in the Paris area in particular, but also in Lyon, are not back to work yet. If you see the logistics for organizing the protection measure is more complicated to implement on those big sites.
Okay.
To reduce the cash burn, but this is not just in [Vinci Mobilité], it's everywhere, we have implemented at a very large scale furloughing measures, which is possible in France and in some other countries also, but mainly in France. Which mean that our people who are unemployed are paid almost entirely, more than 80% for the low salaries, the low wages, by the country, by the states, or are in vacation or in sickness situations.
Okay. This is Jean.
The main objective being obviously to cut as much as we can the cash burns on the fixed cost.
Okay. You don't see any major risk for the real estate of, did your cash consumption, as we had 20 years ago, if you remember. We are sort of the main failed generation with the experience of very enterprise in term of cash position in all construction groups in those real estates. No major risk? Please.
It's clear that the recovery in the real estate activity in France will take longer than in other businesses like, for instance, contracting.
Okay
if you want to sell a project, you first need to build it. During the summer, during the vacation period, but maybe we will have no vacation this year but okay. During the vacation period, it's not the best moment to sell apartments. We might have some delays compared to the normal situation to sell and to deliver our projects. For the moment, for me, it's a one-off problem to address, not an existential problem like the one we had to face in the mid-'90s, if it's what you have in mind.
Yeah.
Don't forget that VINCI Mobilité is not a very big player and is entirely owned by Vinci and financed by Vinci.
Okay. Okay, this is Jean. Thank you.
The treasury, the cash of VINCI Immobilier, except when we buy new land, is coming from its customers. We are quite prudent, like most French developers. We never launch a new project without having sold already 40%-50% of the project to the customer. We get paid before starting the work, which reduces also the risk you mentioned.
Okay. It's very clear. Thank you.
Thank you. The next question comes from [Stephanie Dart from Bank of Canada] . Please go ahead.
Hi. Thank you for answering my questions. I have two, please. The first one is on cash burn, specifically in contracting. If we look at last year, I think excluding D&A, you were at a bit less than EUR 35 billion and about 30% of that was staff, 25% purchase consumed, 24% subcontracting, and 13% external services. Could you please give us a little bit of flavor to which extent you believe each of those are variable, and to which extent you believe that you could avoid negative margins for this year within contracting? My second question, please, is on HS2, the new contract you just signed. Could you please let us know what the structure is? I don't think it's exactly a cost plus fee, but if you could highlight if you have any risk there, and if it's inflation hedge and raw material in particular.
Thank you so much.
To answer the question about HS2. You're right, it's not a cost-plus contract. It's more sophisticated than that and more, I don't have the word. It's what we call an incentivised cost model, which means that the fee we can get, the profit we can make on this project, obviously depends on the way we manage and we optimize the cost. The more we optimize the cost, the more we make, but with some limitation, in the worst case and in the best case. It's quite a good system. It's a win-win system, I think, very intelligent, which has been negotiated with the customer. For the first question, it's obviously a very important question. The fixed cost proportion, versus activity obviously depends on countries and type of businesses. To make it simple, it varies between construction, Eurovia, and energy, between 30% for construction, maybe 35% for Eurovia.
We have more fixed cost at Eurovia due, in particular, to the amount of equipment that we operate on our site compared to construction, where more equipment are rent. You have energy. It can seem surprising, but energy is over 40% of fixed cost, which is due to the fact that energy, it's essentially labor cost. Energy employs more people internally. That's the amount, rough idea of the percentage on revenue of fixed cost. Of this fixed cost, what is important is what is the internal labor part. This internal labor part, in most cases, in particular in France, which is a big portion, as you can imagine, can be, I would say, subsidized to a large extent. This permits to reduce significantly the amount of fixed cost we would have to bear in case we would have little activity.
The proportion of labor cost within the fixed cost varies between, let's say, 45% at Eurovia to 75% at VINCI Energies, construction being in the middle, around 60%. This part of the fixed cost, in reality, can be transferred to some extent to the Social Security or to the state financing systems in big countries like France, the U.K., Germany, et cetera. The exception being the U.S., as I said before, in the U.S., we work almost normally, and in case we would have a workload problem, that's a pity, we would have to fire the people and then recruit them back. It's clearly the area of focus. We have three main area of focus. One is resume the work as soon as possible, providing the security conditions are met.
