Ladies and gentlemen, welcome to the VENSI conference call. I will now hand over to Mr. Gregua ahead of Investor Relations of Vancy. Sir, please go ahead.
Good evening, and thanks everybody for attending Conference Call. I'm with my colleagues from the Investor Relations team. We are pleased to share with you our 9 months 2019 activity main figures. We'll be brief to have more time for the Q And A and because we know it's a busy period for all of you with a lot of other publications and conf code. So what are the key takeaways of the 1st 9 months period?
Total 9 months revenue of almost 1,000,000,000 strong growth of 11% of which plus 6% like for like. The Q3 posted an acceleration which saves up 12% and 6% like for like. France, accounting for 55% of the total, is up 7% International, 45% of the total is up 16%. On top of a robust 5% like for like growth, Revenue abroad was sustained by M And A with the latest acquisition of VINCI Energia, Eurovia and VINCI Airports. The currency impact was positive by 1% due to the rise of several currencies against 0 and particularly the U.
S. Dollar. Good revenue trend, but also dynamic order intake for each contracting division. In total, order intake was up 17% on a rolling 12 month basis at the end of September. Order book up 14% year on year at a record high level of more than EUR 37,000,000,000.
It represents almost 12 months of activity versus 11 months 1 year ago. Net financial debt at the end of September amounted to EUR 23,200,000,000 up 7,100,000,000 over 12 months, mainly due to VINCI Airport acquisition of London Gatwick Airport and to a lesser extent, acquisition made by other business lines. Let's now have a closer look at the main divisions. VINCI Concession, revenue up 16% in 9 months. VINCI Autoroutes, revenue up 2%, Traffic over the 9 months was virtually stable with light vehicles down 0.6% and trucks up 2.1%.
The trend at the end of September is similar to the trend at the end of June, but cannot be extrapolated due to adverse calendar and weather effects. Vinci Airport, revenue of almost 1,000,000,000, up 64% and 9% like for like. You already received our strong traffic failures for the airports 2 weeks ago. As a reminder, traffic was up 7%. Revenue was also boosted by our latest acquisition, of which Airports worldwide integrated at the end of August 18, The greater course integrated since the very end of 2018.
And of course, London Gatwick Airport integrated since mid May 2019. For contracting sales of 1,000,000,000 up 10% on an actual basis and 6% like for like. The main points to have in mind are For VINCI Energy, revenue up 9% and more than 5% like for like to almost 1,000,000,000. It benefited from the acquisition made in 2018 and mainly prime line in the U. S.
And Wallu in Singapore, and in 2019 as well in the Netherlands, in Germany and in France. Aside from the impact of this acquisition, Organic growth remained robust during the period as it has been for the last 2 years. It's even accelerated to almost 7% in the 3rd quarter, split equally between France and International markets. The other intake of VINCI Energies was quite strong in Q3 2019 and was up 9% at the end of September on a rolling 12 month basis. For Eurovia, revenue of EUR 7,500,000,000 up 16% 8% like for like.
In a nutshell, business leaders and order intake at Eurovia remained very strong in the third quarter, both in France and international markets with international markets accounting for 65% of the order book at end September. France remains well oriented on the period, and so we are Germany, UK and North America. In terms of scope effects, year over year figures include notably the industry and the world's activities acquired in late December of 2018 from Layne Construction in the U. S. North America accounted for 16% of 9 months 'nineteen revenue versus 11% in the 9 months 'eighteen.
For VINCI Construction, revenue of EUR 10,800,000,000, up 6% like for like VINCI Construction strong organic growth both in France with Grand Paris, notably and Internationally in most of its operations, more than said the ongoing weaker performance in oil and gas related activities. On its part, the major project division is starting a new cycle. After completion of several large projects, VINCI Construction Ground Proge has recently won significant contracts in North America, New Zealand and the United Kingdom. For VINCI E Mobility, revenue rose 32% to EUR 811,000,000, signed through a strong production, both in residential and commercial property. In conclusion, in view of its strong performance in the 1st 9 months of 2019, VINCI Confirmed that it expects full year revenue and net income to be higher than in 2018.
