Ladies and gentlemen, welcome to the Valsi Conference Call. I now hand over to Griko Antibou. Sir, please go ahead.
Good evening. Thank you, Laura. Thanks, everybody, to attend this conference call. I'm with my colleagues, Alexandra Vonazelle, and Sebast Apeson from the Investor Relations team. We are pleased to share with you our 9 months 18 activity main figures.
We'll try to be brief as we know that the very busy period for all of you with a lot of publication and cons call. We hope you have time to read our press release. If not, what are the key takeaways of the 1st 9 months. 2019 revenues are up 7.7% to EUR 31,400,000,000 plus 3.3 percent on a like for like basis. The Q3 posted an acceleration with sales up 9.5% and plus 4.3% like for like.
France, accounting for 57% of the total 9 months activity is up 4.8%. International, 43% of the total activity is up 12% 2.3% like for like. Activity abroad was sustained by external growth VINCI has been dynamic in M and A over the last month. On the other hand, The currency impact was negative by 2.6 percent due to the depreciation of many currencies against euro and notably the dollar U. S.
Dollar, Canadian, Australian, and Kiwi dollar, the British pound and the Swiss francs. Let's now dive into the main division. Let's start by VINCI Concession, sales at 5.6% at the end of September. Vinci airports plus 12.3%. You already received our traffic figure for the airport, still very dynamic.
Excluding Japan, impacted by a typhoon in September, traffic was up 6% in Q3 and 8% in 9 months. In addition, not that the period benefited from the integration of new airports, Salvador in Brazil since January, and the recently acquired portfolio of airports worldwide since the end of August. VINCI Autoroutes plus 3.6% Traffic remained robust. In Q3, traffic was up 1.4% of which light vehicles plus 1.3% and trucks plus 2.7%. At the end of September, traffic was up 1.9% of which cars plus 1.7% and trucks plus 3.3%.
This traffic trend is in line with our guidance. For contracting, sales up 8.4% and 3.1% like for like at the end of September. Q3 was strong as well, plus 11% of which plus 5% like for like. In more details by division, VINCI Energies plus 17% to almost EUR 9,000,000,000, thanks to M and A, as you know, As a reminder, the main acquisition of VINCI Energy over the last 12 months were Walloon in Singapore integrated since April 2018, Prime line in the U. S.
Integrated since March, high-tech in Sweden since January, Infra Tech and Horoman in Germany since the very end of 2017. External growth indeed, but not only. The organic growth was high at +4 percent quite homogeneous between France and international, where the trend was very well oriented in Q3. Plus 8% of organic growth abroad. Eurovia activity of EUR 6,500,000,000 up 10% and +8 percent like for like.
Q3 posted a dynamic 15% growth. France was well oriented on the period and so we have Germany, UK, Eastern Europe, Canada, and Chile. VINCI Construction always more difficult to summarize. EUR 10,000,000,000 of sales, growth of 1% at the end of September of which plus 3% in France and minus 1% abroad. Solid trend in France around Paris notably, solid as well in Central Europe and Australia, but sales decreased in Africa in the UK and in oil and gas market.
Finally, regarding the order intake, they are up 5% at the end of September, after plus 3% in H1. So a good trend in Q3. Per division, the 9 months order intake of the following trend. Plus 18% for VINCI Energies, plus 10% for Eurovia, minus 6% for VINCI Construction due to icons with some contracts on Grand Paris 1 last year. In France, 9 months order intake were down 8%, and international order intake were up 21%.
At the end of September, our backlog is up 7% year on year at almost 1,000,000,000. In conclusion, Q3 3 and 9 months revenue trends were positive. The group is on track. Our business model is stronger. Thus, we are very serene for the rest of the year and confirm our guidance.
As a reminder, in a nutshell, Our guidance is for the full year 2018 VINCI expects to see growth in revenue, operating income and net income. Would like to thank you, and we are now ready to take your questions.
Thank you. We have a first question from Victoria Carrelia Santander. Please go ahead.
Hi, Greguarantin. I have 3 question on my side. This first one is related to the other concession. If you can explain, what happened during the third quarter, because I was aware that we had some perimeter issue regarding the relation new asset. But, at the same time, I would say the revenues were not reflecting exactly these, these news assets inside the perimeter.
