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Earnings Call Transcript

Earnings Call Transcript
2020-Q3

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Operator

Ladies and gentlemen, welcome to the VINCI's Third Quarter 2020 Revenue Conference Call. I will now hand over the call to Mr. Christian Labeyrie, Executive Vice President and CFO of VINCI; and Mr. Gregoire Thibault, Head of Investor Relations of VINCI. Sir, please go ahead.

Christian Labeyrie
CFO & Executive VP

Thank you. Good evening, and thank you, everybody, for attending this conference call. I am today with [ Maria ], with Gregoire Thibault and the Investor Relations team. As usual, I will be brief in order to have more time for the Q&A session. So what are the key takeaways of this publication? First, a positive inflection in the Q3 after Q2 hit hard by lockdowns in France in particular and in many other countries. In a nutshell, most of VINCI's operations in France and abroad, returned to normal. In particular, the Contracting was close to full capacity in the 3 business lines, VINCI Energies, Eurovia and VINCI Construction. And the traffic of VINCI Autoroutes was close to the 2019 level. For VINCI Airport, the slightly positive summer inflection in passenger numbers was interrupted in September due to the renewed spread of the pandemic and the fact that many countries as a result, particularly in Europe, introduced some further restrictive measures. Total Q3 revenue was EUR 12.3 billion, only down 6% on an actual basis and down 7% like-for-like after minus 28% in Q2. In France, revenue was down around 4% on a like-for-like basis after minus 36% in Q2. Outside of France, revenue was down about 10% like-for-like after minus 18% in Q2. Now on a cumulative basis, in the first 9 months 2020, revenue was EUR 30.8 billion, down 12% on an actual basis and down 13% like-for-like. France, accounting for 53% of the total, was down 15.5% on an actual basis and down 16% like-for-like. International operation, accounting for 47% of the total was down 6.9% on an actual basis and 9.8% like-for-like. As you know, revenue benefited from the latest acquisitions of VINCI Energies and by the integration of London Gatwick Airport since May 2019. Order intake remained firm, up 4% in the first 9 months of the year versus the first 9 months of last year, driven by several major contract wins in Europe, such as: 2 packages on the HS2 rail project in the U.K.; some Grand Paris packages, The Link toll building in La DĂ©fense for Total; and in Canada, the rehabilitation of the Louis-Hippolyte La Fontaine tunnel in Montreal; and the construction of the Southern segment of the West Calgary Ring Road. But on the other hand, as a result of the electoral timetable, order intake has slowed for small and medium-sized projects in France in the last few months. That being said, the order book remained at an all-time high of almost EUR 33 billion, up 15% year-on-year. It represents 14 months of activity, providing us with a good visibility. In terms of financial position versus net financial debt at 30th September 2020 amounted to EUR 20.8 billion, down EUR 2.4 billion year-on-year and down EUR 800 million since the beginning of the year. In addition, VINCI maintained a very strong level of liquidity. Since at the end of September 2020, the group had a total liquidity of EUR 18.5 billion, of which managed net cash of EUR 6.6 billion resulting from good operational cash inflows during the period. Let's now have a closer look at the main divisions with the most important points to highlight. For Concessions, VINCI Autoroutes. After falling 42% (sic) [ 52% ] in Q2 before -- because of travel limitation imposed in France, traffic levels recovered strongly in the Q3. Indeed, traffic was down only 4.3% during this quarter, of which light vehicle, minus 4.7%, while heavy vehicle traffic was more resilient, a decline of only 1.6%. During the summer, intra-European traffic was affected by a lack of coordination between the various countries in terms of public health policies. In the 9 months of 2020, revenue of VINCI Autoroutes as a result of that was EUR 3.5 billion, down 18%. VINCI Airports, after a decrease of 96% in Q2 versus last year, passenger numbers in Q3 2020, we are down 79% year-on-year. Regarding the number of commercial flights, ATM, after a decrease of 85% in Q2 2020, the decrease was only, if I can say so, 60% in Q3. The gradual reopening of borders in the Schengen area from 15th of June and the loosening of travel restriction in many countries, allowed the passenger numbers to recover steadily during the summer period. Airports with significant exposure to tourists, family and domestic travel benefited most from this, particularly in Portugal and France. However, the slightly positive trend came to an end in September because of new restrictions to tackle the renewed spread of COVID-19. Business travel remains very limited. In the first 9 months of the year, revenue was EUR 818 million, down 58% actual and 63% like-for-like. This is about Contracting. VINCI Energies revenue rose 1% in Q3, supported by its most recent acquisitions, which have mainly been done in Europe. The like-for-like decline in revenue was limited to 3% after 50% -- 15% drop in Q3 -- Q2, excuse me, in Q2, confirming that business levels are returning to normal at VINCI Energies, which is showing its resilience in particularly tough economic conditions. For the 9 months of the year, revenue was EUR 9.6 billion, down only 2% on an actual basis and 6% like-for-like. Eurovia. There was a clear upturn in revenue in the Q3, down 1% like-for-like versus 19% decline in the Q2. In France, the resumption in on-site activity began in mid-April and accelerated in May. That trend continued in the first quarter. Outside France, business levels continued to improve in most of the Eurovia's countries. Over the 9 months of the year, revenue was EUR 6.9 billion, down 8% on an actual basis, 7% like-for-like. VINCI Construction. The resumption in worksite activity accelerated in the third quarter, revenue down 1% like-for-like as opposed to 28% in the second quarter. Particularly in France, where business levels were hit hard during the lockdown. That resumption took shape more quickly on public worksites than on building sites due to constraints related to social distancing rules. Over the 9 months of 2020, revenue was EUR 9.5 billion, down only around 12% on an actual and like-for-like basis. To finish with VINCI Immobilier, revenue fell 8% in the Q3, much better than the 29% decline in the Q2, when revenue suffered from the shutdown of building sites for more than a month in France. And in the 9 -- in the first 9 months of the year, revenue of VINCI Immobilier fell 8% to EUR 749 million. During the same period, the number of homes reserved in France, including those of the Urbat subsidiary in the southeast of the country that we will soon control 100%, fell 37% to 3,125 lots. In the third quarter, the decline was limited to 11%. Before giving you the floor for the Q&A session, I would like to conclude on the outlook. Barring any further adverse pandemic-related developments and excluding exceptional events, which, by definition we cannot anticipate, we confirm the full year forecast presented last July. VINCI Autoroutes, a 15% to 20% contraction in traffic level versus 2019; Contracting a 5% to 10% fall in revenue and a 150 to 200 basis point decline in operating margin compared to 2019. As for VINCI Airports, whereas the group previously expected the fall in passenger numbers to be around 65% compared to 2019, the introduction in September of new travel restrictions in response to the second wave of the pandemic led to adopt a more conservative assumption of, let's say, around 70%. Based on these assumptions, the 2020 earnings are expected to fall significantly. The group's earnings are likely to show a year-on-year decline in the second half of the year, however, a decline barring exceptional events should be much less pronounced than what -- that's seen in the first half of the year. On the other hand, measures taken to reduce the impact of lower business levels and cash outflows should result in a reduction in net financial debt at the end of the year. Finally, VINCI management remains confident in the group's ability to bounce back in 2021, particularly with the support of economic stimulus measures announced in France and in many other countries. So thank you for your attention, and my team and I are now ready to answer your question.

