Vinci SA

PAR:DG

Earnings Call Transcript 2022-Q4

[Xavier Huillard, Chairman & Chief Executive Officer]

Thank you for taking part in this little meeting. As is our custom, I'm with Christian Labeyrie. In the room we've also got most of the executive committee members including José María, Chief of Cobra IS who will be able to field questions later if anyone has questions in English.

First of all to look at some pictures, they're very important. On the cover page, here we can see the establishment in the North Sea or the first conversion platform -- AC/DC conversion built by Cobra with a joint venture Simmons Energy. As you saw in our press releases, we've got five others on order. The last two are about twice as big as what we see here. Capacity is two times greater -- more than two times greater than the capacity of the first two stations. We can come back to the point.

Now, this picture tells us again that France won't meet its carbon neutrality commitments by 2050 without a major and highly urgent effort to decarbonize roads, particularly motorways. We're already working very hard on our VINCI Autoroutes networks. But the bulk of the work remains yet to be done and will require significant investments.

The picture illustrating the acquisition of 29.99% of the OMA company, OMA that manages a cluster of 13 airports in Mexico including the Monterrey Airport, which alone has about half of the 23 million passengers booked by the cluster in 2022. This picture is an illustration of the signature to buy the 35% of a company called Entrava which in turn is a concessionary of 570 kilometers of motorways in Brazil, a portion of this is being widened, 210 kilometers being widened. I'll come back to the point.

Then many acquisitions at VINCI Energy, specifically under the ICT component information and communication technology through the takeover of ICT expertise that previously was held by the Kontron Company operating in 11 Eastern and Central European countries. This further strengthens VINCI Energy's axial specialty, which means it will be achieving around €3.3 billion or €3.4 billion in revenue in 2023.

This picture is an illustration of a major deal won by Cobra, which will begin the work on the first land terminal for regasification of liquefied natural gas in Germany. As you know Germany was highly dependent on Russian gas. So, very urgently they quickly leased ships that could use to regasify LNG, four or five of these were installed. But of course that's a temporary solution.

Germany must build land regasification terminals to diversify sources of supply for its gas. We won the first one simply because we -- Cobra had been working on this for many years and speeded things up further due to recent developments particularly the war in Ukraine.

Now, here we have a picture which is an illustration of a major deal won recently by VINCI Construction. It's a joint venture with our Spanish comrades from Ferrovial, the very serious Gorged company. It's a design build contract for a significant portion of the new Toronto Metro subway in Ontario. This still prevent 28,000 vehicles worth of traffic every day, which will mean a significant reduction in greenhouse gas.

Lastly, Vinci Immobilier will also make it in a timely fashion to deliver a major section of the athletes’ village. We're showcasing this because it's a beautiful example of urban regeneration in industrial brownfield. To come back now to our achievements in 2022, Vinci is doing well. In 2022 we booked strong growth in revenue and profits. Cash flow generation is at a record level. There has been a satisfactory -- highly satisfactory renewal of our order books and growth in our environment and social performance. This is an illustration of the resilience of our business model and especially our major ability to adapt as the case of all 4,000 of our business units highly adaptable. Firstly, Cobra IS now very well integrated. This is confirmed further that it's a wonderful driver of growth and performance together with Vinci Energy which was already growing beautifully.

If we put both of these together, we're talking about an energy brand, making over €22 billion in revenue, because they are at the cracks of major transformations of foot right now that are caused by the energy transition and the digital revolution. Among other things, we're deploying renewable energy fields at our airports, our motorways and even at a bigger scale further in Cobra covered countries, such as Iberia and Peninsula, as well as Latin America mainly.

The good news, our first renewable photovoltaic field of 0.6 gigawatts, 600 megawatts will begin producing -- generating green power as of 2023 and this is taking place in Brazil. VINCI Construction is reaping the benefits of this new organization and most importantly the benefits of its major highly disciplined way of accepting order intake.

Next, a fairly spectacular recovery of VINCI Airports which speeded up throughout the year further recovery continuing in 2023 for airports. Good road traffic -- motorway traffic held up well especially in France. And in fact it's now above levels observed before the pandemic in spite of hikes in fuel prices.

And all in all, we see net debt going down significantly. The debt down by €3.1 billion over a three-year period in spite of several major acquisitions such as Cobra, OMA and further press over the past three years, financial investments have been on the order of €8 billion. And in spite of the €8 billion, our debt is brought down by €3.1 billion as we can see.

Lastly, I'll come back to the point quickly later. [indiscernible] methodically, we olled out our environmental strategy and all of our employees join in on this. Important thing to see here is that, all geographies are growing. North America, growing significantly, reaching around €5 billion, whereas Latin America, Europe and Oceania, are also growing very satisfactorily. Of course reaping the benefits of the strong positions that Cobra has as well in these various geographies. All in all, we can say that for the first time in our history, we're making over half of our revenue outside of France specifically around 45% revenues from France and the remainder from outside of France is very much in line with the strategic decisions we took around 10 years ago now.

To delve into further detail on the business lines VINCI Autoroutes light vehicle traffic above the traffic levels in 2019 as I mentioned already in spite of increases in fuel prices. Furthermore, there were problems of fuel availability, which you all felt last fall in spite of growth.

This growth, well, part of it is due to the return of our foreign customers, our non-French customers. This is readily apparent at several borders and several motorway sections. Heavy vehicle traffic was already doing well in 2021. You'll remember, it's continuing to grow by 22% in 2022. All-in-all this is beyond growth that goes beyond macroeconomic growth. This is to a large degree due to development of e-commerce.

By way of illustration here I'd mention basically a doubling in the annual pace of construction of warehouse logistics, logistics warehouses alongside our motorways. That's a very good piece of news because it means -- well, it's not all of a sudden that road shifting will take some other means of transportation, because now the logistics warehouses have been set up alongside motorways particularly near the hub areas of the motorway sections. That's a done deal. And this is something that's developed in a very big way particularly since 2015.