And, if you can explain what, what happened there. So second question is regarding the guidance in contracting, I mean, do you think that we still have I would say, growth in the 4th quarter for contracting. So continue the guidance for the full year, we are at risk that probably tracking top line could not be growing as you expect due to the international business maybe. And the last the question is related to Anna concession. If you can comment about the recent press news about the possible extension in exchange of 3rd month for the month before CapEx.
Nothing more than that. Thank you.
Thank you, Victor. We'll come back to you
So, you
too. I'm back. So regarding the other concession, that small amounts, that's true, but in Q3 2018 versus Q3 2017. This other concession save were slightly down. That mainly due to our stadium activity because seasonally high with a lot of events organized inside the France close to Paris and in Olympic Park, in London.
So Q3 2017 was very high and that's why, you can see, see that decreasing. So that's the main reason. That's the main reason.
We're not following the performance in I'm sorry. It's not related to possible underperformance in traffic on, of Lansac.
No. No. No. No. So if your question, you hired a question in another one.
That's a very small So for lunch, this audio, as we said in the press release, the traffic is very strong. It's in a ramp up. You remember, we opened the 2nd section of Land Sac in June. So we are typically in a rampant sale, and traffic is very strong. And above what we expected.
So it confirms the good outlook we have for these assets. So, no, no, it's not due to that's what we wrote in the press release. Our traffic is up, So that's the stadium. That's the reason. Your second question on contracting, no, we don't change a single world to our guidance.
We are confident. We are serving, as we told you, activities are strong at the end of 9 months. It has been good and very good in Q3. No, no, no, we are we're starting to know, of course, we don't change our guidance and we're there for activity, we're there for profitability, I don't know. We stick to our guidance.
Okay. And finally, your first question was on Anna. You're right. There were some press articles a couple of weeks ago or 3 weeks ago. We don't comment this kind of newspapers on the a lithium right or whatever they want.
What I can tell you is that the negotiation on the new airport in Lisbon are still ongoing. An agreement should be found soon, maybe by yearend, but we cannot tell you more than that because by definition, that's a negotiation. So we will keep you informed. And once we have more news, that's all, ongoing. Okay.
Very good. Thank
you. The next question is from Ira J. P. Morgan. Please go ahead.
Hi, good morning, Gregua. Just three questions as well on my side, if I may. First of all, on traffic on forward in Q3, your reported traffic levels, our growth more or less in line with what APR reported last night. They did mention that there was a calendar impact, which I think was around 1% due to the fact that one nonworking day became a working day in Q3 versus last year. Can you confirm that it is the same for Vansy motor auto auto motorways?
That's my first question. 2nd, just a question on net debt. It's up EUR 1,500,000,000 year on year. I know you mentioned all the acquisitions, that you've made recently. I just wanted to make sure what is included in that net debt level versus what's not included in particular is the Eurovia's acquisition in the U.
S. Including in it. And just my third question quickly, how much was Airports worldwide contribution to Q3 revenues, please?
Thank you.
Thank you, Lovely. So regarding the the traffic for Q3, what can I tell? The growth we, we posted. It's quite clean, I would say. Yeah.
That's what we could call an underlying growth. We had some plus and some minus over the 9 months period, but all in all, that's neutral. And regarding the calendar effects, over the 9 months, somewhere positive, somewhere negative. Again, all in all, it's neutral. And regarding Q3, we didn't have, let's say, some significant calendar effects to, to regulate, let's say.
Okay.
The second question, the net debt. So, yeah, it's all quite an active police in terms of M and A over the last months, it does not include a lane, plants and paving you were referring to. It includes Airports Worldwide, which has been closed at the end of August, okay. But in the net that there is not yet line clients and paying, which has not been closed yet. And finally, speaking about AWW, that's your last question.
The contribution, let's say, is quite small at this stage. It's only for 1 month. I have that in mind, I believe it's it has only been integrated since the end of August. So the contribution was only for September and it was less than 1,000,000.
Okay. Thank you.
Question is from Nabil Ahmed of Barclays. Your line is now open.
