Welcome to the VINCI Nine Months 2022 Revenue Conference Call. I will now hand over to Mr. Grégoire Thibault, Head of Investor Relations of VINCI. Sir, please go ahead.
Good evening, and thanks everybody for attending this conference call. I'm today with Marie-Amélie Falk, Head of Corporate Controlling and Accounting, Christophe Ferrer, Head of Group Cash Management and Financing. On my team, Boris Vallée and Marie Richard. As usual, I will try to be brief to have more time for the Q&A. What are the key takeaways of this publication? First, a solid operating performance in Q3 across all our business lines. For VINCI Autoroutes, the traffic was above its pre-pandemic levels. For VINCI Airports, the recovery in passengers number accelerated. For VINCI Energies, Cobra IS, and VINCI Construction, a strong business and order intake momentum. I will give you more granularity by division later in my presentation. All in all, Q3 total revenue was EUR 16.7 billion, up 26% year-on-year and plus 12% like-for-like, bang in line with the trend of H1.
Indeed, in the first nine months of 2022, total revenue was EUR 45.2 billion, up 26% and +12% like-for-like. Nine months international revenue, which accounts for more than half of the total, was up 48% and up 17% like-for-like. Changes in scope, coming mostly from the integration of Cobra IS at the very end of 2021, boosted revenue by 27%. Exchange rate movements had a positive impact of almost +4%, as several currencies, particularly the U.S. dollar, rose against the euro over the period. Nine months revenue in France was up 8%. Number two, the order intake. The order intake at VINCI Energies, Cobra IS, and VINCI Construction totaled EUR 41.1 billion in the nine months 2022, up 26% year-on-year, and up 6% excluding Cobra IS.
Order intake increased in every business line relative to 2021, due in particular to firm levels of flow business through the whole period. The order book remained at a historically high level of EUR 57.4 billion at the end of September. It's up 26% year-on-year and +2% excluding Cobra IS, and it represents 15 months of average activity. This very robust order book gives VINCI good visibility and serenity, allowing the group to continue being selective and cherry-picking new contracts. Please note that international business represents 68% of the order book. Number three in terms of balance sheet, the net financial debt of VINCI at the end of September amounted to EUR 20.1 billion, representing a limited increase of EUR 0.8 billion versus the end of 2021. This amount of debt is sustainable given our cash flow generation profile.
It includes the acquisition made during the period, the payment of the final dividend in 2021, and share buyback. VINCI's liquidity remains substantial at almost EUR 18 billion at the end of September, of which a managed net cash of EUR 7.4 billion and EUR 10.5 billion of unused LCs. As a result, with such a sound financial position, VINCI is well prepared to continue dealing with the unexpected and continue its development, notably with the upcoming acquisition of Kontron by VINCI Energies and the acquisition of the stake of OMA in Mexico by VINCI Airports. Let's now have a closer look at the main divisions. VINCI Autoroutes. Nine months revenue of EUR 4.6 billion, +11% versus 2021, and +7% versus 2019. In Q3, traffic levels remained buoyant despite higher fuel prices.
Resilient, they rose by 2.5% versus Q3 2019, of which +2.4% for cars and +3.7% for trucks. In the first nine months, traffic levels rose by 2.3% versus nine months 2019, of which +1.8% for cars and +5.5% for trucks. VINCI Airports. Nine months revenue of EUR 2 billion, 2.6 x the revenue of the nine months 2021, and down only 13% from, at constant perimeter versus nine months 2019. You have already seen the traffic figures and noticed that the recovery in passenger numbers continued to accelerate in Q3 at almost all of our airports. Momentum was strong in Europe, South America, and the Caribbean.
Passenger numbers returned to levels equal to or higher than 2019 at several airports, particularly in Portugal, Serbia, and the Americas. In Asia, meanwhile, passenger growth remained weaker because of the travel restrictions still in place at the end of September in several countries in the region. They could increase over the coming months with travel restrictions eased recently in Japan, South Korea, Hong Kong, and Taiwan. Overall, passenger numbers in nine months 2022 reached 69% of the 2019 level, of which 54% in Q1, 73% in Q2, then 78% in Q3. Excluding Kansai and Cambodian airports, these passenger numbers reached 81% of the 2019 level, of which 89% in Q3.
Moreover, bear in mind that VINCI Airports remain active in M&A in Q3, announcing notably the acquisition of a 29.9% stake in OMA, which holds concession for 13 airports in Mexico that together handled 23 million passengers in 2019, including the airport of Monterrey, the key manufacturing hub of the country. The deal will make VINCI Airports the leading shareholder of OMA and enable it to apply its long-term partnership model with the aim of supporting Mexico's economic growth as well as its tourism industry. The concession agreement is due to end up in 2048. We will not comment this acquisition today ahead of the closing, which is expected in December 2022. VINCI Energies, nine months revenue of EUR 11.9 billion, up 10% and +7% like-for-like versus 2021.
To wrap up, after a very buoyant first half, VINCI Energies' revenue growth accelerated in Q3. Up 9% like-for-like versus Q3 2021, both in France and abroad. That's remarkable. International revenue in the first nine months, 55% of the total, was up 11%, +6% like-for-like, of which +8% like-for-like in Q3. In France, nine months revenue was up 7% like-for-like, of which 11% in Q3. Order intake of VINCI Energies remained robust, up 8%. In the rolling 12 months to end September, order intake of VINCI Energies amounted to a record high level of EUR 17.1 billion. Order book stands at EUR 12.6 billion, +11% year-on-year, and represents nine months of VINCI Energies' average activity.