Operator

[Operator Instructions] We have one first question from Mr. Jean-Christophe Lefèvre from CIC.

Jean-Christophe Lefèvre-Moulenq

Can you hear me?

Operator

Yes.

Christian Labeyrie
CFO & Executive VP

Yes, yes, sir. Go ahead. Jean-Christophe, go ahead. [Foreign Language]

Jean-Christophe Lefèvre-Moulenq

Sorry, the line is very bad. Do you hear me?

Operator

Yes.

Christian Labeyrie
CFO & Executive VP

Yes. [Foreign Language]

Jean-Christophe Lefèvre-Moulenq

So first question, ACS Servicios Industriales, are you now in the data room state? Or do you have now access to the detailed account as it seems very profitable? And second issue, we have strong sequential improvement in VINCI Construction over the third quarter, much better than Eurovia or VINCI Energies. Can we have now further improvements over the fourth quarter?

Christian Labeyrie
CFO & Executive VP

Okay. On ACS Industrial Services, the data room has been recently opened, and we are starting the due diligence process. On VINCI Construction, probably the explanation of what you mentioned is the fact that VINCI Construction, specifically in France, has been -- had been more affected than the other 2 Contracting division during Q2, due to the lockdown in France. During the lockdown in France, VINCI Energies never stopped completely its activity since they had an approximately around 30%, something like that of the normal level in Q2 in France, where Eurovia started to the work mid-April progressively. But VINCI Construction in France only started its activity in the beginning of May. So that's probably the explanation of the differences that you noted during Q3.