This illustration of our major efforts in decarbonization, 100% of our motorway rest areas at VINCI Autoroutes have electric recharging stations, 1,750 charging points. And an important thing is 1,400 of these are ultra-rapid charging stations of over 150 kilowatts. You can well-imagine people can't have their vehicles spending eight hours to wait to be charged on a slow charge when you're making a long-distance trip and you stopped at motorway rest area.

VINCI Airports, I said the recovery is speeding up. Q4 2022 was just down 17% versus Q4 of 2019. Traffic more than doubled over the full year period versus 2021. Several geographies and countries have already reached levels above or near the pre-pandemic situation. The UK is recovering quickly. The Asia zone will be gradually reaping the benefits of the lifting of travel restrictions, particularly recent decisions made by China.

We'd also observed that significant work being done over the past three years on OpEx has made it possible to see a significant impact on EBITDA, which is even above the level 2019. Net income is over €500 million. To tell you the truth, which is much higher than we were thinking and actually saying a year ago.

Thanks to all this. And in addition -- and added to the fact that there's a cut in CapEx because we've frozen a lot of CapEx during the pandemic not all CapEx but much of it. So VINCI Airports free cash flow in 2022 goes beyond €1 billion. VINCI Airports also has an environmental targets. They are highly ambitious, targeting carbon neutrality in 2030. Several airports will reach this as of 2026. Particularly we're seeing a systematic rollout of PV farms whenever possible in airport areas.

We have resumed external growth at VINCI Airports, for instance, the signature of 40-year concession for seven airports in Carpe Verde to be closed toward mid-2023. Then more recently we closed. So we're now owner of 29.99% of the OMA Airport cluster. Important to observe traffic here as of last July, reached the pre-COVID level. So it's a done deal. Just like in motorways we're seeing that there's a strong desire to commute, to travel, to be mobile. This is very strong.

And what's striking in air traffic is this is remaining very, very high, in spite of significant increases in ticket prices which you'll all have noticed on average 30% increases in airplane ticket process and that has not held back people's desire to travel and be mobile amongst the citizen REIT to talk about VINCI Highways.

This is motorways outside of France, plus other concessions. We're seeing the same positive trends for traffic, particularly motorway traffic in Peru and in Greece. All say, rail with SCA and then Interstadiums. To talk if you can say, traffic, stadiums, particularly the step deference which is actively preparing to accommodate the Rugby World Cup in the fall of 2023, as well as the Olympics and Paralympics games in the summer of 2024.

Strengthening of our percentage stake in several assets such as the, Confederation Bridge concession in Canada a Rion-Antirion in Greece and then, the two Lusoponte in Portugal. Full acquisition of the TollPlus Company we mentioned this last time, I believe. They're an expert in one of our strategic business lines i.e. IT solutions for land mobility, then the acquisition of the, 55% of Entrevias that I already mentioned to you.

To talk on VINCI Energy a really truly beautiful year at VINCI Energy, revenue up again 11% even further speeding up in revenue growth in Q4. VINCI Energy not only is growing but is also further improving its EBIT margin re-standing at 6.8% versus 6.5% in 2021 which is truly remarkable and further illustrates, I believe, the power and robustness of our business model is to accomplish, well established on the mega trend, which is energy transition and the digital revolution. These are mega trends which are going to be buoyant for quite some time to come.

Furthermore, this is thanks to an excellent geographical diversification. Lastly VINCI Energy as always continues its strategy of growth through acquisition 31 small medium and sometimes biggest companies acquired particularly in the ICT area from the Kontron group that I just mentioned a moment ago.

The first successful year for Cobra IS and the group is revenue about 45% in Spain and 35% in Latin America. And it breaks out basically into three main segments. First of all, flow business. Flow business representing two-thirds of revenue. The important -- this is very important. This is a guarantee for stability and resilience.

Next, come to the EPC projects, Engineering, Procurement and Construction projects. They're ever bigger scale, Turnkey operations requiring many types of expertise. Think of the AC/DC conversion power stations we saw on the first slide. Furthermore, the re-gasification, the LNG re-gasification plants we already talked about.

We're also talking about some very high voltage up to 500,000 volts transportation lines for power in Brazil. Also systems for transport, infrastructure management such as winning deal in 2022 for the same there in Tunnel. Here we also have teams working for VINCI Construction. This EPC portion, we can say the size of business fluctuates more here depending on how things vary. We're in a very positive phase right now. Many deals on offer to our various companies, particularly Cobra. This is once again because we're surfing the megatrends to the energy transition and development of transport. Virtuous transportation infrastructures such as subways, metros and other types of mobility that are kinder to the environment.

Third segment at Cobra is to develop renewable energy production fields. The pipeline of projects under development standing at 15 gigawatts, the same figures what I mentioned one year ago, not exactly the same 14, 15. You have to add to this 2 gigawatts that now have all the authorizations, the building permit, the environmental permit, the permit to connect to the grid. This is 2 gigawatts. Some of this is the 0.6 gigawatts I mentioned to you earlier that will come on electricity production come online in 2023 plus 0.3 gigawatts also photovoltaic in Spain, which will see us work begin in 2023 and the 0.6 gigawatts in Brazil, again photovoltaic, which should begin construction in the next few months.

All of this is an illustration the 2-giga add maturity now almost ready to build. And the pipeline we've still got ahead of us under development has been replenished so that it is still a significant volume 14 gigawatts. All of this is very much in line with our road map. In fact going beyond it because we indicated to you 1 gigawatt per annum initially. It's possible we'll be more in the neighborhood of 1.5 gigawatts, especially if you add the PV developments along our motorways as well as our airport assets.