All in all, this excellent performance was driven by buoyant markets, energy transition, and digital transformation, but also by VINCI Energies' diversity in terms of geographical exposure and expertise. Finally, please note that VINCI Energies remains as well active on the M&A front, having completed 22 bolt-on acquisitions in the first nine months of the year. They are all in Europe except one in Canada. These acquisitions represent a cumulative annual revenue of around EUR 275 million. In addition, VINCI Energies has announced recently the signature of an agreement to acquire the majority of the IT services business of German group Kontron. This transaction, once closed, will enable VINCI Energies to grow its ICT business and establish a foothold for its Axians brand in around 10 countries in Central and Eastern Europe.
They announced as well the acquisition of TLT-Building and TLT-Connection in Finland, strengthening the Scandinavian presence of the company in energy and telecommunication infrastructure. Cobra IS, nine months revenue of EUR 4.1 billion, of which 46% in Spain and 35% in Latin America. It was driven by good momentum in flow business, particularly in Spain, Portugal, Mexico, and Peru, and by EPC projects such as power transmission lines in Brazil. Order intake year- to- date amounted to EUR 6.5 billion. This reflects solid order intake in flow business, along with some large EPC contract wins in Q3. For the record, two new contracts for high voltage lines in Brazil, a contract to build and install two offshore converter platforms for wind farms in the North Sea.
The order book of Cobra IS is EUR 11.2 billion, a high level that represents around 24 months of activity. VINCI Construction, nine months revenue of EUR 21.5 billion, up 12% and +9% like- for- like. To add up, VINCI Construction generated a high level of revenue in Q3. Indeed, the growth in Q3 was +13%, an acceleration versus H1, acceleration driven particularly by VINCI's Construction international exposure. International revenue in the first nine months, 54% of the total, was up 19% and +13% like- for- like. In addition to a positive currency effect, revenue was driven by the ramp-up of large contracts obtained recently in the U.K., Denmark, North America, Australia, and New Zealand. Note as well that the revenue abroad in the specialty networks also rose very sharply.
In France, nine months revenue was up 4%. Business level remains very well-oriented in civil engineering and in roadworks, although the growth was lower in Q3 than in H1. In building, activity was driven by several large non-residential projects in the Greater Paris area. Order intake of VINCI Construction up 5% in nine months 2022 remain robust due to good performance in road business in France. VINCI Construction's order book stands at EUR 33.6 billion, almost stable year-on-year, and represents 14 months of average activity, enabling it to maintain a selective approach to taking on new business. VINCI Immobilier nine months revenue amounted to EUR 1.1 billion, up 2% year-on-year, of which was 11% in Q3. Production remains firm overall, a rather good performance in the current economic environment.
The number of housing units reserved in France at the end of September was down 9% versus nine months 2021, but up 2% in Q3 2022 versus Q3 2021. In conclusion, based on this very solid performance in the first nine months of 2022, VINCI confirms that it expects full year net income to be higher than the 2019 figure. Its guidance for its value business lines in 2022 are, in a nutshell, VINCI Autoroutes forecast full year traffic levels higher than those of 2019. VINCI Airports anticipates, barring a resurgence of the pandemic, passenger numbers for 2022 to be around 70% of their 2019 levels, allowing VINCI Airports to generate positive net income and free cash flow. VINCI Energies with buoyant market should be able to continue growing the business while solidifying its operating margin.
Cobra IS anticipates revenue of around EUR 5.5 billion and operating margin in line with the industry's best in class. VINCI Construction, due to its very large order book, expects to remain busy and improve its operating margin while continuing to be selective. Despite geopolitical, economic, and pandemic-related uncertainty, VINCI remains confident that it will be able to maintain consistent growth over the long term. The group is well equipped to achieve this due to the diversity of its business activities and geographic allocation. In addition, as a provider of services to the energy, construction, and mobility, it's positioned to take full advantage of new opportunities arising from the green growth. We would like to thank you for your attention, and we are now ready to take your questions.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. First question from Jean-Christophe Ormilan from CIC Market Solutions. Sir, please go ahead.
Good evening, everyone. Two questions, if you don't mind. First, on the third quarter numbers, on energy, VINCI Energies, and also, VINCI Construction. The organic growth is due to price effect, or do we have also positive volume effect? That's my first question. Second issue, the guidance. You assume an increase of VINCI Construction margin in 2022. How do you manage this with the strong rise of the cost of factors? If we take the power issue, only the power issue, in France, VINCI, as the other competitors, is covered by ARENH, by at, I would say 40%.
Do you have a long-term supply contract which allows you to more or less offset the negative effects of sharp rise in electricity prices? Many thanks for your answer, Grégoire.
Yes. Hello, Jean-Christophe. For Q3, it's not possible because we have so many contracts. Now remember, VINCI in a full year has around 300,000 contracts. It's impossible for VINCI Energies or for VINCI Construction to make a breakdown between the volume and the price. I will not be, unfortunately for you, more specific than that, even if the inflation has an impact in the increase of our revenue. Which is good news because finally it shows that we are able to pass through this inflation and this thematic of costs and materials price increase. In terms of but your question number two, we stick to the guidance.