We'd like to thank you for your attention, and we are now ready to take your questions.
We already have a question from LOD Row from JPMorgan. Please go ahead.
Hi, good afternoon. So I'll start with traffic, Guilhermej. I just wanted to understand, what how you interpret, the traffic trends in Q3 with heavy vehicles still being quite strong and light vehicles being quite weak. We've seen that at APR as well. So if you can give us a bit of your analysis of that, I mean, do you think the heavy vehicles growth at the moment is sustainable.
And equally, do you think the underlying trend in light vehicles is a bit higher than the reported 1. I understand the Q4 comps are much easier, but just to understand your interpretation of underlying trends, And then if I can ask a question on actually October performance, have we seen any difference And lastly, on the residential sector in construction, are we seeing further weakness? How is the market there? Thank you.
Hello, Lily. So regarding the traffic, it's clear that the trends of 201820 has been, let's say, polluted by manufacturers, positive and negative. And it's very difficult to isolate and to analyze these different effects. And so it's difficult to see a kind of underlying trend, and it's too early to give any forecast. Anyway, for the trucks, unnoticed that it remains very robust.
That's clear. It can be explained by the exposure of our networks to Spain notably where the economy was a bit more dynamic, notably in terms of industrial production and where the economic forecasts are slightly higher than for some other countries in Europe. So that's a very important indicator to look at because of in mind that one third of the trucks of the network face FX contact come from or go to Spain. For the live vehicles, again, it's the same. It has been polluted by many factors in 2018, 2019.
Maybe in Q3, it has been impacted in July by the heat wave and notably for the thousand parts of the networks. So it makes things difficult, but it's too we are not willing to enter, let's say, a kind of new normal. We are not particularly concern and for the full year, our guidance is clear. We expect traffic growth to be in line with the French GDP, except exceptional events. And so the performance of the traffic this year should be, should be printed in Q4 2019, where, of course, the comps are quite easy, let's say.
For the trend in October, we don't comment. And your last question was regarding?
The residential market in funds on construction.
But for us, you saw that the reservation were flat. So we have maintained quite a good trend. But what we said since 18 months is that the market is plateauing. And so we consider indicators on decreasing in terms of housing starts and housing unit bookings. So for the for VINCI and OIBDA, probably it would be a bit aggressive to to extrapolate a very good performance in 9 months.
And the order intake of VINCI mobility is slightly down. So maybe for next year, it it would be more cautious to consider the fact that order intake are done. So there is a time difference, which can materialize in the figure of next year. And the comps are very high and notably on the non residential part.
Right. And if I I can ask one more since I have you on the line. Any update on the cost pressure, the labor cost pressure that you we've seen in H1, in construction in particular?
No, we don't, that's really a close dedicated to activities. So we don't, I've generated a good performance. Okay. Okay. Bottom line.
All right.
I tried. Thank you.
We have a next question from Josh Kristofer from CMCIC. Please go ahead.
Hi.
I have two questions. First, you give us guidance for revenues and the profit for 2019 as a whole. Could we have more flavor on the Vansy Construction as the margins are, under pressure, can can we have, more flavor? And secondly, could we have, the traffic trend for AA-eighty six Duplex. Many thanks, Mercy.
Yes. Good try as well, Jean Christophe. Regarding the margin, it's not the subject of the call, and we keep we stick to our what we said at the end of July is that the margin of VINCI Construction for the full year should be roughly or slightly below the margin of 2018, but I cannot comment more than that. Yeah. We speak to what I said, the CEO during the Analyst Meeting in July.
So that's for your first question. And the second question, ATC, You know, that we don't publish a traffic for all of our assets, you know, that's by And you know, especially for AAT6, we don't comment asset per asset, but it's roughly a trend looking like, let's say, the trend of confused. Okay.
Okay. No more, so slightly positive only.
Looking like the trend of a computer, yes.
Our next question comes from Joseph Pujal from Kepler Cheuvreux. Please go ahead, sir.
Yes, hello. Just a follow-up on, a first question. You say that the weakness in light vehicle traffic in Q3 was probably due to some extent to the heat wave. Do, so so so that that would suggest that in September where all that was over, traffic was more dynamic than in July, August for light vehicles. Is that correct?