Jean-Christophe Lefèvre-Moulenq

And an additional question. VINCI Construction more than VINCI Energies is normally using your subcontracting. VINCI Energies is directly made by VINCI. But VINCI Construction, you have a big part of subcontracting in your P&L. Is that true?

Christian Labeyrie
CFO & Executive VP

Is it your question?

Jean-Christophe Lefèvre-Moulenq

Yes, subcontracting.

Christian Labeyrie
CFO & Executive VP

VINCI Construction, especially the general contracting part of VINCI Construction, especially in the Paris area, for instance, issue contracting probably more than Eurovia, which has its own production means or machineries, which is employing essentially its own manpower.

Operator

Next question is from Mr. Nicolas Mora from Morgan Stanley.

N
Nicolas J. Mora
Equity Analyst

Two, 3 questions from me, please. First one on the order book, the order intake in the third quarter. We had in mind the few contracts you announced, especially in Canada. But despite you again flagging the softness in small, midsized contracts, especially in France, actually, the order book was -- the order intake was very good. Could you shed a little bit of color what's happened and where you've seen strength either in terms of divisions, VINCI Construction or in terms of geography? That would be the first one. Second one on Eurovia. I think one of your French peers has already flagged a bit of a warning for the fourth quarter due to the lack of local authority spending and weak tenders over the past 6 months. Do you feel as well that we are -- we've got a very soft patch ahead of you at Eurovia, will be second question. And last one on the toll roads, French toll roads. Just trying to work backwards, the slowdown in traffic in September and seems you were down 10%, 11%. I mean is this the kind of trend you're seeing right now on the French network? Are you worried this might go down a bit further and put in jeopardy your guidance there? That would be it.

Christian Labeyrie
CFO & Executive VP

On the last one, we reconfirm our guidance for last year total for the traffic numbers of a decrease on a full year basis, between minus 15%, minus 20%. We have no reason for the moment to change it. This being said, you remember that we benefited at the end of last year from an exceptional increase of traffic due to the strike, which affected SNCF, the train operator, which we don't expect to have this year. But we have factored in all these elements in our forecast, which is a forecast. It's not -- it's always -- you have all the risk that the forecast cannot be met, but we confirm the guidance for the moment. The first question and the second are linked. We are obviously having the same worries about the situation of the road work activity in France, not so much in terms of activity level for this year because considering the high level of the order book, the anticipation for activity level for 2020 are not jeopardized. The concern is more on 2021, the beginning of 2021. And this is due to the fact that at this moment that no many decisions are taken at the level of our local public customers, the municipalities or the inter-communality, which are, by far, our largest customer in this activity of the whole year. And this is not due to the fact that they don't have money. They have money, and they can benefit from more money coming from the central government. It's more a program of decision taking process, availability of people with obviously the constraints of the pandemic. It's more complicated, maybe for some administration to organize auctions and so on. But we are putting a lot of pressure through our union, professional union, FNTP, in particular, to make sensitive to decision-makers, the level of the department, the preferred, the majors, et cetera, to make them aware that if they don't take decision now for organizing auctions, no new projects will be awarded before a certain number of months, which would jeopardize the activity level of people like Eurovia but maybe some other guys like VINCI Construction in France in the beginning of next year.

N
Nicolas J. Mora
Equity Analyst

Okay. And if I may, last one on ACS Industrial Services. Do you have an idea of when the BMI closed today, ballpark figure, and when you expect to update the market on basically your plans because we talk about -- I mean 5 billion EV? I suspect it's worth a little bit more than a one-pager statement.

Christian Labeyrie
CFO & Executive VP

No. Because you can imagine that the focus is on the due diligence process, which is supposed to last a few months from now. So I will not anticipate what will be the outcome of this process, as a result, when can the signing take place, and after that, when can the closing take place because you know that between the 2, we will have to go through an antitrust checking. So no, it's too early to say at this time.

Operator

Next question is from Madame Elodie Rall from JPMorgan.