VINCI Construction, whose margin was 3.7% in 2021, will be able, despite the current environment, to keep on increasing the margin in 2022.
Okay. Many thanks.
Thank you. Next question from Stéphanie D'Ath from RBC. Madam, please go ahead.
Thank you very much. My first question is regarding the discussions with the government on a potential stimulus plan for toll roads in France and tariff freeze for next year. Could you please let us know how those are progressing? My second question is regarding net debt, which decreased nicely, about EUR 2 billion from first half. Is there anything to highlight in particular, maybe on working capital? My third question is on the inflation impact on the order book for next year. I think you said in the past that you would expect some pressure on the order book.
Given the higher costs that your clients will be facing. Could you maybe confirm that you expect a decrease of the order going forward? Thank you.
Yes. Hello, Stéphanie. Regarding your first question, for the toll in 2023 for VINCI Autoroutes, then the decarbonization plan. Let's start with the toll. First, before speaking about the 2023 toll hike, we need to know the reference inflation rate, which is, you know, the inflation excluding tobacco in October 2022, and which will be known in fact mid-November. The calculation method to apply our toll in 2023 are defined by the concession contract. Then this pricing will be submitted to the authorities around mid-December. I cannot tell you much more than that. I know there are a lot of people speaking about that, but step by step, first, we need to know the reference CPI, then to apply the contract and to propose the increase.
Because there is a contract, you know, Stéphanie, the formula regarding the toll is very clear and very straightforward. Of course, the respect for contract is essential, particularly in light of the huge, invested capital amount. You know as well that past periods have shown the solidity of the contractual framework. It was for the second part of your first question. Coming back to the first part of your first question, let's say no news, at this stage for a decarbonization plan, but have in mind that the decarbonization of the economy in France and of the mobility and of the transport is central to, for the French government. You know that many working groups are currently contributing to the government discussion.
You may have seen yesterday that the Prime Minister, you see, Élisabeth Borne, announced that the government wants to launch an environmental planning, let's call it an action plan, called France Nation Verte, France Green Nation. The decarbonization plan for motorways would perfectly fit with the targets of this action plan. This plan covering notably the mobility and ecosystem subjects. Clearly no, let's say big news actionable for you today, but have in mind that if France wants to meet its climate targets Fit for 55 by 2050, something has to be done urgently on motorways. You know that motorways account for around 7% of the total French CO2 emissions. France will not become carbon neutral by 2050 if we don't hurry up and decarbonize motorways.
Thank you. Thank you.
You had a second question about.
Second question was on the net debt, which decreased EUR 2 billion quarter-on-quarter, if there was anything to highlight on the working capital, especially as we were expecting obviously a reversal from the very positive impact from the last few years.
I can't say a lot, but I will try to give you sometimes a few tools maybe to reconcile different things. You know that's true that the net debt decreased by EUR 2 billion between the end of June and the end of September. What do you have between the free cash flow and the net debt evolution? You have first the acquisitions, and in Q3, we did not have a lot of acquisition, a bit of acquisition for VINCI Energies, around 10 acquisition. You can try roughly maybe to have a rough estimate of the M&A spending in Q3. You add EUR 100 million of share buyback, that's public. This cash outflow has been more or less compensated by the issue of new shares, and that's public as well.
We issued in Q3 EUR 1.2 million of new shares, so multiplied by more or less the target price. All in all, you should be able to estimate the free cash flow in Q3.
Thank you.
For nine months.
Thank you. Next question.
My other question was on the order book.
Another question on the order book?
Yes, for next year, please. Thank you.
What can I tell you? It's a bit early to tell. I'm not sure I see exactly your question. If this cost increase for the project will it weigh on demand? Maybe at a certain point, yes. There could be lower volume, but by the better price, so in value, it could be around the same. We have to increase the cost because it's not our role, let's say, to face the risk of inflation, and we will not take this risk. We have to keep on increasing the cost.
Thank you very much, Grégoire.
So far we don't see, as you see, by the way, in the press release, we don't see any, let's say, pronounced slowdown.
Thank you. Next question from Elodie Rall from JP Morgan. Madame, you go ahead.
Hi, good morning, Grégoire, and good morning. Good afternoon, Grégoire, and good afternoon, everyone. My questions will be on total traffic, if I may. Traffic was up versus 2019 in Q3, but actually down year-on-year, especially at light vehicles. Could you explain what the main reason is? Is it all because of fuel in your view? Or do we see already a little bit of a consumer slowdown? Second, could you actually give us the current trend in October? Notably, have you seen an impact, a notable impact from the current gas shortages that we're experiencing in France at the moment? Thank you.
Hello, Elodie. The first question regarding that: that's true that Q3 2022 traffic is slightly down versus Q3 2021. Have in mind that Q3 2021 was very strong and was very high. The counts were very elevated. There was a big catch-up of the traffic after the easing of restriction in France in May and June 2021. The activity was very booming. Last year, a lot of people stayed in France from Europe or in France during the summer. Maybe the counts are quite high. We don't feel at this stage, let's say, a negative impact on the purchasing power of people. It cannot be analyzed like that. We decided to keep on comparing with 2019, which is the reference year pre-pandemic. No, let's say no high counts versus Q3 2021.