And what would be the figure there? Or if you do not want to give the figure maybe a gap compared to July August.
No, no, but the, the month which has been particularly impacted for the light vehicles was in, in July with the each way, though.
Okay.
Okay. Okay. But but, well, to understand the pattern, heatwave in July traffic down visibly, and then August, September probably, okay, decent because now heat waves, correct?
Yes, but we don't mention in months by months, you have the Q3 figure and I don't know you know, to start telling, okay, in July, it was like that. So now that again, what we said is that it's even difficult for us to read, let's say, it was a question of ability to read what is the underlying traffic, but we are not a concern. Let's say, looking forward 2020 to have a more clean base to see because 2018, 2019 were very difficult. There were some positives this year and some negatives and the year before in 2018. It was the same.
So it's clearly very complex to
do it.
So that's why I don't want to start commenting the months, you know, on that one. We said it was from calendar effect this year, but we already said that in a tran and facility is down, but all in all, it remains, let's say, a flattish trend that we'll see in weeks to come in.
Okay. Thank you. We have a question from Regwa Cubic from UBS. Please go ahead, sir.
Hi. A few questions from my side. Can you maybe you've disclosed it, but can you just remind us how much the year to date M and A spend is or if you want the third quarter. So can you get a sense on the cash? And then, I think you've changed the definition of debt a little bit with leases in on.
So can you just remind us, under the new sort of destination, what the Q4 deleverage was last year? On a like for like basis so we can kind of get a sense what, what that should settle at. And then, a question on airport. So I was a bit surprised, I guess, two things. One was the organic revenue growth of 11.6 and I calculated the traffic kind of of the legacy assets fully consolidated to be around 8 So I guess it implies you've got like 3.5 percent of, I guess, pricing or non aviation revenues per PAX going up.
What's going on there? And if you could elaborate, if there's anything sort of, because that testing is quite a lot higher than in history. And then finally, Can you just provide us what the actual Gatwick Q3 revenue contribution was, please? Because obviously we've only ever seen half yearly numbers from Gatwick never seen quarterly, so I'm going to get a sense for seasonality there, please.
So regarding your first question, for the net debt, During months ago, in H1, the financial investments were 1,000,000,000. In Q3, we had a bit more with some bolt on acquisition of NT Energy. So at the end of 9 months, the M and A, the financial investments were a bit above 1,000,000,000. A few 1000000 more, but close to 8, slightly more. So you can make your calculation to to try to maybe estimate a free cash flow available.
It's quite a it's feasible. The second question was regarding the net debt. In fact, last year, you remember with the IFRS 16, We integrated a part of the leases on last year at the same period at the end of 2018. There was EUR 159,000,000 in the net debt, EUR 159,000,000 which are not included in our net debt anymore.
Okay. So in other words, your 15.4% on the new basis by the end of the year, basically, rather
than that. So can you repeat?
So your debt at December 18 on that basis was DKK 15,400,000,000?
Yes, exactly. No, you can, yeah, to to estimate our free cash flow. You can do like that at the end of 2018. It was 166 that you will not see again at the end of 2019, which have been, let's say, we've drawn from the all definition of net debt. And Yes.
For the reports, you saw that the trend in Q3, the jargon growth is strong. We are pursuing acceleration. That's true in terms of sales. But that's true first in terms of volume effect because the traffic in Q3 accelerated compared to the traffic in H1, the traffic of Lincierpo. And in addition, you have a pricing effect And you're right, there is, as well, some incremental effect of the non aviation part.
So let's take the train remains good for VINCI Airport. And for the new airport, So Belgrade, AWW and London Gatwick, we said that the sales of these 3 airports
were 1,000,000
in 9 months 'nineteen. And a large part of that comes from, Gatwick. Because in Q3 in Gatwick is a very important, that's the summer months. And it's there is a quite an important, let's say, seasonality in the business of Gatwick.
We have a question from Stephanie Dates from Royal Bank of Canada. Please go ahead.