E
Elodie Rall
Research Analyst

If I may come back, first of all, on ACS Industrial Services acquisition and the parameter of the acquisition, given I think you are still looking on exactly what you would be interested in buying, especially in the Energies Concessions businesses. Could you just give us a little bit of thinking there on how you are judging the risk in Energies Concessions, given it's not something that VINCI used to do? And a third question on the acquisition as well. Why considering paying in shares part of the acquisition when you could actually pay all in cash? So that's on ACS. Second question on Airports. Given where the trends are going, could you update us on the different assets and the risk for capital injection on some of your assets there, if there are any? And last question, you mentioned being encouraged by the stimulus measures that have been announced in France and, therefore, the impact on new activities. Could you give us a little bit more detail on where you see a positive impact on which sector? And any news on the negotiation of green CapEx on the tolls would be helpful.

Christian Labeyrie
CFO & Executive VP

On the stimulus package, honestly, I don't have visibility, since it doesn't depend on us. It depends on the central government and the speed at which central government will implement the different programs. And particularly, what I was saying before to Nicolas, will they inject rapidly new financing at the level of the department or cities, et cetera and whether this money will be rapidly or not spent by those people who are our clients. Our clients are mainly local, not the central government, and we have no visibility. We can only do some lobbying, which I explained before. On VINCI Airports, you probably noted that we obtain a waiver from our lenders at Gatwick, where the issue was probably the most sensitive as you mentioned. And as a result of those weathers and considering that additional financing have been negotiated by the Gatwick management with its banks and considering also that they might benefit from the program set up by the Bank of England for short-term financing support, we don't see any liquidity issue on the basis of the present trends of traffic for the full year 2021. Okay. After that, we will see what can happen. We are unable to make projection longer. Industrial Services. The terms of the deal, I can't say more. I can't say more than what was explained on the press release, I'm sorry. I can't provide more details. We have a confidentiality agreement, obviously, with ACS Grupo. We obviously will be in a position to disclose more information after the diligences are performed. And there was another question, I don't remember.

E
Elodie Rall
Research Analyst

Well, one was on ACS, but why considering paying in shares?

Christian Labeyrie
CFO & Executive VP

It's a possibility we want to have, because we have to take into account what will be the analysis of the deal once it can be detailed, explained by the rating agencies. We want to protect our credit rating and having the opportunity to pay part of the price in share can be useful with regard the conference of the rating agencies. But again, the details will be explained when we are able to do it and authorized to do it. [ It is ] the case now.

E
Elodie Rall
Research Analyst

Okay. And I had a last question on the green CapEx and potential for Concessions extensions. Can you confirm you're still talking to the government about that potential?

Christian Labeyrie
CFO & Executive VP

The contract is still in place. As you can imagine, with the recent events that we have been facing in France, government has maybe other priorities at this moment than extending the Concession duration.

E
Elodie Rall
Research Analyst

But do you see the recent report from the regulator as a deal breaker? Or not really?

Christian Labeyrie
CFO & Executive VP

No. It's not the first and neither the last report on the motorways, which will be printed in France.

Operator

Next question is from Mr. Nabil Ahmed from Barclays.

N
Nabil Ahmed

I have 3 [ inquiries ]. Maybe bouncing back on what Nicolas was saying about order impact in France. And yes, we can understand what's going on with the municipalities, in particular. Can you maybe talk a little bit on the private side of things, how order intakes are evolving from the private sector? Second question, maybe just a detail about Airports revenues. We were used to see revenues declining less than traffic. That's not exactly the case in Q3. So is that related to foreign currency weakening in the quarter? Or is there any change to math or fixed revenue streams that you are getting on some of the key assets? And finally, if you could make some comments as well on cash flows. I mean it looked pretty strong in the quarter given where the net debt position is. So any sort of view on where you would expect net debt to land by the end of the year would be useful.

Christian Labeyrie
CFO & Executive VP

To answer your question about customers, nature of customer, the best answer is maybe VINCI Energies. VINCI Energies revenue in -- is on more than 80%, maybe 85%, 86% with private customers in France, for instance. And VINCI Energies is the one which is resisting the best among our different activities. So -- but probably it's due to the fact also that they are very diversified. They are not just working for 1 or 2 sectors of the economy, but many different sectors: pharmaceuticals, distribution, cars, new technologies. They have a wide bunch of customers. And for the moment, at least, it resists quite well, probably also because they are not just doing -- providing services for new work, new projects for these customers, but also for maintaining the existing equipments of the customers. It's more difficult to answer the question for VINCI Construction because the average size of the project is much bigger to VINCI Concessions. When you sign a contract with Groupama for the Link Tower for Total, it's a huge contract for a single private customer, but it's not necessarily representative of the global activity of the division. But I would say that the private sector for the -- resists reasonably well. It should be the case also of the public sector of our customer, providing, as I explained before, that there is more reactivity in the decision taking process at the level of our local communities. Then...[Audio Gap]

N
Nabil Ahmed

Is that fair?