Yeah, good evening, Thibault. Thanks for taking my question. I actually got 2 first one is on the order intake in the third quarter. If you could give back the numbers by division, And if you have that on a like for like basis, so excluding the acquisition, I'd be interested to hear, how the intake has performed during the third quarter? Second question, I guess, focusing on those divisions that have significantly changed in terms of like for like growth and it looks like it's primarily year over year.
It's looking primarily in France where the like for like growth has accelerated in the third quarter. Are you seeing pricing complements here. I mean, my question, I guess, is to what degree this is volume this is the market that has been good for you guys? This is executing your backlog or to what degree this is related to an increased pricing on the materials side of things?
Thank you, Nabil. The order intake in Q3, so you guys can make the calculation of +5 at the end of September plus free, at the end of H1, at the end of June. So it means that in Q3, the order intake in total were up double digits like +10 percent. And you can consider that half of that was some let's say, M and A and external growth impacts. Your second question, that's a good analysis, yes, lots of strong organic growth in New York.
Yeah. That's due to, let's say, a good market, speaking about France. And there is a pricing effect, you're right in this increase, but we don't quantify. We don't break down, but the market is very good and we are in a positive electoral cycle ahead of the municipal election in spring 2020. So the trend is good.
It should remain good, but in this growth, yes, there is a price effect, but sorry, we don't
question is could the price effect be significant enough to really explain the change in the
No. No. No. No. No.
No. No. No. No. No.
No. The market is very, let's say, well oriented. Very well oriented. So of course, I'm not going to deny there is a price effect, but not to explain, let's say, such a swing and that's mainly due to the good market
Thank you. The next question is from Mehdi Boudorkan of Raymond James. Please go ahead, sir.
Yes. Hi, Gregor. I have two questions. So one follow-up on AWW. We have an idea in terms of revenues I mean, on a 12 month basis.
And secondly, on VINCI Construction, could we have more color on the performance, which actually remains weak in terms of organic growth. Is that linked to Africa?
Hi, Meli. Thanks for your questions. So the first one regarding apples worldwide, what I said to LOD is that more or less on 1 month, you have a contribution of sales below EUR 10,000,000. So you can, you can multiply by 12 and maybe again, it's quite marginal in terms contribution that it gives you an idea on a full year on a full year basis. Regarding your second points, you're right.
The answer was your question. VINCI Construction, Africa, the sales will be still done as well on the oil and gas markets. So that's it.
Thank you. The next question is from Greg Kumovich of UBS. Please go ahead.
Hi. I've sort of figured out the the net debt side of things. Obviously, you're saying 16,000,000,000 obviously, a bit hard for us to know exactly what's going on with all the components, but kind of excluding acquisitions And if you look over the last few years, and that's, I guess, where it becomes a little bit tricky for us because of the timing of M and A. And so on, what would you say is kind of the normal seasonal cash flow in the fourth quarter? Is it kind of 1,000,000,000 €1,000,000,000 or something like that.
And then you didn't mention Belgrade in the acquisition, because obviously you mentioned Lane, clearly that's pending, U. S. Antitrust approval, but what's happening with regards to, Belgrade? And then, question on kind of just your guidance. I was just looking very briefly on your website and looking at the consensus recurring net income.
And I think it kind of implies hardly any profit growth in H2, net income. I'll just keep it simple. Obviously, you've just done pretty solid sales growth in the third quarter. You're not talking about any margin pressure. So I want to understand What do you think that that's too conservative?
Thank you, Gregolfo. Regarding your question on cash flow and on the working cap variation, know that in our activities, that's always very difficult to predict. That's at the very end of the year that you have some cash inflow. So that's really, and that's through the end of December that you have more visibility on your on your working cap. But to give you more colors anyway.
The trend of working cap at the end of September was around the same that the trend you saw at the end of June 2018 versus June 2017. But anyway, over the period, our free cash flow in the 9 months 2018 was slightly above EUR 1,000,000,000. It was slightly lower than EUR 1,000,000,000 last year in the same period. So in other words, our operating leverage more than compensated this, working cap change. And below that, you have some financial investments.
