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Ladies and gentlemen, welcome to the VINCI conference call. I will now hand over to Mr. Gregoire Thibault, Head of Investor Relations of VINCI. Sir, please go ahead.
Good evening, and thanks, everybody, for attending this conf call. I'm with my colleagues from the Investor Relations team. We are pleased to share with you our 9 months '19 activity main figures. We'll be brief to have more time for the Q&A and because we know it's a busy period for all of you with a lot of other publication and conf call. So what are the key takeaways of the first 9 months' period? Total 9 months revenue of almost EUR 45 billion, strong growth of 11%, of which plus 6% like-for-like. The Q3 posted an acceleration, with sales up 12% and plus 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 the robust 5% like-for-like growth, revenue growth was sustained by M&A, with the latest acquisition of VINCI Energies, Eurovia and VINCI Airports. The currency impact was positive by 1% due to the rise of several currencies against euro 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 billion. It represents almost 12 months of activity versus 11 months 1 year ago. Net financial debt at the end of September amounted to EUR 23.2 billion, up EUR 7.1 billion over 12 months, mainly due to VINCI Airports' acquisition of London Gatwick airport and, to a lesser extent, acquisition made by other business line. Let's now have a closer look at the main division. VINCI Concession revenue, up 16% in 9 months; VINCI Autoroutes, revenue up 2%. Traffic over the 9 months was mutually 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 Airports revenue of almost EUR 2 billion, up 64% and 9% like-for-like. Eurovia received a strong traffic figures of 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; Belgrade Airport, integrated since the very end of 2018; and of course, London Gatwick airport, integrated since mid-May '19. For contracting, sales of EUR 28 billion, up 10% on an actual basis and 6% like-for-like. The main point to have in mind are for VINCI Energies, revenue up 9% and more than 5% like-for-like to almost EUR 10 billion. It benefited from the acquisition made in 2018, and mainly PrimeLine in the U.S. and Wah Loon in Singapore. And in 2019 as well in the Netherland, 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 even accelerated to almost 7% in the third quarter, split equally between France and international markets. The order intake of VINCI Energies was quite strong in Q3 '19 and was up 9% at the end of September on a rolling 12-month basis. For Eurovia, revenue of EUR 7.5 billion, up 16% and 8% like-for-like. In a nutshell, business levels and order intake at Eurovia remained very strong in the third quarter, both in France and international market, with international markets accounting for 65% of the order book at end September. France remains well oriented on the period and so were Germany, U.K. and North America. In terms of scope effects, Eurovia figures include notably the industrial and roadwork activities acquired in late December of 2018 from Lane Construction in the U.S. North America, accounted for 16% of 9 months '19 revenue versus 11% in the 9 months '18. For VINCI Construction, revenue of EUR 10.8 billion, up 6% like-for-like. VINCI Construction's strong organic growth, both in France, with Grand Paris, notably, and internationally in most of its operations, more than offset the ongoing weaker performance in oil and gas related activities. On it's part, the major project division is starting a new cycle. After completion of several large projects, VINCI Construction Grand Projets has recently won significant contracts in North America, New Zealand and the United Kingdom. For VINCI Immobilier, revenue rose 32% to EUR 811 million, thanks to a strong production, both in residential and commercial property. In conclusion, in view of its strong performance in the first 9 months of 2019, VINCI confirms that it expects full year revenue and net income to be higher than 2018. We'd like to thank you for your attention, and we are now ready to take your questions.
[Operator Instructions] We already have a question from Elodie Rall from JPMorgan.
So I'll start with traffic. I'll go ahead if you don't mind. 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 ATR as well. So if you can give us a bit of your analysis of that. I mean do you think that 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 one? 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 you seen any difference? And lastly, on the residential sector in construction, are we seeing further weakness? How is the market there?