Second question, still on the traffic, Elodie. In October, yes, the light vehicle traffic has been impacted by the shortage of petrol in France. It doesn't put into question our full year guidance, which is the traffic to be above the 2019 figure. On the contrary, have in mind that the trucks traffic has been less affected, not affected. In fact, these companies, the haulage companies often have priority on a fuel storage tank. Finally, they could drive, and they were not under any problem. If they are not young, you know, they can on the motorway of VINCI Autoroutes because you may have read that our fuel stations were open at more than 90%, even during the height of the crisis.
In the worst case, you know, the trucks could come on a motorway to take, to buy some gasoline. Now the situation is, let's say, resolved, at least much less difficult than it was two or three weeks ago. I don't rule out a catch-up effect with people who could postpone their journeys. They did not do at the beginning of October or mid-October to now.
Okay, thank you very much.
Holidays start in France, as you know.
Thank you. Next question from Patrick Crueset from Goldman Sachs. Sir, go ahead.
Merci, Grégoire, and congrats on the continued strong execution. Just two questions from me. One, can you give a bit more color on the construction margins for this year? How you see the potential evolution amid high inflation in 2023. Secondly, what sort of tariff increases should we be looking for in your main airport platforms in 2023? Thanks.
No. Hello, Patrick. No, I can't tell much more than that. You know, it's a revenue call. It's a trading update. We are not supposed to speak so much about the results. We can just say that we stick to the guidance, which is VINCI Construction will increase the margin. It's not easy for us. We have to be agile. We have to fight. Sometimes we have to claim. It's not easy. I don't mean it's easy. It's probably less easy than what we could have had in mind six months ago, as we already told you. VINCI Construction margin, anyway, from 3.7% has still room to increase. Today, I cannot tell more than that in such a call. Regarding the airport, that's pretty easy.
You know, in Portugal, the decision should be officialized for the aeronautical fees in 2023, let's say, by the end of November. You should know exactly what's the aeronautical fees increase for the main Portuguese airports in one month, let's say. You know the concession contract. You know that the reference CPI is the one calculated at the end of August. This CPI was around 7%. It should give you already an indication. We'll be more specific airport by airport once the civil aviation of Portugal and ANA have, let's say, officially published. Something around the reference European CPI of 7% at the end of August makes sense. Lyon is under negotiation, so I can't tell more.
At Gatwick, you know, there is this CAA framework, which is based on RPI, the Retail Price Index increase will occur in April 2023. Something like, you know, in the tweak, it depends on some airlines, other bilateral contracts, multi-year contracts with some discount. All in all, in your model, you should, let's say, try to mirror RPI minus something.
That's great. Thank you.
Thank you. Next question from Nabil Ahmed from Barclays. Sir, go ahead.
Yes, good evening. Thanks for taking my questions. I have three, actually, if I may. First one was on the outlook for airports. We're continuing to see airlines capacity building into the fourth quarter. And yet you're maintaining your 70% guidance, which would imply that traffic would weaken in the fourth quarter compared to Q3. Is that simply caution or are there elements that we should be aware of? And if you could comment on what you see on Asian facility as well, because I think the traffic released by VINCI Airports sounded a little bit more positive than previously. The second question was on the VINCI Construction. Could you remind us now how margins compare between France and abroad?
Specifically on Entrepose Contracting, are you starting to see some positive trends regarding related to the high energy prices? Last question, if I may, and forgive me, I know it's a Investor Relations call, but should we expect as well some inflation impact on CapEx and maybe a CapEx guidance being revised along those lines later on? Thank you.
Yes, but for the guidance of VINCI Airports, if you read very carefully and see that today, before the publication, the guidance was VINCI Airports expects traffic in 2022 close to 70%. Now, it's around 70%. Yes, the difference is a bit minor. It's a bit of semantics, but it means around, it means it can mean at least a bit above 70%. Close to means a bit below. I would say that the guidance has been revised upward. To get this around 70%, let's say slightly in the north of 70%, if you plug the same kind of exit rates in Q4, like in Q3, you should get, let's say, this around 70%.
We do not anticipate, even if we are always a cautious people, let's say, a slowdown in the coming quarter. That's true that the bookings are well-oriented in our main airports. We still see a strong demand from passengers despite the increase of price tickets coming from the airlines. We still see, let's say, this strong demand. Yes, no, Q4 should be well-oriented as well. As you know, it means that the incremental impact should be, let's say, appealing. Second question, Nabil, on VINCI Construction margin, no, we don't give the split between France and international. Entrepose Contracting, you know, has been restructured early 2020, and it's not spread over the group.
It does not exist anymore as a single entity. We still have the people from Entrepose and their knowledge and their expertise, which is very interesting for us, notably when it's time to develop new opportunities in H2, in hydrogen. Nice expertise in terms of LNG tankers. You know, I tell you that because we see this kind of demand, of inflow coming and resulting from the current situation. We see, you know, the countries that have been in Western Europe, for example, in Germany, they need more and more to have to be sovereign on an energy point of view, to be less and less dependent on some countries and to produce more and more green electricity.
Okay, on the margin.
Yeah. Inflation on CapEx? Yes, but it will increase because, for example, you know, the contractors, they do not accept, and we, actually, we don't work anymore at fixed price, at least for the mid-cycle or long-cycle projects. That's a very strict rule internally in six months. We refuse to sign a contract which has no escalation or cost plus mechanism because as I told you, it's not our role to manage and to face this kind of inflationary risk. That being said, it means that our concessionaire will have to pay a bit more their CapEx.