There's no there is nothing, let's say, unusual. We already spoke quite a lot about the working cap trend in H1. And you remember on that, the deterioration of the working cap in H1 'eighteen, was due to the pickup of activity for Eurovia and VINCI energy. So at the end of the day, that's a positive signal for the business. To add you as well to some investments for VINCI Mobile with acquisition of Field and less advanced payments for VINCI Construction and most stringent rules in terms of the delay of paying or subcontractors.
No, there is nothing, let's say, scaring me. And, second question was on Belgrade. We still wait for the the closing and still by their end. And to conservative on the guidance, your 3rd and last question, Gregor? No, we will maintain our guidance we are not going to, you know, to split and to adjust our guidance, let's say with every every quarter or every semester.
So that's, we keep it.
Okay. Can you maybe just help in aggregate, how much were the M and Afinancial investments in the third quarter in terms of spend? So then we can calculate ourselves.
In the 9 months? The MR envelope was €1,700,000,000, slightly below that. And you we communicated in H1, for the M and A of lot. So you have the Q3 for 9 months M and A.
Thank you. Bye bye.
Thank you. The next question is from Stephanie Das of RBC. Please go ahead.
Hi, everyone. Thank you for answering my questions. The first is on Bouygues, which recently downgraded the guidance because of I was wondering whether you were seeing any change in the environment, like, then from that perspective. My second question is regarding the North Carolina contracts you just announced and whether there would be concession opportunities on the line? And then finally on ADP, the recent regulatory developments, do you feel the likelihood of the privatization is increasing or decreasing.
Just one question, Tiffany. Hello. It's not here. We don't tell you. Just your second question was about you, Orovya in North Carolina, what was exactly the question?
And
also Orovya winning two contracts. We've locked the mid Yeah.
Yeah. Now it's Carolina.
I was wondering if maybe in a few years' time, those could become potential managed lane concessions or if it was just the contract that stated they were not planning standard?
No, no, it's just a contractor. As far as I know, the management of the concession will be will be done by the public authority by the DOT, the division of Transports in North Carolina. So that's there is no let's say, concession opportunity at the end of the construction. Regarding your first question, so with the profit running of a Bouygues Construction And Colas. If we start, I call us and the the read across for you.
Yeah. Yes. That's your your question. The the year has been difficult. For arrayed works activities with our subsidiary called ETS, UTS, and it's partly due to the French National Railway Company strikes, which took place from April to July 18.
They affected this subsidiaries activity and profitability and created some problem in terms of transportation of aggregates. However, the good financial health of Eurovia Other Business allowed us to absorb this nonrecurring issue. As a consequence, earlier guidance, which is a rise in revenue and EBIT margin, remains fully valid. Regarding Bouygues Construction and the problems on data center and biomass plants. What can I say that?
It's the the the biomass plants are very complex projects. On a tactical point of view and that's very demanding in terms of delays and neither VINCI construction nor VINCI energy never built any biomass plant. VINCI energy can be active in some biomass plants in Germany, for example, but as a subcontractor, which is totally different, VINCI Construction built in the past two ways to energy plants, but ways to energy plants and biomass plants in terms of complexity And on technical point of view, really, it's not the same, but these two projects have been delivered. And more generally, because the question is always maybe on the UK, where these programs occurred. Evinci energy is not very exposed to the UK.
Actually, the UK accounts for less than 1% of VINCI Energies sales. And our policy in the UK, you know, that by heart is to be very, very, very selective and to be very opportunistic. And regarding the data center, VINCI Energy does some data center in Singapore, notably with The company we acquired, last April. I told you about in the introduction, and that's a company specialized in this business. And all in all, with the projects of Huawei, we haven't been confronted with major difficulties in this particular segment.
And we hope and we think we'll continue to do so. Another question on It was an ADP, right? ADP. Your first question, Tiffany?
Yes. That's right.
Stephanie?
Yes.
Yes. That's right. Okay. So, and and what do you want to know on the ADP?
Just maybe comment on the recent developments and Oh, you see.
Okay. Yeah. Yes. So your recent development indeed under assembly that you announced, the the national assembly, voted, in favor of some articles of the packed loop and what packed and notably allowing the IDP privatization. It was at the beginning of October.