Elodie, so regarding the traffic, it's clear that the trends of 2018 and 2019 has been, let's say, polluted by many factors, positive and negative. 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, you noticed 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 I'll remind that's 1/3 of the trucks of the network, as I said, that come from or go to Spain. For the light vehicles, again, it's the same. It has been polluted by many factors in 2018 and 2019. Maybe in Q3, it has been impacted in July by the heatwave, and notably, for the southern part of the networks, so it makes things difficult. But it's true. We are not going to enter, let's say, a kind of new normal. We are not particularly concerned. 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 printed in Q4 '19, 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 France 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 can see the indicator decreasing in terms of housing starts and housing unit bookings.So for VINCI Immobilier, probably, it would be a bit aggressive to extrapolate a very good performance in 9 months. And the order intake of VINCI Immobilier is slightly down, so maybe for next year, it would be more cautious to consider the fact that order intake are down. So there is a time difference, which can materialize in the figures next year. And the comps are very high, and notably on the nonresidential part.
Right. And if I can ask one more since I have you on the line. Any update on the cost pressure, the labor cost pressure that we've seen in H1 in construction in particular?
No. We don't -- that's really a call dedicated to activity. So we don't -- as you know, Elodie, we don't comment at a bottom line.
We have the next question from Jean-Christophe Lefèvre-Moulenq from CM-CIC.
Jean-Christophe Lefèvre-Moulenq here. I have 2 questions. First, you gave us a guidance for revenues and year-end profit for 2019 as a whole. Could we have more flavor on VINCI Construction as margins are under pressure? Can we have more flavor? And secondly, could we have the traffic trend for A86 Duplex?
Yes. Good try as well, Christophe. Regarding the margin, it's not the subject of the call. And we keep -- we stick to our -- to 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. We stick to what we said, the CEO, during the analyst meeting in July. So that's for your first question. And the second question A86?
Duplex.
You know that we don't publish the traffic for all of our assets. You know that by now. And especially for A86, we don't comment asset by asset. But it's roughly a trend looking like, let's say, the trend of Cofiroute.
Okay. Okay. No more. So this will be slightly positive only.
Looking like the trend of Cofiroute. Yes.
Our next question comes from Josep Pujal from Kepler Cheuvreux.
Yes. Just a follow-up on the first question. The -- you say that the weakness in light vehicle traffic in Q3 was probably due to some extent to the heatwave. Do -- so 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. But the month, which has been particularly impacted for the light vehicles was in July with the heatwave. So I cannot comment month on month.
Okay. Okay. But well, to understand the pattern, heatwave in July, traffic down visibly. And then August, September probably, okay, decent because no heatwave, correct?
Yes. But we don't comment month by month. You have the Q3 figure. And I don't want to start telling, okay, in July it was like and then August, it was like that. So no. But again, what we said is that it's even difficult for us to read, let's say, it was the question of Elodie, to read what is the underlying traffic, but we are not concerned, let's say, looking forward 2020, to have a more clean base to see because 2018, 2019, were very difficult. There were some positive this year and some negative. And the year before, in 2018, it was the same. So it's clearly very complex. That is why -- so that's why I don't want to start commenting the months. And we said there were some calendar effects this year, which we already say that in H1. So no, traffic is down. But all in all, it remains, let's say, a flattish trend. But we'll see. We'll see in weeks to come.
We have a question from Gregor Kuglitsch from UBS.
A few questions from my side. Can you maybe just -- can you just remind us how much the year-to-date M&A spend is or if you want, the third quarter, so that we can get a sense on the cash? And then I think you've changed the definition of debt a little bit with leases and so on. So can you just remind us under the new sort of definition what the Q4 deleverage was last year for the like-for-like basis so we can kind of get a sense what that should settle at? And then a question on the airports. So I was a bit surprised, I guess, by 2 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 that implies you've got like 3.5% of, I guess, pricing or nonaviation revenues per pax going up. What's going on there? And if you could elaborate if there's anything, sort of -- because that seems quite a lot higher than in history. And then finally, could you just provide us what the actual gap rate Q3 revenue contribution was, please? Because obviously, we've only ever seen half yearly numbers from gap rate. Never seen quarterly. So I want to get a sense for seasonality there, please.