Christian Labeyrie
CFO & Executive VP

About the delta, the difference between traffic and revenue in the Q3 for Airports, honestly, I don't have the answer. I guess, my colleague, hold on. We don't -- we are not completely sure of the answer, but it seems that there are some one-off effect in Q2, which can explain why the revenue decrease was less than the traffic decrease compared to the difference in Q3. It's not that material, by the way, but there is not a simple answer to your question. I'm sorry. Like, as for the free cash flow, for the time being, what I explained to you during the confinement, during the lockdown has not happened. I was expecting a deterioration of the cash coming from the operation during the summer because we were assuming that due to the recovery of activity, we would have to spend more in OpEx, CapEx, et cetera. Apparently, it hasn't happened and the cash evolution is very satisfactory so far. Now you're asking me what would be the forecast for the indebtedness at the end of the year, I will not answer your question because I don't want to extrapolate the very good evolution of the cash flow until the end of the year because I don't know. And there are still uncertainties regarding the working capital, in particular. I hope to have a good surprise, but I cannot guarantee you. I'm sorry. So far, so good.

Operator

Our next question is from Mr. Pierre Bosset from HSBC. So we have a next question from Mr. Tobias Woerner from MainFirst.

T
Tobias Alfred Woerner
Research Analyst

Yes. I have 3 questions from my side, please, if I may. So number one, just on the Airports, you've obviously lowered your guidance a little bit for this year for understandable reasons. But I just wanted to get a sense whether that already includes the potential of a second wave impact in your traffic estimates? The second question is around permits on the nonresidential side. When I look at them in France, they seem to be holding up better. You talked about sort of the private side to an extent already, but why would that be? Or am I looking at the wrong data? And then just lastly, ACS is obviously an interesting move, at least from my side. Could you give us a little bit more sort of background or flesh around your motivations here and the rationale, what you're thinking about? And maybe if I may be cheeky here, whether this was an unsolicited approach from you or whether there was an auction ongoing?

Christian Labeyrie
CFO & Executive VP

I'm not sure I can tell you too much about the way we have been in a position to make this proposal. What can I tell you? We know ACS top management for a long -- we have been knowing there for a long time. You probably know that we are working with ACS Dragados in the U.S. at present on a very big project in Virginia for the Link in the base, near a Navy base. It's a several billion-dollar project that we have been working with ACS Dragados on many other instances. So there had been contacts with the top guys of Dragados, of ACS for many years. We knew that within ACS, there was a particularly interesting business, which was the Cobra Industrial Services Dragados business, but we -- the business was not fulfilled. It was part of the group, sales group. And we had some information at one point during the year that this business could be for sale, not through an auction, but through negotiated transaction. That's all what I can tell you for the moment. And we think it's an interesting business for us because it would be very complementary from what we have already in this business, which is VINCI Energies, both in terms of geography and in terms of type of projects, size of projects. But the 2 companies have in common a culture, which is based on decentralization, strong control and focus on cash and bottom line. I mean the particular division, I'm not taking the whole assets group, but the particular Energies division is -- of ACS has a very close culture and values compared to VINCI Energies. Okay. On residential permits, about the permits, I will answer about the residential permits because the residential permits depend to the large extent, and this is the same story than the one I told about earlier. The residential permits are depending probably that in France from the local authorities. And due to the lockdown and due to the lag, it takes -- it took after the election end of June. Decision has not been taken as rapidly as they should have been for delivering new permits, which explains why the real estate developer at this moment are facing a situation in which they lack of offer. They don't develop new -- enough new projects due to the fact that the permits have not been delivered. Now for the particular nonresidential segment that you mentioned, I have not been informed of a particular evolution on this respect. Maybe those project being bigger in general than the residential projects. We had been instructed in advance and as a result of that, the permits have been delivered, but I don't have other explanation to give. The issue about nonresidential market is more about the evolution of the demand. Whether the present situation in terms of today from working from home will have or not an impact on the demand in the medium and long term for new office buildings. We don't have the answer, for sure. As for the project under course, like, for instance, our head office, which we are building in Montreal and which will be ready for occupying mid-2021, we have already taken the necessary steps to reorganize the layout of the building so that people can work together without risking to be contaminated, one with the other. And I suppose that it will be the case for any new office building that will be launched in the future. That's what I can say for answering your question.