New VINCI construction is keep making good on its promises, strong activity in growing growth of revenue more than 11%, €29 billion, 55% of which outside of France the UK, France, the Czech Republic, North America and Oceania, important to point that out.

We're seeing a ramp-up of the major projects won previously such as one in the UK just to and also a very good deal flow of big project and also a very good deal flow of small and medium deals and electrical engineering that's important to have to make sure you're highly resilient all sizes.

EBIT margin growing 3.8% and will continue to grow. The key motto at VINCI Construction is selectivity, selectivity more than ever before. We don't talk about market share and volume. We are talking about striving for operational excellence and performance. The good news is the size and the quality of our order books give us the confidence we need to know that we're able to continue with this policy being highly selective.

Yes order intake 2022 was very good. We can see it on the slide up 12% excluding Cobra, up 32% like changing the scope i.e. including Cobra. On the right-hand side we see a particularly significant harvest orders outside of France. This order intake bigger in non-branch Europe and international outside Europe than in France, even in France order intake is very good on the order of 10%.

Lastly property development, the environment deteriorated here in residential property, pretty abrupt shift from the previous situation where you had strong demand, shift to the situation where we've got a scarcity of supply that's priced in line with the interest rates, but people's purchasing power has been cut by increased interest rates. That's on residential real estate.

And then, we're seeing very clear wait-and-see stances taken by investors in office real estate wait and see, by the investors everyone -- pandemic. So housing unit reservations down, by approximately 17% even slightly more -- significantly more in the most recent months of 2022 and according to initial figures of 2023, even though obviously, we're not going to disclose annual trends, which is to say we're starting to movement in a more difficult period when it comes to residential real estate.

However, there is a section of residential that's doing well, a niche, which we've begun developing. We began looking several years ago. Now here, I'm talking about serviced residences, both for students and seniors. This is particularly popular amongst seniors. These are not nursing homes. These are service departments for older people. These are not medical facilities. We are not in the same category, as the other guys.

Another very important point, something I think I already touched upon. VINCI Immobilier was the number one developer -- the first developer, to set a target for zero ceiling of soil by 2030 in net terms, which will make for a major transformation in property development. We will tend to focus on urban regeneration operations such as, our new headquarters office or such as the athletes -- the Olympic Athlete Village that you saw earlier. No doubt about it.

The property market will improve again, in the future. We feel it's going to see improvement fairly soon in residential, because the country more than ever before needs new housing units whether we're talking about housing that people buy, or housing to be rent -- social rented to social housing. We'll have a problem in this country, if a major gesture is not made to boost increased construction of new housing.

I'll hand over to Christian Labeyrie, now who's going to report the figures to us.

[Christian Labeyrie]

Thank you, Xavier. So on revenue a lot has been said. Growth on close 25%, actual scope €60 million in revenue constant up 12%. Strong increase in concessions, plus 30% on the back of growing traffic of motorways. The rebound of VINCI Airports, VINCI Autoroutes revenue up 8% VINCI airports more than double that of 2021 slightly above 2019 pre-COVID level. VINCI Highways, essentially international order route activities and e-toll management activities.

And as you said, the control of TollPlus, in the US in 2022 and the Prince Edward -- CDR bridge in Canada revenue, up 55% in real terms 24% like-for-like. VINCI Energy up 11% like-for-like 8%, accelerating quarter after quarter. Growth in revenue of VINCI Energy by France and internationally. VINCI construction up 11%, like-for-like 8.5% fully leveraging its international growth. Scope effect €5.5 billion integration of Cobra IS acquisitions, VINCI Energy some 30 and 22 the most significant cemented at the end of last year. Control AG added to that total 30 over the years some 60 acquisitions contributing for about €260 million additional revenue in 2022.

VINCI Concessions the integration of the Canada bridge full year that's €40 million €26 million and €16 million in 2022. VINCI Airports integration since the 1st of January of the Amazon airport some €50 million in 2023 we'll have the integration of Oma, for close on €500 million. Cape Verde about €30 million full year half for 2023. Net impact of currency translation adjustments 1.5. That's the reveling at average rates of some 10% for the dollar as well as other currencies linked to the dollar.

Next slide, gives you the split by geographic areas strong rebound in revenue versus 2021 driven by international operations plus 46% plus 70% like-for-like, thanks to Cobra for the actual change. But growth in France is noteworthy 6% pretty much on a par with inflation but differences by business. VINCI Energy is above 9%. VINCI Construction plus 2% illustrates our selective approach at VINCI Construction.

In conclusion on this chapter, VINCI is accelerating the expansion of its international footprint. That's in line with one of our strategic goals set out a long time ago for the first time over half VINCI revenue 55% achieved internationally, as against 47% last year.

Operating income from ordinary activities of each division. Overall, remarkable performance increases across businesses. EBITDA of VINCI highways over €3 billion 52% of revenue. Topping its 2019 level just below €3 billion. VINCI Airport thanks to accelerating traffic recovery throughout the year and drastic savings plans put in place during COVID sees its grow strongly. It now reaching close to €1 billion. That's pretty much the 2019 level.

Other calls for satisfaction. EBIT of VINCI Energy VINCI Construction are up coming in approximately €1.2 billion, 30% better than in 2019. The operating margins of these two divisions continue to grow in spite of cost inflation and supply chain difficulties in certain markets.

For VINCI Energy, operating margin reached 6.8% of revenue 30 basis points higher than last year, 80 bps higher than 2019. Majority of our businesses and geographies at VINCI Energy contribute to this excellent overall performance strengthening VINCI Energy amongst the most – the best-performing companies in its sector. Cobra delivering EBIT of over €400 million, excellent margin, in line with our expectations, above 7%.

For VINCI Construction, operating margin up 10 basis points versus 2021, 3.8%. That's a good, even very good level, given industry characteristics, size of the company, even if there's room for further progress and it's a level never before reached at VINCI for over 10 years.