Second, reduce our fixed cost as rapidly as possible to cope with the decreased level of activity, and obviously, get the cash in and reduce the cash out as much as we can. It happens that at this moment, as I said before, the cash situation is rather good because we benefit from the fact that we collected significantly at the end of March due to the high level of activity versus normally in January and February.
Thank you very much. Very clear.
Thank you. Ladies and gentlemen, let me remind you again, if you have any comments or questions, please press zero one on your telephone keypad to enter a queue. Thank you. The next question comes from Gregor Kuglitsch from UBS. Please go ahead.
Thank you for taking my questions, and same to you. I hope everybody is okay. My questions are just to be very clear on the follow-up to the comment you've just made. If we can just do very basic math to understand correctly what you're saying. For instance, in construction, you said 30% is fixed cost and 60% of that is labor, therefore 40% is non-labor. If I multiply the two out, that would be getting me a 12%. In other words, if you make no revenue of, say, last year you made EUR 1 billion, today it's zero, you'd make EUR 120 million loss. Just so we're square on numbers. I think that's how I read it, just maybe confirm. If you could then help us on a second question. I think you mentioned deferral of CapEx and other non-essential expenditure.
If you could just help us out a little bit, anything maybe on the concession CapEx, whether things are getting pushed out on the operating CapEx, anything you could tell us, sort of what you're planning for. Then maybe a final question on airports. I think it's a point in the first quarter, but also I guess maybe going forward. Your traffic was down, fully consolidated subsidiaries 19%, but your revenues were only down 10, like for like, I think rounded. Obviously there's a difference, and I wonder whether it's things like cargo or something like that. Obviously, inflation as well. Maybe putting the question differently going forward, if passenger traffic is basically virtually zero, what kind of revenue levels do you actually get? I'm thinking maybe any fixed fees you get from any airport operators or any airlines, or cargo. That would be helpful.
Thank you.
On the first question, I cannot add anything more to what I have said already because it's really a rough math. I think the reality will be much different because we are a very decentralized organization. The important guys at Vinci are not at the corporate level, but on the field. They are reacting very fast. I just discussed with one of my colleagues in charge of construction, and he visited two sites yesterday in the Paris area, where you could have thought that it was impossible to resume the work. One is the station at La Defense, the Eole station, which is located under a big commercial center. The other one is a boring machine in the Grand Paris project in the surface of the area. In both cases, we are back to work.
Already 100 people are working at La Defense, but tomorrow it will be 200, and then back to 500, which is the normal level. They are really doing a fantastic job to try to limit as much as possible the time during which we will be under optimized in terms of cost management. The good question is the second one about CapEx, because clearly, depreciation, there is not much you can do once you have acquired an equipment. You can try to reduce the future CapEx, which is what we have done already. We have stopped or postponed significant amount of CapEx, both in the concession and in the contracting businesses. Altogether, I estimate the total reduction or postponing of CapEx in the order of magnitude is around EUR 700 million, which represent, in the concession business, approximately 25% of what was forecast for this year.
It doesn't mean that we will never do it, but we will do it later when the conditions will be back to normal. In contracting, we have reduced the CapEx program versus what was planned in our budget by almost one-third. All together, this represent a savings in cash of EUR 700 million. You asked a question about the airport business. I don't know if we have all the answer, but Grégoire is going to try to answer your question.
Hello, Grégoire. You're right, finally, the revenue decrease in Q1 is a bit less pronounced than the traffic pax decrease. Have in mind that the aeronautical revenue is not only linked, of course, to the number of passengers, but as well to the number of ATM, which decreased slightly less than the number of pax, because you had seen, at least in a part of March, some flights. We were not very loaded, but still. Aero as well, you have some freight, it can explain a bit of difference. On the non-aeronautical part, we still collected some retail rents. We still collected some real estate rents as well. For example, advertising revenues, we have still been paid for that. That's why there is a kind of difference that you noticed between the trend of the traffic and the trend of the sale.
From there, if your question is if we have zero revenue for Q2, at the end of the day, don't dream. The impact on revenue will be more material than what you can have seen in Q1.
No, for sure. If you have no pax, you still make some revenues. That was kind of the question in a way.
After if, behind that, the question is regarding the.
These issues are dealt with on a case-by-case basis. There is no general answer to this question. If the question is, with zero passenger in a particular platform, do you generate revenue? The answer is, it depends on where, with what type of customers, et cetera, what type of partners. They are very different situations, so we cannot give you a global answer to your question. I'm sorry.