Understood. Can I ask the question on the France versus abroad margin slightly differently? Is it fair to assume that the construction margin improvement that you expect this year is mainly driven by France improving?
I will. You can try to ask it differently, but I will answer the same way. I will make less effort than you. No, but we don't, because, you know, it's very, there are many divisions. It's not so easy to tell, okay, international is like that, and we move like that, and France is like that, and we move like that. You know, even France, it's heterogeneous. It's not the same trend in civil engineering, networks, roads, and so on. International, you know, it's too big. We are in 119 countries outside France, so it's not possible to tell you. There will be some places where the margin will be up. There will be some places where the margin will be down.
There will be some business where it will be up and so on. All in all, the margin of VINCI Construction should increase.
Fair enough. Thanks a lot, Grégoire.
No worry.
Thank you. Next question from Gregor Kuglitsch from UBS. Sir, please go ahead.
Hi. I hope you can hear me well. I've got a few questions.
Yes, we can.
Let me just came back on construction. I mean, you had very strong growth in the third quarter. I appreciate there can be timing and things like that, but can you give us some kind of sense, whether there was something special there or whether we should be assuming a lower run rate? And maybe sort of both for energies and construction, I appreciate you now have, I think you said 15 months of orders or sort of 15 months of activity in your order book. As things stand today and given what you're seeing on the order trend, do you actually expect the revenue decline kind of in the foreseeable future, say next year? Is it too early to say? A question on Cobra. I think there was a large amount of contracts.
I don't know if they were booked in Q3, EUR 1 billion. There was a press release, I think, for EUR 1 billion or so. I guess that wasn't in Q3, correct me if I'm wrong, but does that mean that business should also be ramping up in revenues? I'm guessing there's some. I mean, you kinda mentioned it in the press release that EPC is starting to kind of become bigger. Those are the contracting questions. The second question is maybe on airports, and maybe, I think, I guess we've all seen the passenger numbers, but the revenues are coming in higher despite the fact that we knew the passenger numbers. Is a good way to look at this to just take the revenues divided by the fully consolidated PAX.
For example, in Q3, that would mean like, I don't know, EUR 21 per passenger of revenues, and that's obviously aeronautical, non-aeronautical. Is that a right way to look at it and think about sort of extrapolating that into Q4 and then beyond? Obviously, you commented on inflation already. Thank you.
Hello, Gregor. A lot of questions. For the last one, yes, it's a way, I would say, like an observer to try to make your own estimate. Why not? After, it doesn't mean a lot, you know, to try to think in terms of average revenue per pax for such a portfolio. Don't forget that VINCI Airports has a pretty unique portfolio in the world. We are in 12, 13 and soon 14 countries. We will have soon more than 70 airports. We are by a mile the most diversified airport manager in the world. It's a lot of different airports, but to try to estimate your Q4, try to do a bit the same. There may be a bit of seasonality. You need the revenue.
You have as well-known aeronautical revenue and some revenue which are not linked to traffic. Like for example, real estate revenue, other ancillary fees and so on. Yes, you can try to estimate a bit like that anyway. The growth, I was asking my colleague what were your other question because I was a bit lost. The Q3 growth for construction was very strong indeed. It's due as well, don't forget that, to change impact. Favorable, you know, a lot of currencies rose against the euro during the period. That's true more or less for all the dollar, the U.S. dollar, Australian dollar, Canadian dollar. That's true as well for the Swiss franc, for example, which is important for VINCI Energies.
This growth is linked to change, positive change, linked a bit with the part of inflation. It's linked to the ramping up of some large projects. That's still true, and it should still be true, I would say, in the coming quarter. At a certain point, there will be a ramp down of these large projects. If we don't win additional large projects like that to compensate, there will be a ramp down. But you know, that will be perfectly fine. It will be almost done, let's say, for us on purpose, because we don't aim at becoming too big and too exposed to this kind of a large project for VINCI Construction. What can I tell you more? Good trend in flow business. Very strong revenue increase in North America. In Australia, very strong revenue increase for the specialty networks.
Soletanche Bachy, Ménard and so on. That's it for this first question, I guess.
Okay. Cobra?
Yes, Cobra IS. Yes, for the order intake. No, we announced some, several large projects. There is one which is not yet in the order book. That's the one we announced at the beginning of October. That's the first LNG terminal in Germany.
Okay.
That's an important amount. I don't know if we gave an amount, so I will not tell you so, but it's not in the order book. What has been included in the order book for Cobra IS in Q3, that's the two contracts for works on the electrical lines in Brazil, and that's the converter for offshore wind in the North Sea with Siemens. Yes, the EPC project will ramp up. Yes.
Okay. Maybe, sorry, one final one on energies. Do you care to make a similar comment, like what the run rate is? I mean, it was again, very strong, even like-for-like 9%. Is there any reason to believe that slows down dramatically, or is anything going on?
You know, remarkable because very, very strong in France and abroad. It even accelerated in Q3, both in France and both abroad. What we can tell is that all the business of VINCI Energies, infrastructure, industry, ICT, and the building solution, are up in France. All the places in VINCI Energies abroad, most of the places are up. So how can we explain that? Probably, VINCI Energies, and it's maybe only the beginning of a long-term trend, is surfing on this mega-trend, which are digital revolution, energy transition. But inflation as well has an impact in the total revenue growth, probably. Currency impact as well. You know, VINCI Energies is a very, or it's quite a lot in Europe. But for example, they are quite big in Switzerland. They are big in the U.S., VINCI Energies.