VINCI Construction margin reflects good performance in major projects specialty networks Soletanche, Freyssinet, good profit margin internationally, North America, Australia, New Zealand. To preempt Jean Christophe's question, let's flag that there are no material claims to be noted that would boost these results.

As always there are challenging work sites inherent to the business. They're also very good projects. HS2 in the UK or the start-up of [indiscernible] or the Greater Paris project and also VINCI Construction margin reflects the initial positive effects of the French reorganization into four subdivisions, building, road work, civil engineering, specialty, hydraulics, earthworks, demolition. We can of course do better, notably UK, Africa. So we can bank on continued improvement of VC margins going forward.

Lastly, EBITDA VINCI Real Estate, amount is more modest, it's also up on the year as well as the profit margin, as Xavier said, this performance can't necessarily be extrapolated going forward, given the difficult climate in France, moving along the income statement.

IFRS two to be related to a group policy, the 270,000 people, international headcount, more important. And we're striving to offer profit sharing systems linked to VINCI checkup, but contribution of subsidiaries consolidated at equity. There are pluses and improvements in Japanese airports, minuses, because there are acquisition costs under this item.

Now, under the one-off items, no impairment test impact to be noted. As regards to the financial expenses, a bit surprising in terms of what you rent, slightly down 614 as against 658. The explanation is the rising interest rate hasn't yet impacted us a great deal in 2022.

In fact, more in Q4, we benefited the positive rate of return on our cash. 2023 is likely to be less favorable with rising interest rates full year. And there's also swap rate variability that in the right direction, that is in the wrong direction last year.

Other financial items, very positive, reflecting reevaluation of our stake in ADP. Let me say that, since we no longer have a seat on the Board, ADP chart marked to market which has improved significantly in 2022. Hence, a positive impact in our financials and impacted Gatwick of the early redemption of certain loans under par, generating a profit of ISL of those bond redemptions, because Gatwick had the necessary cash to do that tax-wise, an increase in the tax bill higher than what's shown here 2.6. We had an expense of €400 million linked to the revaluation of income tax in the UK was purely book impact on our deferred tax.

Strong increase in the tax expense for France was spent just over €1 billion tax on profit. The same amount to be added in terms of production tax in the income tax, over €2 billion in taxes, which puts us quite well in the list of French tax payers. Net income after tax €4.259 billion. That's a record. I'm sure of that. That's EPS of close on €5.50.

Next slide is the change in the debt of a year. The free cash flow record, free cash €5.4 billion, very much higher than what we could expect a few weeks before the end of the year. The last forecast was strengthened by Bloomberg. Consensus in November was 4.7. We delivered 700 better over half. This gap comes -- this variance comes from a strong level of cash in towards the end of the year down payments one received on the project in Canada, one in the final weeks of the year. That's remarkable performance.

WCR improved sharply of late in 2020 and 2021 during COVID, because the admin teams were ready to call in receivables. But those benefits were not reversed in 2022. I tend to repeat this year, but it's the case this year. We can't consider that the 2023 cash flow level can be considered as normative going forward. All the more, the CapEx be it at Cobra to grow renewables in greenfield or VINCI Airports are set to rise VINCI Airports, in particular the 2022 CapEx is €200 million below what it was in 2019. Necessarily there'll be a catch-up in the lag here.

Notably, Portugal, the UK and Cobra, we'll continue to invest significant sums in renewals about €400 million this year probably more going forward. Hence, a normative cash flow to make a forecast, our risk of the order of €4 billion to €4.5 billion, but not necessarily more.

2.7 financial investment, that includes the acquisition of OMA for €1.5 billion at the end of the year, partially funded in Mexican peso. €600 million at VINCI Energy, over half for Control, that was the deal that was cemented at the end of last year. VINCI Highways were about €300 million. If we include the consolidation of the debt of companies acquired, the Canada Bridge previously not consolidated about €100 million at VINCI Construction, essentially in North America.

Cash out pertaining to dividend and share buybacks in the cash effect of the debt linked to the mark-to-market of our exchange rate derivatives all in all reduction of debt over a year of €1 billion.

Next slide is the way in which free cash flow is crafted [indiscernible] first part of the year. We don't generate a lot of FCF up until July it's only after that the curve begins to arrive with December that's particularly significant. It has happened certain years that it even accounts 50% of the year's cash flow in 2022 was 44%.

That's a lot more in certain businesses, a lot more in 2021 35%; in 2020 51%; 2019 24%. Hence the difficulty to give you a very accurate forecast, especially, at the start of the year. That's due to a very specific situation of receivables at the end of the year and that will be a VINCI Construction Energy and Cobra.

Putting things into perspective. Next slide. On 10 years, we see that FCF generation at VINCI is rising incrementally very high-end recurring on average per year. Cash flows improved 11% per annum, but 17% over the last five years. That's way above the increase in profit on the average, 8% of the period accelerating since 2018.

As I said once again we can't consider that levels reached in 2021 2022 over €5 billion. A normative reasons difficult to predict CapEx both at airports and Cobra. Balance sheet is of course very solid even more so equity of €4.6 billion WCR, negative WCR. It's a free resource. Obviously that's very appreciable let's strengthen further.

Our long-term assets coming in at close to €5 billion. That will increase by close on €5 billion covering the large part of CapEx and acquisitions reduction in net debt by €one billion as I said free cash flow above €9 billion same level even slightly higher than last year's. So it means that if we reason EBITDA multiple not necessarily the right reason often we do.

The debt ratio has improved because debt was 2.5 times EBITDA in 2021 and it's down to 1.8 in 2022. It's a level that may not be viewed by some as optimal if we want to reason in optimizing cost of capital. But we accept that. It's a consequence of our prudence. It's a vital asset gives us some leeway when it comes to M&A and also swiftness in our recovery since COVID.