Okay. Thank you very much.
Thank you.
Thank you. The next question comes from [Tobias Ronne from MainFirst]. Please go ahead.
Yes, hello. [Tobias Ronne] here from MainFirst]. Thanks for taking the questions. Three questions, if I may. Number 1, maybe just confirm your exposure to the civil engineering side and as a whole for the group and revenue terms, I get to around 47% or something. That's number 1. Number 2, what do you expect in France and let's say the U.K. and Germany and the U.S. in terms of infrastructure spending programs? Do you have, through your industry associations, any sense of that? Lastly, I hear what you say on the airports, it's difficult to give a one-shot answer, but maybe take your big airports, let's say Gatwick, what you're doing there to mitigate the severe impact there. Thank you.
Can you repeat the last question, please?
Yes. Obviously, with airports, it's difficult to give a one-shot answer in how you will mitigate the situation on the airport side in the short, also in the longer term. If you could give us, using Gatwick as an example, what you're actually doing on the ground there now to mitigate the situation and what your thinking is going forward.
Okay. On this last question, I would like to mention the fact that the management of Gatwick is very soon going to issue a detailed presentation on its website, explaining in detail the measures that have been implemented. I don't want to interfere with this presentation. To make it simple, it's a combination of many different things. OpEx reduction, quite significantly, including layoff of people. Revision of the CapEx, as I mentioned before. Considering the fact that some CapEx have been pursued because when you don't have traffic, it's sometimes easier and more efficient to work on the site, and particularly when you work on the, how you say, the runway. It's an example. Also in the building sometimes. If you don't have passengers, you can work more efficiently. They will disclose more information.
If you can be a bit patient, this should be available very soon now, probably in the coming days. As for the civil engineering exposure of the group, if you add up the traditional civil engineering activity, which are made of many small and medium-size project, but also the major project division, which is essentially doing civil engineering jobs, VINCI Construction Grands Projets, and also Soletanche Bachy, which is made of many small entities, but performing civil engineering jobs in very specialized areas. All that together represented last year two-third of our total revenue. I think this proportion shouldn't change much this year, maybe a bit more with the Grand Paris project, which is developing, and now with the HS2 project. Approximately two-thirds civil engineering, but it includes approximately 25%-30% of specialized business.
Building represent approximately one-third of the total activity of the Vinci Construction. What are the projection? Honestly, post-confinement, nobody has any idea of what is going to happen. Probably the government will have to re-dynamize the activity of the country. Will that be done through additional investment in civil engineering? Honestly, I don't know. I think we have enough job to do at present. We don't really need more jobs in construction. We have the historical order book I mentioned before. The important thing is maybe not to get more work, but already do the work we have on hand, at least in France.
Thanks a lot. That sounds awesome.
Thank you. The next question comes from Nicolas Mora from Morgan Stanley. Please go ahead.
Yes. Good evening, guys. Three quick questions from me. First one. On networking capital, do you expect, especially from VINCI Airports and Concessions, a bit more headwind in 2020, especially from airlines dragging their feet in paying fees? Second point, the order intake in the first quarter was, on our numbers, very strong, very reassuring. Can you explain us a little bit, especially in energy, what went on or why the order intake was so strong? Last point on liquidity. We thought you had plenty of cash. You just keep on signing up more. What's the plan? What are you gonna do with EUR 18 billion? There's plenty of things to buy, but we don't think that's really your priority right now. Just was wondering where you would stop and what you expected to do with all this.
On liquidity, you understood that we don't have EUR 18 billion on hand. The EUR 18 billion includes more than EUR 11 billion of available facilities. If you add up the commercial paper, it's even more, it's EUR 14 billion. Of the EUR 18 billion, EUR 15 billion, it's credit facilities or borrowings, just in case. The actual cash position is only, if I can say so, around EUR 5 billion, of which approximately half in the subsidiaries. That varies according to the moment in the year. The rest centralize at the holding company. That's not that significant. The idle cash is not that significant considering the size of the group, which is huge, and considering the variation of the working capital that we can expect in the coming months, considering that the first quarter position was abnormal. It was better than expected.