So regarding your first question, for the net debt, you remember, Gregor, in H1, the financial investments were EUR 8 billion. In Q3, we had a bit more with some bolt-on acquisition of VINCI Energies. So at the end of 9 months, the M&A, the financial investments were a bit above EUR 8 billion, a few hundred million euros more, but close to EUR 8 billion, slightly more. So you can make your calculation to try to maybe estimate free cash flow out of that. It's quite -- 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 million in the net debt, EUR 159 million, which are not included in our net debt anymore.
So in other words, you were at EUR 15.4 billion on the new basis by the end of the year, basically, rather than...
Sorry, can you repeat?
So your debt on December '18 on that basis was EUR 15.4 billion?
Yes. Exactly. Yes. No, you can -- yes, to estimate our figure. So it's something like that. At the end of 2018, it was EUR 160 million that you will not see again at the end of 2019, which has been, let's say, withdrawn from the -- our definition of net debt. And yes, for the airports, you saw that the trend in Q3, the organic growth is strong. You've seen an acceleration. That's true in terms of sales. But that's true for us in terms of volume effect because the traffic in Q3 accelerated compared to the traffic in H1, the traffic of VINCI Airport. And in addition, you have a pricing effect. And you're right, there is as well as some incremental effects of the nonaviation parts. So let's say the trend remains good for VINCI Airports. And for the new airports, so Belgrade, AWW and London Gatwick, we said that the sale of these 3 airports were EUR 642 million in 9 months, '19, EUR 642 million. And a large part of that comes from Gatwick because Q3 in Gatwick is very important. That's the summer month, and it's -- there is a quite important, let's say, seasonality in the business of Gatwick.
We have a question from Stephanie D'Ath from Royal Bank of Canada.
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, second, please give us an update on the milestones and when we will get a bit more granularity on the regulation arrangement after you start investing in Montijo.And then thirdly, you have very strong trends at new airports, especially compared to Parisian airports. Is that mostly driven by the new routes opening? And if you could give us a bit more granularity.
Sorry, your second question, Stephanie, was on the regulation of which airport?
No. Of ANA group overall...
ANA. Okay.
After the -- I mean, obviously, it goes hand-in-hand with your CapEx investments to come in the newly signed airports.
Okay. So we don't -- we explained in the press release of VINCI Airports 2 weeks ago that traffic in Gatwick in Q3 was down 1%. But it can be explained maybe by the 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 relate, let's say, the underlying traffic. So for Montijo, the process is still ongoing. We -- but all we can say is that the project of conversion of the Montijo military airport into a civilian airport is progressing according to our schedule. You know that's an environmental study, and public inquiry has been done by the APA, that's the Portuguese agency for environment. And these agency is currently working on the final conclusion. So it can take still a few more months to work, let's say, on the implementation technicalities. We have to sit with them and know how to do that, how to implement all the decision. And you can say 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 agreements will be signed. And for [ NUE ], it's a perfect illustration of the model, let's say, of VINCI Airports. We try 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 the end, we could apply, let's say, our recipe and our methods, and we could open new routes and notably some international routes. There was a low cost, which set -- which has now its base in [ NEU ]. That's where they are. And they opened new routes, 17 new routes. So that's a lot. Let's say, that's what we try to do when we buy an airport, to make it ramping up and to propose some solutions for the clients and for the stakeholders.
[Operator Instructions] We have a question from Marcin Wojtal from Bank of America Merrill Lynch.
Yes. So my question is on your order intake, which I believe is up 12% in the first 9 months. But that obviously would have benefited from the acquisitions, 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 if that is something that you track?
Yes. Usually, that's plus [ 12% ], 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. A very good organic growth is due to summer effect.
Okay. And if I can have one more question on the VINCI Construction. So you're mentioning a new large project in a number of geographies, including the U.K. Can you update us on the high speed to the HS2 rail project? Have you recognized anything already in the backlog? And if not, what is the status of that project for VINCI?
No. HS2 is in [ ECI ]. So we do 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. But HS2 is clearly a very important and a structuring project for the U.K. That's true economically-wise, and that's true as well on an environment point of view. And so we have the conviction that the project 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 in ECI. It's not in the backlog yet.
We have another question from Eric Lemarié from Bryan Garnier.