Next financial policy. Well you already know this. We attach great importance to liquidity ability to mobilize resources if need be to reimburse our loans in 2022 we reimbursed €2.6 billion maturing to optimize refinancing cost to pick the right time to position on the market in 2022.

We issued two bonds one in all was ASF October for VINCI more recently January this year for ASF and also to seize M&A opportunities part of our strategy as we decided in December 2021 by writing a check to ACS close on €5 billion to acquire Cobra. More recently at the end of 2022 take 30% stake in Oman to acquire Cobra Advance Energy. All-in-all over three years. We achieved €8 billion in acquisition. That's a lot. Need to fund that in over four years over €16 billion in M&A. Debt reversals by VINCI. That's an average of €4 billion per year in spite of COVID. So have total liquidity including unused credit €20 billion increase in 2022 estimated over the uncertain period, especially during the summer, because of the Ukraine conflict it be prudent to up our credit lines.

We did that with the support of our banks for €2.5 billion. So we're equipped to continue to meet contingencies, while continuing to expect credit rating confirmed both by Moody's and S&P. I appreciate the strength of economic model resilience business diversification and our cautious management. Thanks to these good ratings we can expect to continue to fund the company in good conditions even in the changing context and if rates aren't quite what they were one year ago.

As I said we placed in 2022 two issues of €850 million ASF. Other of €850 million at VINCI, another €700 million ASF. So the average maturity of our debt is still around seven years had conditions higher than what they were previously remain okay given the current rate environment.

Cost of debt is the next slide. Slightly increased weighted average in 2022 at 2.5%. That's due to the charts on the right given the cost of debt by currency, so you see in particularly euro debt the three main currencies cost of debt has risen and that the weighting by currency has changed, because we have a share of debt excluding Euro hire. We also have a debt excluding OECD strong currencies. Mexican pesos, Peruvian sols, et cetera. In spite of that it remains pretty much okay. Difference between the rates on the right led between two five is an average on the year doesn't fully factor in the full impact of rate rises, and on the right the end of year. So we see what happened notably at the end of years cross-currency with 200 bps increase the various costs by currency. Thanks.

[Unidentified Company Representative]

First of all, we were talking about 2023. At VINCI, we all share have this confidence very confident in the future, as Christian said. And the reason for this is because our construction, energy and mobility business lines really place us at the very core of major challenges in this world.

What are we all about transforming cities? We can go back to the point later. Digital revolution in all industries and human activities, decarbonizing transportation, developing green electricity in the energy mix support, providing support for the emergence of low-carbon hydrogen for industry and large-scale transportation, also systematically tackling projects from the vantage point of preserving biodiversity and carbon footprint. It also means developing the circular economy. On all of these subjects we are very highly involved. We feel we are solutions providers in all these areas to rise to all of these challenges which we find very exciting. And it's the case for all 270,000 of our employees very enthusiastic. This really gives us a great deal of leverage for further future growth.

At VINCI Autoroutes, we are realistic. We except the macroeconomic facts and also high fuel prices. For all these reasons, we expect stable traffic at VINCI Autoroutes in 2023. At VINCI Airports, on the other hand, what we're expecting is continued recovery in passenger traffic. Probably things will lag in Asia because Asia has just reopened more recently.

So, I want to lag some forecasters worldwide are expecting resumption of traffic to pre-pandemic levels as of 2023 -- 2022 sorry. We're more cautious. We think it will be more towards 2024, but added 2023 beginning 2024 won't really change things in a big way. Anyway continued recovery in traffic at VINCI Airports. Clearly leading everything you could calculate in terms of impact on our business performance.

On to VINCI Energy will continue to grow all the while maintaining the high level of EBIT margin already booked in 2022. Cobra is -- has a very strong order book, truly a record order book, probably the highest order book Cobra has ever had on hand in its history. This is where we expect growth of at least 10% in Cobra sales in 2023, all the while remaining top of the class and the profession in terms of EBIT margin.

VINCI Construction reset our intention is not to grow VINCI Construction, but to continue growing the EBIT margin by being even more selective. It may happen that the consequence of that discipline might cause a tiny auto growth.

We're not targeting growth though there may well be growth. We're going to be further improving operational performance though and EBIT margin which is to say all in all for VINCI what we're expecting is renewed growth in revenue and operating income to a lesser degree than 2022 compared to 2021.

As a comparison, our net income should be slightly above that of 2022 in spite of increased financial expenses that are crystal clear that Christian has explained very clearly.

With this great confidence, the Board of Directors met yesterday and decided to propose to our next shareholders meeting on April 13th, a dividend for 2022 of €4 per share payable in cash including €1 already paid as an interim dividend. The remainder of €3 will be payable in cash on 27 April this year.

The dividend will we take into account the fact of the matter that you've seen i.e. the rebound after the crisis the new profile of this group with further development of concessions record levels of cash flow. This is also a way for us to demonstrate our confidence in the future.

Lastly, I won't dwell on this, but let me just say that in the presentation you can find firstly three slides that give you details on our environmental social ambitions, how we're making progress in this area, how we're really bringing forward with us all of our employees takeaway point.

We're very much on track in our road map, particularly when it comes to our CO2 footprint, down by 13% and also when it comes to using low-carbon concrete. Our intention is by 2030 to be using 80% low-carbon concrete or even better, ultra low carbon concrete. If you look just at France, we already stand at 30% usage of low carbon concrete in all of VINCI Construction's activities.

Another important parameter is recycling a circular economy. We already stand at 46% using recycled road beds for construction of motorways in France and a very large proportion of our aggregates and other elements are from recycled materials at VINCI Construction. Our target is to reach 20 million tonnes in the next year. So we're somewhat ahead of schedule on that particular point.

Lastly, we gave you -- this is a slide to be careful when you look at. We're looking at our socioeconomic footprint in France is done by outside firm, an independent firm called Utopies. We've asked them to do this analysis several times before they use methodology, which is a very strong sound methodology. It takes into account not only our impact in France.