Hi, good afternoon. Thanks for taking my questions. The first one is on Gatwick traffic decline in the third quarter. Could you Please let us know excluding some accrued bankruptcy what the underlying trend was. Could you please give us an update on the milestones.
And when we will get a bit more granularity on the regulation, at least one after you start investing in months ago, And then thirdly, you're very strong friends at New Airport, especially compared to, like, Belgian efforts. Is that mostly driven by the new group opening? And, if you could give us a bit more, if I may. Thank you so much.
Your second question, Tiffany,
was on the regulation of which which airport? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Ana, okay.
[SPEAKER UNIDENTIFIED COMPANY
REPRESENTATIVE:] I mean, this is good hand in hand with the CapEx investments to come in the new Lisbon efforts.
So we
don't we explained in the press release of in Chia Pauls 2 weeks ago that, traffic in Gatwick in Q3 was down a 1% it can be explained maybe by kind of uncertainty in the Brexit environment. But we said that it's mainly due to the collapse of Thomas Cook and to the strike in September of British Airways staff. So we don't simulate, let's say, the underlying traffic.
Performance is
the process is still ongoing. We, but all we can say is that the project of conversion of the Montijo Military Airport and to a CVVIA Airport is progressing according to our schedule. You know that an environmental study and public inquiry has been done by the APA that's the Portuguese agency for environment. And this agency is currently working on its final conclusion. So it can take still a few more months to work, let's say, on the implementation technicalities, we have to see with them now that how to do that, how to implement all the decisions.
And it can You can think it's a longer procedure, but it's a normal procedure for such a project. So we are confident and we will give you more information when the final agreement will be signed. It's a perfect illustration of the model, let's say, of VINCI Airports, We're trying to be quite, let's say, dynamic, creative, proactive, to open new lines, to open new routes, And that's the, let's say, the beauty of our diversified and international business model. We have a very strong network of airlines of clients. And so in Lyon, we could apply, let's say, our ECP and our method and we could obtain new routes and notably some international routes.
There was a low cost, which, which set, which has now its days in the in view. That's where they are. And they open new routes, 17 new routes. So that's a lot. Let's say that.
What we try to do when we buy an Apple to make it ramping up and to improve both on solutions for the clients and for the stakeholders. Thank
you.
We have a question from Martin Muchstong from Bank of America Merrill Lynch. Please go ahead, sir.
Good afternoon. So my question is on your order intake, which I believe is up 12% in the 1st 9 months, but that obviously would have benefited from the acquisition. So from the contribution of companies that were not in the perimeter in 2019. So I'm just wondering, do you have a like for like number for order intake growth that would perhaps separate between the constant perimeter and the impact of acquisitions? Is that is something that you track?
Yes. Usually, that's, +12 percent, 9 months, 19 versus 9 months, 18. You're right, Marcin? And the like for like, let's say, growth is very close to this 12% figure. It's, let's say, low double digits.
Okay. Thermal effect.
Okay. And if I can have one more question on the VINCI Construction, So you're you're mentioning a new new new large project in a number of geographies, including the UK. Can you update us on the high speed to the Hs 2 rail project? Have you recognized anything already in the backlog? And if not, what is the status of that project for VINCI?
No, actually, too, is an easy item. So we did not recognize at this stage any amount in the backlog. So that's in our pre backlog. And an update, it's quite difficult to say that ISP 2 is clearly a very important and scripturing project for the UK. That's through, economically wide and that's true as well.
On an environment point of view. And so we have the conviction that the projects will go ahead, but it will be, let's say, difficult and tricky at this stage to try to give a more detailed timing, but it's an ACI. It's not in the backlog yet.
Alright. Thank you.
We
have another question from Eric L'Omarie from Bayer, Bryan Garnier. Please go ahead, sir.
Yes, thank you. I've got 2, if I may. First one in France, for the civil works market next year, you will have some local election are you still confident your business will not be too much impacted by any sudden related to this election. It was my first question. And a second question regarding the UK.
I know it's not the biggest exposure for VINCI, but have you been recently penalize, by, all of the first, around, the brexit, cigar. And do you consider that you are a Brexit ready?