T
Tobias Alfred Woerner
Research Analyst

And maybe on the airports, whether a second wave is already built into the 70% decline?

Christian Labeyrie
CFO & Executive VP

Yes, the guidance, the change of the guidance, which is relatively fine-tuning, it's not crystal -- rocket science. It's based on our present experience, recent and present experience. So we can say, yes, it takes into account the fact that there are more restrictions at present for traveling within Europe, in particular, not talking about long hauls, which are in a very bad situation, as you know.

Operator

[Operator Instructions] We have a next question from Mr. Gregor Kuglitsch from UBS.

G
Gregor Kuglitsch

Three, actually. So the first, and apologies if this was already commented on, but I see in your disclosure that you've appointed the previous executive from CINTRA in the United States. So I would be particularly interested if that signals anything regarding your intentions to enter the managed lane market in the United States. I think you've traditionally not really been involved, obviously Ferrovial isn't quite big. I don't know if that's what we should take from that, but that's something that you're taking more seriously.Secondly, on ACS. Can I maybe ask 2 things? So I guess maybe -- or 2 or 3 things really relating to the deal. I think one, if you could just give us some sense what you think the risk profile is at the EPC side of the business, so the project side rather than the sort of service side. And then perhaps related to that, what -- I think there's quite a bit of oil and gas in there, so if you can just give us a sense why you think that's not an issue. And then finally, if you as a group are thinking about investing directly into renewables because, obviously, that's one of the attractions, I think, of the asset. Is that a new area of growth? And then one, maybe small one, and again, I apologize if it's been commented on, but the -- can you just give us a sense what the run rate of traffic is? Is it kind of starting to trend in France motorways, I'm talking about, is it kind of down double digit? Is that roughly where we are now in terms of run rate?

Christian Labeyrie
CFO & Executive VP

The last question, the answer is no. We are not a double-digit decrease on the traffic, but I will not give more precision on that. About ACS, about the risk on EPC, the answer is in the question. Obviously, the risks are bigger on large projects, large EPC projects and on service business. But so far, so good. I mean if you look at the track record of ACS Industrial Services in the last 10 years, we have always been involved in EPC, both in EPC and in services. And they delivered a steady performance, both in terms of results and in terms of cash, which is the best evidence that it's a particularly well-run business with strong procedures, and we don't see why this should change. So oil and gas, yes, has been one of the markets of ACS Industrial Services in the past. In the recent period, you can imagine that this part of the business has significantly decreased, but has not disappeared completely. So it's still there, but with a smaller exposure and what was the last question on ACS? Oh, why we -- okay. They have developed an expertise at ACS Industrial Services in the developing of new greenfield project in the energy sector and, particularly, in the renewable energy sector. It means that they have a team in Madrid. I don't remember the number of people, but quite significant, who have the capacity to win projects, doing field project, which means that, first, they have to be able to build generally through an EPC contract to build. And then eventually if you operate at the SPV level, taking a stake, generally a minority stake in the SPV. So they have the ability to find partners, equity partners to share the risk at the SPV level. But what happened generally after a while, after a few years, once they have built the project, they have real achieved the project, they have built a facility, they tend to resell their equity share at a gain, at a capital gain, which is no more because the risk you take at the time you build is not the same as the risk once you operate. And they are about to sell a significant portfolio of assets to the Portuguese energy player with a significant capital gain, which is the best evidence of their strong ability to do this type of thing. So maybe -- which could change, what could change in the future, being VINCI and no longer as ACS Dragados, as subsidiary, is that we could imagine to keep longer for a longer time, those equity investments, if it makes sense for us. Or we might also decide to do exactly what they did in the past. But we will have -- being VINCI and having more financing ability and power, we might imagine to keep and build the portfolio, a bigger portfolio of stakes in these type of projects. Belen Marcos used to be the Head of CINTRA in the U.S. She has been living in Texas for a very long time, so she has been at the heart of the development of Ferrovial in the managed lanes segment starting with Texas. So yes, it's a person that will bring a lot of value to VINCI considering the potential of this U.S. market. It doesn't mean that we will sign to more contract because we'll need to analyze very closely of the risk, which are not just linked to the operation, but which are also linked, to a large extent, to the construction part of the managed lane project. But yes, we are very pleased to have convinced Madam Marcos to join us, certainly a very good person to have with us.

Operator

Next question is from Mr. Jean-Christophe Lefèvre.