Since we are prudent people, you know us quite well, and this is clearly a positive appreciation that the rating agencies have taken into account when they recently confirm our A- and A3 long-term rating. We are prudent, that's true, but we prefer to have too much cash than not enough cash like some of our colleagues or competitors. That's for the first question. What was the other point, Grégoire? The working capital of the airport business and of the motorway business is obviously not the same. Probably the recovery of the airport business will take longer, will clearly take longer than the recovery of the motorway business.
That's why, also, we think it was reasonable to have some liquidity available and that's why Gatwick, in particular, which are our bigger assets, Gatwick negotiated recently an additional GBP 300 million facility with its relationship banks, which should be sufficient to cope with those difficult times until the recovery takes place at Gatwick. What we believe, obviously, we have no certainty. We believe that the recovery will be progressive. Logically, it should be progressive, starting with flights within the country. For instance, you know we operate Nantes and we operate Lyon. When you want to go from Nantes to Lyon, you can go by car, but it takes you some hours, a few hours. You can go by train. In such case, you have to go through Paris, it's quite easier to take a plane, a direct flight from Nantes to Lyon.
That's the type of thing that could be implemented as soon as the government feels more comfortable with the security, the health, and safety situation. In the second run, we can expect opening flights within Europe, and we think that Portugal could be one of the first country which could benefit from the reopening of flights within Europe between the U.K. and Portugal or Germany and Portugal, et cetera. What will take much longer, clearly, are the long hauls. That's why the recovery will be progressive and it's preferable to be in a safe situation versus liquidity compared to the motorway. I think your second question, Nicolas, was regarding the order intake for VINCI Energies, still quite strongly up in Q1 2020 versus Q1 2019. It's mainly due to some projects and contracts we won in Scandinavia, notably, which are at VINCI Energies scale, quite big.
A few million EUR, it makes the difference in terms of a variation. VINCI Energies was about to achieve a record year, both in France and in its main markets like Germany, Northern Europe, the U.K., and now some more exotic places like the U.S., Brazil or Australia. Bad luck, we were hit in this fantastic improvement in mid-March. At the end, the quarter remains quite satisfactory as a whole. Obviously, Q2 will be different.
Just on that front, Final question on, can you remind us the exposure, especially to industrial investment within VINCI Energies? The mix has changed a lot. What's the short cycle?
I just say industry as a whole, there are many different types of industries. Jobs in the factories represent almost 30% of the total VINCI Energies revenue, more or less like infrastructure. Infrastructure, meaning electrical lines, transportation and distribution, etc. You have building solution, which is obviously depending on the situation in the office buildings, representing around 25%. The rest, so 20% being the new information and communication technology business, which is resisting quite well in the present moment, especially the maintenance part, because it's very important that all the telecom networks work properly, and a lot of maintenance has to be done to achieve that.
All right. The very last one on the splits on private versus public demand, once we start to get out of lockdown and look into the second half of the year, have you had first hints from clients canceling initial projects, canceling initial talks? I suspect not many people are-
I don't have a global view on things to answer your question. Just maybe to say that the public clients are more supportive, I would say. More supportive in order to resume the work, but that's really general talking. You have also some private customer who are supportive, but to make it simple, the example being the work we do for the Grand Paris, the company of the Grand Paris, or the [RATP] at Eole. The big public customer are really helping so that we can resume the work as soon as possible. Probably they receive some advice from the central government, I don't know.
Thank you, Christian.
Okay.
Thank you.
More questions?
The next question comes from Pierre Bosset from HSBC. Please go ahead.
Good evening to all. I'm glad to see that you are all in good form. I have three questions, if I may. The first one is on the additional cost linked to the COVID-19 constraint. How easy do you think to be easy to pass those additional costs to the final client? My first question. My second question is on the margin for next year. Is there any reason to think that the margin for next year will be different from what you were expecting before? Those margins are coming from your order book, do you have any reason to change your expectation? The last question is on airports. There's probably some situation where the drop in revenue will put in danger some covenant. I'm speaking about Gatwick, for instance. What is the way out?
Are you ready to inject some more money, or do you think that the way out will be to get some waiver from the bank? What do you expect here in terms of financial situation for the airports? Thank you.
On the last one, we have not identified any particular situation where we would be in danger. You know that most of our concession are financed out of project finance schemes. About Gatwick, I prefer to leave the management of Gatwick answer your question, and I think we'll have the answer in the document that will be released soon. You will see everything depends on those matters, on what scenario you take into account to make your projections. So far so good, I would say. This obviously can change depending on how long it will take to recover the traffic. Projection for 2021, honestly, it's not really the thing on which we are focusing now.