So that's a good step read. That's now into the hands of the CNate. And to be adopted, the backlog has to be approved by both chambers under the French parliament, the National Assembly and the CNate. And we think such an approval for the LoRa Pact, for the PACU, could occur. I don't know.
It's somewhere around, you know, early 2019. But at this stage, We don't know much more than that. What can we tell? What will be the main terms and condition of the privatization which can only express, let's say, an interest in transitors because we don't know yet the rules of the game.
And so when do you think the government would start, discussing the KDS charges that you have once? It's privatized. I quite received
We don't know. I don't know, Stephen.
I wish I knew.
I don't know. I have no idea, really.
Thank you.
The next question is from Eric Del Valle of Bryan Garnier. Please go ahead.
Two questions on my side. The first one, I'm just curious, could you maybe share with us the revenues generated by ETF, you know, the subtrees of Colas on an annual of Eurovia, sorry, maybe he's in zero news on an annual basis. And, a second question regarding Vincia Pulp, I am, I am, I understand that the According to the press, VINCI Airports has been criticized in Japan, following the telephone the Typhoon incident. Could you confirm that? And is there any political weeks there because of that.
Thank you.
Thank you, Eric. So regarding ETF, the the sale in 2017, slightly above €400,000,000.
Okay.
Okay. And for Vincia Park, And the typhoon, which was in Japan, in early September, I would say that some noise, political noise, and we don't we don't commence. We work hard to to to put the situation on track. All the stakeholders really and John did a great job And finally, the conveyor port, could we open it quite quickly? And we are proud of that.
And now that the traffic is the back, the thing, cruising speed. So that's a bad moment, we replaced under the recent criticism where we don't comment on Nissan noise.
Okay. You didn't have to invest more to, to, you know, in order to, to better protect the asset in the future. Against this type of, weather impacted?
Maybe, but it's not, let's say, a short term or dogs policy.
Okay, fair enough. Thank you. Bye bye. Thank
you. The next question is from Nicholas Samara of Morgan Stanley. Please go ahead.
Yes, good evening, Agua. Just a couple of questions. One on VINCI Energy, you know, the conference bridge was quite tough in the 3rd quarter and, you had a quite a blood quarter. Is there anything specifically you want to highlight there, just to basically to know whether or not we need to extrapolate a bit more growth into Q4 and and early next year, basically the same for France. And second one, just coming back a bit on WIG and especially at Colas.
Can you confirm you're not into you're not parting to any of these, medium, long term contracts with the incentive weather conditions seem to be particularly harsh, so that we can assess a little bit the impact, whether it's only going to be basically limited to the strikes in Q2 or whether basically the negative effect from extensive contracts could drag on into 2019 or 2020?
Hi, Nicolas. So yes, a very good level of activity for Vinteen Energy. So in France, when you saw in terms of organic growth, you saw the trend was quite linear on Q1 and Q2 and Q3. That's in general the case in France. It's not the case out of France.
Foreign currency, energy abroad. Why is that? Because we operate in 52 different countries and 100 of business units. So sometimes you have some business units up, sometimes down. But this quarter, it happens from time to time, all the planets were aligned abroad, let's say.
So that's why there was a very good and exceptional, let's say, organic growth. After It's probably more, let's say, reasonable and realistic, not not to extrapolate too much. Again, all the planets were aligned this quarter, maybe it will not be the case. We know, so don't be more cautious And the second question was on Yes, what we told is that we are the search and activity with the SINCEF, the strikes penalize the activity and the profitability, but at the end of the day, the good, let's say, trends of the other business of Eurovia compensated and absorbed this extra cost. And so it doesn't change a single world to our guidance.
Okay. And if I can, just the last one, on the net debt, What what more is it gonna take for consensus to finally, glass the site that the net debt is gonna be much higher than, the way consensus stands at around 13,000,000,000? I mean, how much more effort do you need to put into it to reset consensus expectations?
Yeah. That's a very good point. Thank you very much. Thank you to to warm that. I I didn't have to do that by myself.
So that's, no, no, that's a very good point. Yes. Net debt, logically, when you see that at the end of September, yes, net debt should increase by year end. So thank you to have raised this good point.
No. But you know, you've you've you've consensus is very tight for the end of the year. There's only one point which sticks out completely. That's that's net debt. So just Yeah.