Okay. Sorry, maybe one final one on free cash. I note that, I mean, my calculation based on what you kind of just commented on earlier implies that I think Q3 free cash is maybe up actually year-over-year. I don't know, you probably have the numbers, but up maybe, I don't know, EUR 200 million or something like that. Does that mean you think you can be comfortably ahead of EUR 4 billion, say for the sake of argument, or you don't really know yet?
I gave, you know, Stéphanie some tools to try to estimate what could be the free cash flows. I'm not going to comment. Just have in mind that the working cap change at the end of September is still negative. On one hand, there is a very strong operating rebound. On the other hand, there is still a negative variation of the working cap. Let's say at the end of September, that's, I would say, normal or common at this stage of the year. The working cap improved in Q3, but over the nine months still remain negative. I mean, the working cap change still generated a negative outflow by definition. That being said, what is important is to see what will be the trend in Q4 2022.
You know perfectly that's the most important quarter in terms of cash flow generation for a group like ours due to the operational profile of our businesses. You know that at the very end of the year that we generate the free cash flow. We are like in the toys industry. To be even more explicit, because you asked that, Gregor, can we still, let's say, expect a free cash flow of around EUR 4 billion? We'll see that, probably, yes.
Okay. Thank you.
Thank you. Next question from Sathish Sivakumar from Citigroup. Sathish, go ahead.
Yeah. Thank you. I got two questions. Firstly, on the autoroute traffic, obviously, you just flagged that Q3 is slightly down year-on-year. What is your expectation as we go into Q4? Do you expect, like, a similar seasonality trends in terms of normalization, or is it continues to be, like, down into Q4 as the overall international travel starts to recover? Then, just related to that, what is your expectation on the fuel subsidy? Do you expect it to continue beyond December into next year? What will be the impact on your pricing discretion of the government if the fuel subsidy were to continue into next year? Thank you.
Hello, Sathish. Second question, it's not our role to comment decision of the government. If they want to keep on subsidizing the petrol price, that's their choice. Do I think they will continue or not? Honestly, my advice is not smart and has no importance. Ask the French government. Point number one, what will be the trend in Q4 2021 in 2022 versus Q4 2021, if it's more or less your question. Again, we communicated with our guidance on 2019 which is the reference year, being the year before the COVID-19. What we said is that the traffic in 2022 over the full year will be above the traffic of 2019. We don't compare to 2021, and even less quarter-over-quarter.
We really communicate on 2019, which is a reference year. For Q4, what I said a bit earlier is that for the light vehicles traffic, not for the trucks, but the car, during a couple of weeks in October, have been impacted for obvious reasons by the fact that there were some shortages of fuel in France. If you cannot fill the tank of your car, of course, you don't drive, or you don't take the risk to be stuck in the middle of nowhere. It does not put into question our guidance, which is compared to 2019, Sathish.
Okay. Yeah. Thank you. That's very clear.
Thank you. Next question from José Arroyas, from Santander. Sir, to go ahead.
Hello, Grégoire. Just one question. It's on the Brazilian power transmission line that Cobra won. I mean, it's very clear it's EUR 1 billion revenue. But I wonder if this is just the EPC contract or it also includes the concession contract attached to it. If so, can you break down each of the two buckets? More generally, does VINCI like this business line that Cobra has been historically running? If so, what would be the equity CapEx VINCI would like to invest in this line? Is it similar to the renewable development business line, or is this more of a one-off case? Thank you.
Yeah, no. Hello, José. The amount we announced for this one of these projects in Brazil, so for the PPP project, the project that we and Cobra IS will build, operate, and maintain, the amount we indicated is the amount of CapEx, upfront CapEx, initial CapEx.
Okay.
Okay? It's not about the full life of the project. Do we like this kind of project? If not, we would not go. We are quite new, and let's be honest, but Cobra IS has a very long experience and a very long track record in Brazil. They have always been very agile and smart to make, let's say, a good sustainable business in this activity in Brazil. The amount of works for the PPP is EUR 670 million.
All right.
That's the CapEx. That's the CapEx that Cobra IS will build. Let's say we will capitalize on Cobra IS experience, but to, I would say, to be honest, to discover, because we are new in this field. We will see if we like that in a couple of years.
Thank you.
Thank you. Next question from Nicolas Mora, from Morgan Stanley. Sir, go ahead.
Yes. Hi, guys. I'll just keep it short. Just a couple left. First one on VINCI Construction. I mean, you know, we are getting pushback on the cyclicality of the business. I mean, the order intake remained very strong in the third quarter, despite fears that, you know, your clients had a standstill because rates are going up. You know, we've got a recession around the corner. What can you tell us in terms of the bookings? Did you manage to get a lot of repeat business or your typical EUR 5 million, EUR 60 million kind of projects in non-res and infra? I mean, where does the strength come from? That's the first one.