In France, we've got our own business impact. But we go beyond our direct effects. We also have -- they also study our indirect impact and we call the induced impact i.e. the fact we pay taxes has a knock-on effect in terms of jobs, because those taxes don't you stay in a box at the treasury department, but they're actually used do various things such as build schools, health facilities and so forth in the country.

If you take into account all of these effects direct, indirect and induced, we are supporting in the angle in terms of the term supporting around 1.6% of all jobs in France. That's about 460,000 jobs 463,000 jobs representing 1.5% of the country's GDP. Another important parameter based on the Utopies survey. If we focus yet again on France 96.5% of our purchasing is done in France. And out of that amount, 50% purchased from small- and medium-sized companies within our ecosystem.

So again, the figures possibly could be question because the modeling involved here is highly sophisticated. But the important thing is to track this to see what progress we are making in terms of our impact on the environment and society as a whole. There you have it. That's what I wanted to say to you.

Now, we'd be happy to field your many questions. We will respect our tradition. As you can well imagine, we will give the floor. Yes, go ahead.

[Unidentified Analyst]

Hello, everyone. I might disappoint Christian. It's not VINCI cost to extend this year and the compliance. But actually, I'm thinking of energy. VINCI Energy Cobra as well as E&R operations for yourselves. VINCI Energy, congratulate 30 basis points improvement in operating margin. Question, could we get more color and more information on the profits equation? In other words, is this by business line ICT industry? Are they explanation for the improved performance and the absolute margins, or are there geography considerations as well? They come in to pay further more regarding Cobra I suspect the margin above 7% is due to turnkey projects versus recurring business. Lastly regarding proprietary operations projects for your own account that are being developed. Will -- has VINCI managed to control its purchasing and the cost of purchasing? I know that there were issues I do believe for solar panels.

[Xavier Huillard, Chairman & Chief Executive Officer]

Well, the problem with Jean-Christophe is that the labor in fine questions. I'll answer and let my colleagues maybe come in. The good news with VINCI Energy is that, it's very uniform in terms of business and in terms of geography, in terms of business and geography both. I'd say why? Well because the margin psychologically if you decide to do 6.8 doesn't happen at a drop of a hat. Everyone ends up by delivering six points. The margin is crafted in the mine.

Second thing, VINCI Energy is a huge amount of relatively small deals. But with the systematic determination to seek out the technology value-added and not to follow deals, which would have low value added. And that's another way of boosting margins. So, at the risk of disappointing you Jean-Christophe, the margin is very uniform, both vertically and horizontally. There is no business driving the others.

ICT business costs more than the others generally come at a higher price and over the long term tend to produce quite a good margin. But as long as you're capable once again of refocusing them on the right segments and they're good clients that generally takes a bit of time after the acquisition.

Your second illusion would seem to indicate that the Cobra margin was in very large part coming from major EPC projects. I failed to see why you hold that belief. No, it's the same as VINCI Energy once again. The major projects have the advantage when they generate margins to rest that margin on big volume. The disadvantage is when things go sour, then you see a decrease in the average margin rate. You need to ensure that the margin is broadly equivalent across the two segments mentioned earlier flow business on the one hand and big EPC on the other.

If I were to give you a more complete answer, so you may be right insofar as cyclically EPC tends to generate slightly more margin than the flow business segment, but it's not set to last. If my colleagues wish to add some value added to my words, they are most welcome to do so. Have I said anything silly?

[Unidentified Analyst]

Of course, you haven't. He's nice. He's a nice guy.

[Xavier Huillard, Chairman & Chief Executive Officer]

No, of course not. It's uniform in countries and businesses, not just in my mind. It's a bit in my mind. I mean point is that, these are really mega trends. We're also facing shortage. And so, we're all the more selective because to date, there's a lot of solicitation. Also, depending and that's the lower grade numbers that comes into play. Depending on business sectors, growth is more or less high year-on-year and it can evolve this year. We've seen a very strong momentum in industry, driven probably by energy efficiency and rising energy costs such that industry players need to invest in order to optimize their production, major projects, well less on major projects, but we're seeing notably there were issues in the tertiary major, fewer tertiary projects innovation with our characteristic agility we can grow all our business like for VINCI Construction, the aim is to be selective and to favor margin over volume.

José María, would you like to come in and maybe enlighten us on the price of PV panels? What's true is that we've delayed a bit the start-up of the construction of this first project in Brazil. So it's not to pay over the odds for the PV panels. What's the situation?

[José María, Chief Executive Officer, Cobra IS]

Linked with the price of panels, you know, that we bought in our last three years more than three gigas of PV panels. Then we have some advantage, but it's a fact that panels has increased the prices, 20%, 30%. But it's true that the prices of the energy has increased a lot too. Then the PPAs prices are better, and we can mitigate the price of the panels, the rise of the price of the panels due to our position and we can balance this with the increase of the video.

[Unidentified Analyst]

On the disclose, on panel now?

[Xavier Huillard, Chairman & Chief Executive Officer]

We don't disclose our margin. We've got about 4,000 entities be never ending. The standard deviation of margins at VINCI Energy is far narrow than at Cobra. In fact, we can do a lot better when the standard deviation will shrink more Cobra units and geographies that have above par performance and others sub-par performance.

Next question.

[Unidentified Analyst]

Hi. Barclays. Three questions if I may. First to pick up on what you expect for highways in 2023. I'm not surprised about your message of passenger cars, stability trucks. The amount, the numbers isn't going to be a slowdown that could impact trucks more as we saw in more challenging macro situation in the past. If you could give us a bit more color on that?

Second question on financial expenses in 2023, what type of increase should we work on a cost rate shifted a lot as of Q2, €300 million, €350 million. Is that the order of magnitude all other things being equal excluding acquisition costs?