Jean-Christophe Lefèvre-Moulenq

Yes, Jean-Christophe Lefèvre-Moulenq again, a follow-up question. First, regarding the specific road building activity in the U.S., how do you see the outlook over the coming months? And a follow-up question on ACS renewable energy, if that means that you could carry the assets on your balance sheet as ACS does in the same sector.

Christian Labeyrie
CFO & Executive VP

All depends on the magnitude of what you are talking. At present, we are virtually 0 in terms of investment in this sector. We can imagine to invest a few hundred millions of euros, which means that we'll never compete with Total, BP LNG. We are developer of projects. We are not just investor in existing projects. That's what makes us different from the guy I mentioned before. When Total wants to penetrate a new market, like they want apparently to do it, they buy an existing business, which is operating wind farms or solar panel farm, et cetera, et cetera. We never do that. We will try to win new projects in the countries where we feel comfortable because we have a good knowledge of the country and we have local management, et cetera. And then we -- once we have built the facility or the farm, then you can think of keeping the equity share for some time in our balance sheet. Yes, we are capable of doing that, providing we are not talking of dozens of billions, but a few hundred millions, why not? We are just at a very early stage. About road building in the U.S...

Jean-Christophe Lefèvre-Moulenq

Yes.

Christian Labeyrie
CFO & Executive VP

Honestly, it has been very well managed. The crisis of the Q2 and now Q3 has been very well managed, probably also the way the U.S. government has managed the pandemic has been quite different from the way the French government has managed the pandemic in our country, which means that activity has never been stopped during Q2. And as a result of that, the performance is really satisfactory, considering the constraints we are facing. And I should have mentioned, obviously, that now we don't make the distinction between the old Eurovia settlement in the U.S. and the lane plants and paving asset acquisition, the 2 are fully integrated within the same management.

Operator

[Operator Instructions] Next question is from Mr. Eric Lemarié from Bryan Garnier.

E
Eric A. Lemarié
Research Analyst

Yes. Excuse me, I just got 1 question from my side. I understand VINCI is interested to divest some of its assets, some assets comparable to VINCI Energies, ACS Industrial Services, by the way. Would you be interested to look at them, to make an offer? Or because of ACS, it is just not possible for you to look at them?

Christian Labeyrie
CFO & Executive VP

First, we don't exactly know what is for sale. So I cannot say that we are not interested at all in the VINCI -- the LNG assets, which will be put for sales since we don't know what is for sale. What we know for the moment is that apparently, if we are talking of the whole thing, it's much too big for us compared to our existing size. And also the -- apparently, the financial performance is not really at the top presently, which means that if you acquire such an activity, you will have to spend a lot of time, energy and probably money to put such a business at a good level of profitability. It can take years. We prefer to keep our energy, managerial energy for integrating new companies, which are already at a level of performance, which is at least a level of VINCI Energies performance, and eventually higher, in order to have a profit enhancing impact. But again, we don't know in detail what will be put for sale. So I can't tell you more for the moment. And it's true that we cannot follow all the same targets at the same time. We don't have infinite resource, managerial resources. And for the time being, we concentrate on assets, industrial services.

Operator

We have a next question from Mr. José Arroyas from Santander.

J
José Manuel Arroyas
Equity Analyst

Three questions, please. On the French store roads, what reasons can you give us for the softness in traffic in September? Is there any particular segment, commuter traffic or heavy traffic that is doing worse or better? And can you share your outlook maybe for 2021 and especially if airport traffic presumably improves next year? And my last question is on the Kenyan PPP contract. VINCI announced the total revenues from this contract would be EUR 1.3 billion. How much would be Construction revenues, and how much would be Concessions revenues?

Christian Labeyrie
CFO & Executive VP

On the Kenyan project, the -- we are talking essentially of Construction, since it's not a Concession, it's a PPP. It means that it's a contract -- it's a long-term contract by which the Kenyan authority pays us for reimbursing the cost of the new work and the cost of the maintenance of the road during the length of the project. So it's essentially a construction job. But remember that we mentioned in the press release that there is still a lot of time to spend for closing the deal, especially financially speaking. Well, for Autoroutes, we are not commenting the variation of traffic on a monthly or a weekly basis. It makes no sense because we are not really comparing the same thing. So I think quarterly is a reasonable time for trying to compare things. I wouldn't dare making projection for next year because who can do it at this moment? And nobody has visibility on what is going to happen with the pandemic, neither on our businesses or other businesses, except maybe the new technology, but it's not our business. And -- I think that's all. Okay.