Number two, just on, I know Grégoire asked the question, but on VINCI Energies, I'm just a bit surprised by the strength of the like- for- like. I think you were, what, just shy of 10%, 9% in Q3. The comps was a bit easier, but you know what's happening? Can you just help us frame a little bit the strength now? What's happening? And again, if so, it's the question of how much inflation is there in this 9%? Is it all inflation? Is there a bit of volume growth? Just to try to understand a bit better and know what to extrapolate for into, especially into next year. Thank you.
Hello, and thanks. So first question, the trend remains good. I'm sorry maybe to disappoint some of you, but I'm not going to invent, at this stage, some bad news when they are not. So trends remain good. Order flow, I told you several times that the flow business was good for VINCI Construction. It's a bit like in H1 when we said that around two-thirds of the order intake of VINCI Construction come from business below EUR 5 million. So the smaller business are still well-oriented. But the deal flow, in fact, again, we don't see big slowdown yet. It could happen in some region, in some business, you can see some tender decreasing. The number of calls for tender decreasing, okay.
All in all, the situation remains very, very solid. In addition, there should be other projects, so that's more big projects because we can speak about them because, you know, the flow business is difficult to speak about so many small business. You know, for Grand Paris, there will still be in the next, let's say, 12, 18 months, some tender, notably on line 18, 17, maybe even bigger on line 15 on the west and on the east, the lateral line. There are as well other big project in the metro project in the southwest of France. We are currently participating in tenders in Oceania for road project in Canada, in the western part of Canada. So there are still quite many things to do. Are we cyclical?
That's maybe the image we can have from time to time. In reality, we are not, let's say, so cyclical or let's say less cyclical than what you could call a cyclical stuff maybe on the market. Especially, we are much more diversified on a geographical point of view than ten years ago. We are much more exposed to this energy contracting related trend. In fact, we are probably a different group than what the group was, I would say ten years ago.
Just finally to help us, you know, at times we have few what you've got in your pre-backlog, just to again improve a bit of visibility. I mean, outside of the terminal, the regas plant in Germany, I think the Spanish project was something about EUR 500 million. What do you have in the pre-backlog right now that's been more or less made public? I think you got a big contract in Canada in Toronto, you got. You still have that highway in Africa. You haven't actually reflected in the backlog. I mean, where do you stand versus kind of your typical pre-backlog level of just a few billion euros, if you can discuss about it?
First, yes, the pre-backlog remains very robust. Finally, you mentioned some projects which are obviously not yet in the backlog. For example, this Toronto subway major project, we are only preferred bidder at this stage. It should be finalized in the coming weeks. Once it will be finalized, it will be in the backlog. Yes, you mentioned this large project. You mentioned as well the LNG terminal for Cobra IS in Germany. It is quite a big contract which is not yet in the backlog, as I told to Gregor, I think. We announced recently some project in New Zealand, in Australia. All of them are not in the pre-backlog. Pre-backlog is
That's why we are, let's say, serene. We are serene to embrace, let's say, the future. I don't say that all is rosy. There are some difficulties in some specific places or specific business. All in all, we are solid and serene. Again, if the backlog had to decrease, it would not be per se, particularly, let's say, a drama. It's fine. Again, three, four years ago, we ran a backlog which was maybe 30%, 40%, 45% lower than today. We had a good life anyway. I mean, if order intake were to decrease in the coming quarter, that's fine. Today, we don't see the same material and general sign of slowdown.
Yeah.
In the coming years, we think the opportunity is huge for our different businesses, huge in terms of decarbonation, in terms of energy related contracting, mobility, new mobility and so on. Clearly, we are not afraid by the coming year. What will be exactly the trend in H1 2023, it's a bit early to tell, or even in 2024, you know. Some of our business are, you spoke about cyclical. Some of our business can be called late cyclical.
Thank you. Next question from Tobias Werner from Stifel . Sir, please go ahead.
Yes, Grégoire, can you hear me? Hello?
Yes, I can. Hello, Tobias.
Hello. Two sets of questions for two different areas, and I'll make them hopefully quick. Just remind us for the VINCI Airports here, exit rate in Q3 was what again in terms of pax versus 2019?
78%.
Was that for September?
No. Oh, no. September, we communicated 10 days ago. In September, it was 79%.
Okay, 79%. Okay, so
79%.
In the past, you've also mentioned what the break-even point was in terms of pax rate versus 2019. Just remind me of that as well, please.
I don't know exactly what we said in the past, because the break-even is not so easy to calculate for the whole portfolio of VINCI Airports. We could have more granularity for airport by airport, more or less the break-even, but we will be much better than break-even. You understood much better. Break-even for the free cash flow was roughly at 50% of the 2019 traffic. It's really to take, let's say, with precaution because it's really you cannot plug 50% to a Gatwick, Portugal and so on and have the same results. That's, let's say, a rough idea. For net income, it's around 60% because when we communicated on that, we were able to reduce to the strict minimum the CapEx.
Don't forget that for the coming, actually this year and for the coming quarters, CapEx will increase again, and that's good news.
Okay. Thank you.
In that week, for example, the CapEx will increase a lot in the coming year.
Okay.
From nothing last year.
You also in the past mentioned the fixed cost, variable cost split for the airports, division. Can you just remind me of that as well?
No. Again, it's too specific to. It's mainly a fixed cost business, even if we have been able in an incredible way to reduce drastically the OpEx, and so as a consequence to offer impressive operating leverage. After the OpEx will increase again in 2022, it's not, let's say, a totally normal situation. We will not be able to manage such an important level of traffic, of flows with such a tiny cost base. We've been very good in H1, but the OpEx should keep on increasing from now.