We are in a very short-term focus at this moment on resuming work, cutting costs, postponing CapEx, trying to limit the cash burn as much as possible, and then we see where we are when we close the accounts at the end of June, and how we can then project ourselves until the end of the year. 2021 is very long-term for the moment, not just for us, but for many corporate in France and in many countries.
No, I accept that. I fully understand. My question was more, because there's some margin which are embedded the order books that you have, which is very large, is there any reason to think that those margin could be different because of the COVID-19 additional cost or whatever? Yeah.
It's too early to say. It's too early to say because we are precisely working at present on how to organize ourselves to comply with the new constraints without deteriorating too much the productivity and the organization of the work. We are learning day after day. I was discussing with Jérôme Stubler, the Head of Vinci Construction, just before this meeting. He was explaining to me some of the ideas that have been recently implemented on the site to make the work done as efficiently as possible. I don't have the answer to your question about what impact it could have on our productivity, and therefore on our cost. Therefore, what would be the question to address eventually with our customers. It's too early to say.
Okay. Thank you.
Thank you. Ladies and gentlemen, I would like to remind you, if you have any further questions, please press zero one on your telephone keypad. The next question comes from Jenny Ping from Citi. Please go ahead.
Hi, good evening. Just one from me. ANA, obviously you've been negotiating with the government or have signed the MoU, in terms of the CapEx and how you're going to be remunerated for that. Where are you on that negotiation process? As you said earlier, presumably a lot of it has been postponed, but should we be expecting any material CapEx outflow on ANA anytime soon? Is the whole project now in question in terms of the spending, the additional CapEx on the runways, et cetera? Thanks.
Okay. In Portugal, where we have one of our major asset, as you know, we have a long-term view on things. Like we have in most cases, when you operate a long-term concession, you have to have a long-term view on things. Particularly in Portugal, where we operate all the airports of the country, and where we have established with all the different governments of the country, close and productive relationships. This is still the case, obviously, whatever the difficulty we encounter at this moment. For Portugal, which has managed quite well so far the virus crisis, we think we cannot change our way of behaving just because of that. We have to be constant in our approach of the situation.
That's why, if we project ourselves in the medium term, there is no doubt about the fact that the capacity of Lisbon will have to be improved and increased. That's why the Montijo project, we continue to work on it. It doesn't mean that we will spend huge amount of money in the short term because we are at an early stage of the project, and we are essentially doing studies. We do engineering work, not construction work, and not before some time. We don't change the way of behaving on this one. It doesn't mean that we don't have a close dialogue with the authorities about how can we reduce some operating costs in the present moment. We have to pay a lot of attention to the social situation of the country because we are a close partner of Portugal.
I don't know if my answer is clear enough, but it's really what we think. We mustn't have a short-term view on the way we manage the issue in Portugal.
That's perfect. Thank you very much.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero on your telephone keypad. The next question comes from Nicolas Mora from Morgan Stanley. Please go ahead.
Hi, guys. The last one before we go. Is it time for you to get back to the government and relaunch the idea of a stimulus plan in French toll roads?
No. The answer is no. I don't think it is a priority, Nicolas. We have paid a lot of attention in the way we manage our motorway during this difficult period. You probably don't know because you are not allowed to travel, but we have kept all the oil stations and the shops open, all of them, to make sure that the truck drivers could have a rest stop whenever they have to fill in their tank, can take a shower, have a decent bathroom facility, et cetera. This was very important for the image of VINCI Autoroutes, and I think it has been much appreciated by the authorities, by the minister, Madame Borne. Now the question about new plan relance, stimulus package is clearly not the issue for the moment. Again, we have plenty of work to do on our motorways.
We have the previous stimulus plan, we have the investment plan. We have different things which have been stopped. We have the bypass of Strasbourg. All these works have been stopped. Now the priority is to resume the work, and it has started, I think yesterday or the day before, on the A62, which is in Tarn-et-Garonne in the southwest of France. Little by little, we resume the work. That's clearly our main focus.
Thank you very much. There are no further questions in the conference call. I will now give back the floor to the speakers. Thank you.
Thank you. Thank you very much, everybody. Of course, the investor relation team is at your disposal to follow up and to answer your question. Good luck with all the publication ahead. Good luck with the school at home for some of you, and have a great evening. Bye-bye.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.