Yes. I 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 slowdown related to this election? It was my first question. And second question regarding the U.K. I know it's not the biggest exposure for VINCI, but have you been recently penalized by all of the fuss around the Brexit saga? And do you consider that you are Brexit ready?
So for France, you saw, Eric, that the order book is robust if we speak about Eurovia, and that on top of that, our order intake 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 say this in English. Because there is still a good outlook for us or for the provision. First is that the local authorities' financial health has improved compared to the last cycle. The second point is that the municipalities, the block terminal in France, are not the only ones responsible for these investments. They also need this CapEx to upgrade the public network of road in France. And it depends from the clients, which are the regions. And you saw maybe an article today in the press is that the quality of the public network in France collapsed in the international reports. So something has to be done. But on top of that, there are probably some new tramways, new light rail systems to be built in some cities in France. And finally, don't forget that sure, yes, we'll benefit as well from the Grand Paris. So broadly speaking, we'll see what will be the year 2020, but we don't panic. And for the Brexit, for the U.K., we don't feel some slowdown, let's say, in our local business in the U.K. at this stage. Maybe tomorrow. We don't know. But our 9 months' activity was up in the U.K. for VINCI Construction, and it was up as well for Eurovia. And moreover, the order intake has been good in the U.K. in the recent weeks for these 2 divisions. So that's -- we'll see. And for airport, we already answered. Yes, there may be some uncertainties on the Brexit that's -- the slight decrease in Q3 for Gatwick was due to other parameters to some one-off. So not only -- but you know the Brexit, who can tell exactly what will be the outcome? That's pretty moving, the saga, as you stated.
Our next question comes from Nicolas Mora from Morgan Stanley.
Yes. Gregoire, just a quick one, and maybe following up on Wojtal's question. Just on the order intake because it was particularly strong in Q3, and you got some large contracts outstanding out there. What did you actually book in Q3? Did you book -- so the old common station for EUR 500 million, EUR 600 million? But did you book also in New Zealand? Just to have a feel for basically the big elephant in terms of contracts outstanding.
We booked it -- Nicolas, and you're right. The trend in Q3 was very strong. And that's true, and not only for VINCI Construction. VINCI Energies was very, very well oriented; Eurovia, even better; and VINCI Construction is very solid as well. So we booked several projects of, let's say, maybe around EUR 100 million. So several of them. But we didn't book yet the station in London.
Okay. So no station and no other railing in New Zealand either, I suspect?
Let us check on New Zealand.
Okay. Just EUR 700 million...
Let's check. Let's check. No. Indeed, yes, it has been booked in July. This was in New Zealand, the Auckland City Link. Yes, my colleague tells me that LNG in Canada, in the Western part of Canada, for VINCI Construction grand project and Entrepose has been booked. So that's one of the big elephant. And it's more than the EUR 100 million plus I told you. But we were, in fact, successful again to book some quite important project, and notably, in the U.K., but not the [indiscernible] station at this stage. And Ottawa was already booked in H1. Ottawa, as you know, for Eurovia and [ DCBP ] was already booked in H1. And you already know that.
Yes. And maybe just one quick follow up on VINCI Energies because you mentioned it. So it's still particularly strong. So no slowdown from industrial clients, still benefiting from the structural trends, fiber to the home. And so on this, there's nothing -- no clouds are there, basically?
We don't say no clouds, but 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, I'd say, the case for every market, in lots of market. We said that the business was strong in Benelux, in Switzerland, in Eastern Europe, with PrimeLine and doing well with [ Aena ], Brazil and so on. So we could not make, let's say, an excessive list, but it's -- the planets are quite aligned by division. The infrastructure division was the most booming in the 9 months '18 with a very strong growth, let's say, high-teens. And below that, very good growth as well from ICT industry and building solutions. So we don't see slowdown at this stage.
[Operator Instructions] Well, it seems that we have no more -- no further question for the moment. [Operator Instructions] It seems that we have no further question for the moment, so I give back the floor to the company.
So thank you very much for your attention. So the Investor Relations team remains at your entire disposal. Should you have more question, 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.