So for France, you saw, Eric, that the order book is robust. Thanks to speak about the year on year. And that on top of that, our order intakes remain high. In other words, it means that the very good level of activity in 9 months did not impact The order book, which is regenerating very well and very fast. So beyond the municipal election in France in March, next year in March 2020, we are, let's say, quite cautiously optimistic, I'd say, because there is still a good outlook for us, for the profession.
First is that the local authority's financial health has improved compared to the last cycle. 2nd point is that the municipalities, the bloc Cominar in French, are not the only ones responsible for these investments. There are some needs of CapEx to upgrade the public network of roads in France. And it depends from the clients, which are the regions. I mean, so maybe an article today in the press is that the quality of the public network in France collapsed in the international report.
So something has to be done. But on top of that, There are probably some new tramways, new light rail system to be built in some cities in France. And finally, don't forget that year over year will benefit as well from the Grand Paris. So broadly speaking, we'll see what will be the year 2020, but we don't panic.
Okay. That's clear.
And for the breakeven for the UK,
we don't
We don't see some slowdown, let's say, in our local business in the UK at this stage, maybe tomorrow. We don't know that our 9 months activity was up in the UK for Finshe construction and was up as well for year over year. And moreover, the order intake has been good in the UK in the recent weeks for these 2 divisions.
So that's,
we'll see that and for our ports, we already answered. Yes, there's maybe some uncertainties around the Brexit that's just like decrease in Q3 for Gatwick was due to other parameters. Okay. To someone. So,
not
only, but, you know, the Brexit, we can tell exactly what will be the outcome. That's pretty, moving the saga as you said. Thank you.
Our next question comes from Nikolas from Morgan Stanley. Please go ahead.
Good evening, Gregua. Just a quick one and maybe following up on, on those, on those types question. Just on the order intake because it was particularly strong in Q3 and you've got some large contracts outstanding out there. What did you actually book in Q3? Did you book, so the old common station for 500,000,000 dollars, $600,000,000, but did you book also New Zealand just to have a feel for basically the big elephants in terms of contracts outstanding?
We're looking to you, hi, Nicro. And you're right. The trend in Q3 was very strong, and that's true. And not only for VINCI Construction, Vinci energy was very, very well oriented. Eurovia is even better and Vinci construction is very solid as well.
So we booked several projects. I would say maybe around 1,000,000. So several of them, but we didn't book yet the station in London.
Okay. So no station and no, not the rail link in New Zealand either, I suspect.
This is Jake from New Zealand.
K. It's just it's just 700 minutes?
Let me check. No. Indeed. It has been booked in July. In the Bocaolin City Lane.
The Yuma colleagues are telling me that LNG in Canada in the Western part of Canada for VINCI Construction Grand Proger and entrepreneurs has been booked. So that's one of the big elephants and it's more than the $100,000,000, plus I told you, but we were quite successful again to to book some quite important project and notably in the UK. That's not the old dock station at this stage.
Okay. Okay. And OTawa
was already booked in H1. OTawa, you know, for European VC GP was already booked in H1, and you know that?
And maybe just one quick follow-up on VINCI Energies. You mentioned it's still particularly strong. So no slowdown from industrial clients, still benefiting from the structural trends. 502 to the home and so on. There's nothing, no clouds are there, basically.
I'll never say no close on that, the growth was strong. All the planets were aligned. It was a very good Q3 in terms of activity and in terms of order intake. And it was, let's say, the case for every markets, in a lot of markets, we said that the business was strong in Benelux, in Switzerland, in Eastern Europe, primeline and doing well with Cianna, Brazil, and so on. So we could not make, let's say, your negative list.
But it's the planet are quite aligned by, by division, the infrastructure division was the most booming in the 9 months 'eighteen, with a very strong growth, let's say high teens, And below that, very good growth as well from ICT in 3 and building solutions. So we don't see slowdown at this stage.
1 on your telephone keypad. Well, it seems that we have no more, no further question for the moment. It seems that we have no further question for the moment. So give back the floor to the company.
So thank you very much for your attention. So the Investor Relations team remains at your entire disposals should you have more questions, feel free to call us whenever you want and have a great evening and good luck with all these publications. Bye bye.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.