Third question on PV, so maybe mistaken, I thought your appetite for South American highways wasn't that great because of technical due deal issues what did you see in this asset that makes you confident? Is it the works aspect that attracts you, particularly you're going to do the works or other factors that came into play? Thanks.

[Xavier Huillard, Chairman & Chief Executive Officer]

On truck traffic, Pierre Coppey will correct me if I'm wrong. What's driving truck traffic is the growth in e-commerce unless there's a collapse in the e-commerce segment, truck traffic is set to a level of in our view not decline significantly. I don't know if I said this, but the logistics warehouse is over. So there's not really any possible alternative to ship all these, small parcels from the growth of e-commerce. They can only be shipped by road, because the warehouses are longer roads. That's, a good news. I think I pretty much answered the question. Pierre, do you want to comment on that?

[Unidentified Company Representative]

No, just to recall that 90% of freight goes by road.

[Xavier Huillard, Chairman & Chief Executive Officer]

Financial cost expenses Christian, do you want to take that one?

[Christian Labeyrie]

I think, you've got a slide. I don't know, if it's in the deck or if it will be in the annexes, gives you the share of variable rate debt. Overall, debt you can do all, the math you like depending on the assumptions. That are yours or might be, a great change on average to the year. It's not easy to assess today. Answer to your question, isn't easy. What sure is there will be scope effects, because on the one hand, we've integrated companies that weren't previously consult.

We recover their cost of debt in our numbers. There weren't a case of Canada. So there will be almost [ph] recourse has its own debt about 300 million 400 million in pesos. That's going to impact our financial expense, plus the cost of acquisition for €1.5 billion. That will also impact our acquisition cost. That alone is, a far from negligible effect. But then, as regards the additional cost of debt linked to rising rates on the variable rate, all depends on your assumptions with that, you can do the calculations. I'm not going to do the job in your stead.

We did it with a degree of prudence, as always when we redo the math, a bit more specifically after the close, we see that our budgets were a little over cautious, but we can expect a significant hike in cost of debt in 2023 in light of what I said.

Nicolas, on Travis. So trying to answer your question first of Brazil, is a country, part of the countries that have significant infrastructure needs. We think as we're managing airports, Salvador de Bahia for five years, Manaus and other airports in the Amazon for a year now, it's a country that has federal state administration works well. We found our balance in the country. That's the first part to the answer.

Secondly, it's a yellow field project. We of course, audited the traffic segment that good in technical assistance and traffic and we're maintaining a partnership. We're taking 55 with an invest [indiscernible] Brazilian funds that has a contractor track record for the second segment. That's -- we won't be the constructor, selective strategy. Brazil, is not part of the country where we go and construct. We'll be concessionaire, in this entry and partnership in terms of contract. Also, we've worked on airports makes us confident.

The grantor is the state of Sao Paulo, very big and the elected Governor is the Infrastructure Minister, who previously managed airports. So we're in total confidence on this contract. I would just add that our understanding and our confidence, in this major country with strengthened by the fact that Cobra is -- has been present there for a very long time, and one including very PP very significant deals, high voltage lines. José María, will correct me if I'm wrong, Cobra will have already achieved 20,000 30,000 kilometers of high-voltage power lines in Brazil and has ahead of it a significant potential to continue work on this segment, given the mammoth needs brought about by the energy transition. So it's a combination between the recent understanding that we have at VINCI Airports with the longer presence of VINCI Energy and very historical powerful presence of Cobra makes us believe that this country is a good country in which to invest.

[Unidentified Analyst]

How are you? Yes, good morning. Thank you. From JPMorgan. A couple of questions. First of all a brief question on Slide 55 operating cash flow. I'm wondering operating cash flow at VINCI Energy. Why was it divided by two cut in half in 2022? Next question a few questions that are more about strategy. Growth through acquisition. External growth has resumed. You reinvested in airports. What should our expectation be hence forth? You've got enough in your balance sheet. Will it be further airports or in energy? Will there be other focuses for your growth, particularly the United States? You're well established there in construction and concession. You've got all the know-how.

There's an infrastructure growth plan and the pipeline over there. So what are VINCI's infrastructure intentions for the United States? Lastly, do you have an update on the potential green CapEx plan extension of concessions now that rates have been set? I forgot to write down. I saw you were looking at the slide. Yes. Could you repeat the two, three; points first of all Slide 55 on operating cash flow at VINCI Energy. Next external growth where we headed hence forth and then the United States infrastructure. Any opportunities you will be moving on for at VINCI? And then the motorway concessions plan extension green CapEx any updates?

[Xavier Huillard, Chairman & Chief Executive Officer]

I'll ask Christian to comment on Slide 55. I couldn't find it. I'm looking it up. Well cash flow. I know we’ve build on this if necessary. 2021 cash flow was an outlier. Cash flow was well above net income. But you can explain this. In 2020 we'd had cash flow levels that were way higher abnormal. So we're now coming back to the norm. And additional point at that to secure lead time for supply and secure job sites we had to do a lot of advanced purchasing of material. And that worsened WCR. But all in all we're in the neighborhood of record levels before the outlier years, the atypical years of 2020 and 2021.

On external growth, we're not going to reinvent some new asset class or new business line. We've got enough. We're going to be really focusing on areas of energy and concessions. Our three main focuses: land mobility motorways air mobility airports and now energy and generation of green energy. That's enough. And we're at the very beginning stages of things in that third segment. The next question where we focus what geography to focus on. No doubt about it the North American continent is a place we will need to investigate be more assertive than it might have been in the last 30 years. But we would recall for you that in the area of highways for instance, we can say that the number of projects for concessions motorways, highways in the US. Well, there will be some increase? Yes, but not a huge thing. It's not going to be potentially a major market. So we take a look to see cautiously.