Okay, understood. Historically, what would have been the fixed cost, variable cost split before COVID?
No, it's mostly fixed cost. Mostly. More or less like on a motorway.
Okay. Moving on to construction. I mean, the FNTP orders seem to be accelerating when you look at them. Also the survey picked up really well, which was out today. What do you put that down to? Is there a bit of catch-up going on from post-COVID in terms of these orders? Or what is the situation here, there?
I didn't see. I saw that FNTP published something, but I was connected in the call. It was, I think, the order intake in France at the end of September. I propose you better than the FNTP trends because we communicated today the VINCI trend. Order intake remains very well oriented and, as in France as well.
Do you think, is there a bit of a COVID catch-up still ongoing, i.e., orders which couldn't have been put through during COVID are now being, you know, put through?
No, no. It's more probably that people have some projects and notably in terms of energy efficiency.
Okay.
To change their energy mix to. There are many projects like that, renovation of buildings, of public buildings. I don't know if it will keep on like that, let's say, for the coming quarter. If I take my midterm or long-term glasses, the future is very promising for our business. What will it be? Will this trend suddenly stop or slow down by the end of the year, early 2023, if and when we are in a recession? We will see. Fundamentally, we are serene and confident.
Does the Olympics 2024 have an impact there?
No, no. Again, yes, there is an inflation impact, as I said, in the order book, in the order intake, in the revenue. That's good news because it means that we are able to increase the prices. I cannot split the volume effect and the pricing effect as we do in other industries, for example, in the cement industry that you know by heart. Yes, they can because it's a bit different. That's from a manufacturing process. They have fixed costs and so on. They are able, maybe they know their product, they know the volume, they know the price. It's very different. Each project is different. You know, for us, we are tailor-made of 300,000 project per year, and between one and another, they are different.
You do have the Eurovia Materials business. There you could see what price and volume is.
Maybe we can see, but it doesn't mean we can say.
Excellent. Then just lastly, in terms of the reservations, you've had a very strong third quarter from what you mentioned earlier, still on the Immobilier side. Obviously, very small business, but I'm intrigued given the higher mortgages.
Yes. Don't be excited. By the way, it will be maybe the cold shower this time, because yes, there is a positive inflection in Q3 2022 up versus Q3 2021. That's for the bookings on the reservation. It's mainly due to some block sale to social housing authority. In fact, this block apartments have been commercialized have been postponed. The commercialization has been postponed. It's only for this time, a kind of catch-up effect. It does not mean it's the start of an upward trend. On Immobilier, it's probably better to be a bit cautious.
Excellent. That's very helpful. Thank you very much.
Thank you. Next question from Marcin Wojtal from Bank of America. Please go ahead.
Yes, good afternoon. Just one question from our side. Could you please provide an update on your pipeline of renewable energy projects when you acquired Cobra IS, that was estimated that there was a pipeline of, I believe, 15 GW. So how much of those is under construction already? Have you been adding new projects to that pipeline? Are you planning to keep communicating to us what the pipeline is?
You know, Marcin, yes, of course, we aim at communicating. Maybe we will communicate more and more in detail for the full year results, the ninth of February. What I can tell you today is I can confirm what has been written in our press release at the end of July, is that one solar photovoltaic project in Brazil is, let's say, the construction started recently for more than 500 MW. In addition, we have other solar projects in the same country. We confirm that around maybe a bit more than 1 GW could be ready to build in the very coming months. That's what we wrote in the press release for the H1 results at the end of July. Yes, in the meantime, that we have other opportunities.
There are opportunities which finally will not occur, but at the other end, there are new opportunities, you know, that's, let's say, a moving pipeline.
Thank you.
No problem.
Thank you. Next question from Graham Hunt from Jefferies. Please go ahead.
Good evening. Hope you can hear me okay. Just one question from me. Just coming back on the energy business and the acceleration. I mean, it's just really coming as well, pricing and inflation, but also are you seeing a shift in the mix of new contracts you're getting in that business against the backdrop of focus on the energy environment? Is that what's driving some of the acceleration? In a slowdown going into next year, would you expect energy to be a little bit more resilient, perhaps because of this focus? Thanks.
Hello, Graham, and welcome to the club. Yes, that's what we explained. VINCI Energies is totally, let's say, perfectly fitted with the mega trend and notably the trend of energy transition. In addition, all the other business lines were strongly up. This growth, yes, it's supposed to keep on like that in the coming, let's say, over the mid and long term. Yes, clearly, it's probably only the beginning of this environmental revolution. Let's put it that way. It's only the premises. It's only the beginning. Will it be like that in 2023? Again, I don't know. Even VINCI Energies can face difficulties on some specific projects, on some.
Very clearly, the outlook for VINCI Energies, considering their activity on the wide range of activity, considering the way they are organized, very decentralized, very agile, considering their efficient, let's say, organizational man-management, yes, the growth should last for quite a long time.
Thank you.
Thank you. Mr. Thibault, we have no more questions on the phone line.
Okay. Thank you very much, everybody. Of course, the Investor Relations team is here for you at your disposal. Have a nice evening. Good luck for all this publication ahead, and enjoy your holiday, Tiffany. Bye-bye.
Thank you. Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.