Operator

We have one -- another question from Mr. Tobias Woerner from MainFirst.

T
Tobias Alfred Woerner
Research Analyst

Yes, just a follow-up question with regard to your Construction business. I mean when I listen to you, it sounds to me as if the situation around orders in the municipalities and the local businesses is a practical problem. It's not that on the basis of stimulus these orders will come through eventually. Is this the way you see it? Or is there something more fundamental at work?

Christian Labeyrie
CFO & Executive VP

It's the way we see it at present. And when I look at the papers coming from the federation republic, for instance, on this matter, they clearly say that it's a matter of organization, maybe motivation, maybe availability of civil servants to take decision. It seems a bit stupid, but it's the way it is. Money, apparently, for the moment, is not an issue because the situation -- the financial situation of the municipality is quite good. It can seem strange, but it's the case. It's quite good. And on top of that, the central government is prepared to inject even more money, if necessary, to stimulate the economy. So it's more a problem of organization. I think the problem -- the fundamental project -- problem linked to the market situation, to my knowledge, at present when I read the different papers on the issue.

T
Tobias Alfred Woerner
Research Analyst

Understood. And the future is the future. And following up from that, on the residential side, is that a similar logic? I -- residential is not...

Christian Labeyrie
CFO & Executive VP

Yes. Yes. Yes, it's a similar logic. There is still strong demand in France, not everywhere, but in many different places in -- especially in the big cities and even now in smaller city because more and more, the people leaving the big cities would like to live in more friendly areas to avoid the problem of big cities. The problem is that it takes time between the time you identified a piece of land, then you analyze whether it's feasible or not to set up a project -- the timing project on this piece of land, and then do all the administrative work to go through the local civil servants to obtain the permit, et cetera. It can take years. At least months, for sure. And then you start the work, and it takes again 2 years before the project is completed. So it's a very long process, which is being made more complicated due to the pandemic which has finally almost stopped the work during a few months in Q2 and beginning of Q3 at the level of the municipalities.

Operator

We have one last question from Mr. Charles Maynadier from Kempen.

C
Charles Maynadier
Analyst

This is Charles Maynadier from Kempen. I just have 1 question, on the M&A side, on the Concessions side, if you could give us an update there. And if you could also comment on your commitment to grow that part of the business, still considering the quite large size of the potential deal with the ACS?

Christian Labeyrie
CFO & Executive VP

The focus in Concession at this moment is mainly on greenfield projects more than on brownfield acquisitions. But it's also true that there are not very many opportunities. So we mentioned the Kenya project. We have -- I don't know if we have mentioned some projects we have in Europe, in Germany, Czech Republic. So we are still working to try to win new PPPs in this part of the world. Well, management, again, it's a bit early to -- we cannot just invent the project, find the construction abilities and so on. But we are interested in the U.S. market, but we are not in a hurry. You never make good deals if you are in a hurry. You may be patient and take your time. In the Airport business, you can imagine that there are not very many deals on the table at present. Also because the sellers are not prepared to sell at a low price, but it's impossible to put a price on an asset at this moment because we don't have any visibility on the recovery of the traffic. So the pipe of new project in Concession is relatively limited at present and essentially concentrated on greenfield projects in the motorway business. Okay. No more question?

Operator

We have one last question from Mr. Nabil Ahmed from Barclays.

N
Nabil Ahmed

Yes. Sorry, Christian. Just one follow-up from me on the management. Is it fair to assume, given the story of the group and the way you've been building the Concession portfolio historically, is it fair to assume that acquiring construction capabilities in the U.S.? Could be a prerequisite before we see VINCI more active and management?

Christian Labeyrie
CFO & Executive VP

Not necessarily because we can also find local partners. We are the only PPP, to my knowledge, in the recent past that we have been able to win and execute very well in the U.S. was for the construction of a bridge and tunnel in Louisville, Indiana. And we did that in a joint venture, in construction joint venture between VINCI Construction Grands Projets and the local partner, which is the Walsh Group from Chicago. So we could imagine why not trying to team up with this partner or another one to try to win together management contract. But we will like to have some input in the construction job, not subcontract, 100% of the job to an external partner. That's for sure, now.Thank you very much for your question. And you can follow-up with my colleagues, Gregoire and Alexandra as necessary. Bye-bye.

Operator

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.

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