Just wondering.
But sometimes part of the content use, maybe it's a bit like India in terms of integration of M and A or M and A based, that's why, but
Okay, fair point. Point.
Thank you. The next question is from Olivia Peters of Macquarie.
Everyone. I just have a couple of questions, please. Firstly, I was I'm quite surprised that you're saying that oil and gas activity hasn't picked up. It seems that it has for some of your peers, and I'm wondering if that is due to where you're located geographically or if there's another reason for that. Secondly, or university construction.
I I understand that you're being selected, but are you seeing any improvement in the pricing environment in France, you've alluded to things like building material prices, and I'm wondering if construction price the construction contract prices pricing is going more favorably. And just going back to the consensus, I'm sorry to labor the point basically, I agree with Gregoire, but, there is pretty much no growth factored into the consensus for the second half. Is that something that you would expect or something that, given the results assuming you you believe will change and are is the sense of factoring in the M and A that you've been doing, or not. If you could clarify that, that would be very helpful.
Thank you. Yes. Ria?
Yeah. Hi.
Yeah. I will start by by the end. So point number 3, so again, now the guidance is on an annual basis. So we don't we don't comment on the specialty that saves dedicated, let's say, to mostly dedicated to to activity. Totally speaking.
2nd question on VINCI Construction, the pricing environment in France, That's quite difficult to to comment on the assembly market. It depends on the market. It can be depending on some project and the region and some, so, so no comments. Sorry about that. And oil and gas, you're probably right.
Maybe compared to some of our competitors, but maybe the Geo mix, which makes the difference.
So it's got nothing to do with where you're located?
Yes. It depends on the countries where we are. It depends on specific situation.
And just on the 3rd question, and I'm asking you to change your guidance. Just are is consensus factoring in the majority of the M and A? You've done this year or not in your view?
It was a it was a follow-up to the question of, of Nicolas, probably the financial investments we could we have done and we could make this year are not yet in in these circumstances.
Okay. Okay. Alright. Thank you very much.
No worries. Bye bye.
Thank you. The last question is from Marcin Vostal of Bank of America Merrill Lynch.
Yes. Thank you for taking my question, Greg. So, a very quick one on the on the motorway stimulus plan, the 385,000,000 of CapEx that you mentioned in the release. So can you remind the amount of tariff increases that you will be getting for 20 from 2019 to 2021 per annum And also in terms of the investment over how many years will you be deploying into the CapEx that that is mentioned?
Hi, good evening. So, Martin, thank you for your question. So, are in mind that we speak about what we could call the small motor weights in this plan, and which had been decided by the former president, Francois Alon in July 16. Your coffee would decrease has been published at the end of August, but the approvals on ISF and Escota are still pending we are waiting for the final green light of the council of state to save data in French, and that's probably in the coming weeks. So but all in all, what can I tell you in 2000 Toyota route with some local authorities We'll invest an additional 1,000,000 in the coming years?
Will be probably spread, I don't know, in 3, 4, 5 years. And this CapEx, that's true, will be remunerated by an additional tariff increase between 2019 2021. So for IFS quota, since we are still waiting for the final authorization of config data, I will not comment. But for coffee routes, that's fine, but That's okay. So CapEx are around €160,000,000, and the tariffs increase will be slightly below 0.2%.
Exactly 0.195 percent per year between 2019 2021. That will be in a Jeanal O'Ficiel or the therapeutic.
Okay. And if I can have a follow-up, so $385,000,000 of total CapEx, how much actually will be funded by VINCI and how much is the subsidy from municipalities?
We don't, no, I don't answer the question because I don't have the exact information to be frank. So I prefer not to answer.
Thank you.
Thank you. We have no further questions this evening.
Okay. So, if it's the end, thank you, everybody, for your attention. The Investor Relations team remains at your disposal and should you have more questions, feel free to call us whenever you want and we always try to answer, but not in the blackout period, of course, but we do our best. And finally, we look forward to welcome you If I walk to welcoming you the 20 21st November in Marfae for Capital Markets Day year over year, Have a great evening. Bye bye, everybody.
Ladies and gentlemen, thank you for your attendance. This call is being concluded. You may now disconnect.