In airports, Nicolas will check if I'm mistaken. The concessions model for airport, full airports in the US, I don't think we really have any sign that might develop in a large big way in upcoming years. Sometimes what happens is the terminals might be an offer as a concession. We're somewhat reluctant. It's a little bit risky to just be responsible and shoulder the risks of a terminal within a much bigger airport hub as a decarbonized energy, yes, a lot yet to be done.

The Reduction Act is going to boost things. No doubt about it a huge boost to anything relating to the environment, particularly renewable energy, specifically -- especially, hydrogen in the US. But we have to move forward carefully. We have to be certain firstly we fully understand and are well rooted before moving on to new projects. But yes, overall we are going to be developing faster than previously in the United States and Canada. But of course, there we've already prospered quite well. So, no new business lines and a focus in all likelihood a greater focus on North America in addition to Latin America as well as Europe, which has been the case. I believe that I've covered most of the points.

The plan nothing really to say here. Why? Well we did say this here in the past. Our whole strategy boils down to what? First of all, to make as many people as possible realize that we have a huge issue of decarbonizing our motorways in this country. If this isn't dealt with right now together, we're not going to manage to meet the targets of carbon neutrality by 2050, especially and this is how I temper recent communication done by the ART, the Transportation Regulatory Authority. We can't await new concessions to take over from the current ones to then begin making powerful gestures to decarbonize.

We've got to start it now, start tackling this now. 2030, we're too late in the day to meet the deadline of 2050. So we're talking about this. Nothing specific to announce to you above and beyond, what I've said already. We're still explaining things. Last week there was a very interesting symposium organized jointly with VINCI Autoroutes and the [indiscernible]. So gradually, we're disseminating this information. We're getting people to realize and understand it's urgent to demobilize -- decarbonize mobility. We have to talk about that before we talk about how to finance it.

[Unidentified Analyst]

Hi, Oddo-BHF. Two quick questions. One quick and one rather more strategic. The first on the Autoroutes and the toll price changes. In 2023 you announced a number of smaller major support measures for your users, notably reductions on short trips, what will be the impact? Will it be material financially for you?

And a slightly more strategic question on expansion in renewables. You mentioned the fact that you confirm the pipeline of 14 gigawatts of projects saying that it's evolved. Okay there are projects that will enter production that are being replaced. But have you given up on certain projects or replace certain projects? If yes why? And lastly still on renewables. If we look 10 years out how do you view yourselves on that business? And it's one year just over one year that you've integrated Cobra. What are you see as your competitive advantages as in that business.

[Xavier Huillard, Chairman & Chief Executive Officer]

I'll answer. I'll let José María come in if he. A year ago we said, we'd be capable produce one additional gigawatt per year. Today, we're saying it's probably a bit more than that. If we were to float a number forgive me if it's not quite right because it's not the same year-on-year. I'd say closer to 1.5 giga and then do the math over 10 years. No, reason why this demand doesn't continue to be there. 10 years at 1.5. That's 15 gigahertz. We plan to retain them even if it means showing the capital with others with ACS, because the company set up to receive the assets developed from scratch by Cobra.

Well it means that in 10 years' time we'll have something of the order of 15 gig a bit more if in the meantime we decide to further on the gigawatt that can be developed on French motorways and 1.2 gigawatts potentially development that can be developed on our airport. So – and that's going to be heavy CapEx wise, but it can generate good EBITDA gradually as of this year, because we're going to have the first field in production.

Competitive edges remain the same. What's Complicated in renewables is to develop from scratch find the land that can be negotiated potentially with its owner that can be quite readily connected to the grid close to a station who's far sufficient to receive the power you're going to produce that we sense, it's going to be not too difficult to develop in terms of environmental planning mission which is a growing concern quite rightly.

What's complicated is that once that's done project engineering of course construction. We're talking about PV. It's not hyper sophisticated in terms of the technology and then production isn't rocket science either.

One final segment, I have – has to be sold that power. And there we're agile Cobra's agile. That's to say there are times when you have to sell some in the form of a PPA because there's a strong appetite for electro intensive industrialist to secure their green power supply. You may know in Europe, there are no longer PPAs available to offer the electro-intensive players unless you wait for 2027 or 2028. There's a shortage of projects to meet the needs of PPA in green power from industrial.

So the key is to take and it depends on the country better regulated tariffs sign a number of PPAs. But also to accept we're happy with that to retain some of the power that we're going to sell in merchant. That's to say we'll sell on the market.

I need to be very agile. The good news is that Cobra is very agile when it comes to finding the right mix and possibly switching mix depending on changes in the market conditions. So our competitive edge is there. It's in the fact that we believe we have the right mix between a local understanding and the global capability so as to develop projects from scratch.

Our purpose isn't to buy ready-made fields not saying that we'll never do it as we did for the highways. But our purpose is first and foremost to develop ourselves and the strong expertise at Cobra on that develop the fields ourselves takes time, but it generates far higher IRR. On the tariffs hang on José María.

[José María, Chief Executive Officer, Cobra IS]

Okay. So on the tariffs well, yes, on the tariffs we worked on the acceptability of the increase by doing three things: a differentiated application of the tariffs depending on where short trips or long trips. We managed to block 70% of trips under 30Ks that is near urban ring rows and all the short trips that is home-to-work trips.

We increased from 20% to 30% the rebate on the Ulys highway subscription passes for frequent users, which obtains a reduction on one regular trip and the E Ulys subscribers who pay their e-recharge 10% rebate secured as of May. We need to do the IT development the cost stemming from all these is a handful of millions.

[Xavier Huillard, Chairman & Chief Executive Officer]

We're talking about 60,000 charging stations use electric. As I said earlier when mid-2023 we'll have that number of recharging stations. Ulys Electric goes well beyond the borders of motorways to give access and also payment for a network of recharging stations that's well beyond the number we have the 70,000 well beyond the number we have just in the motorways. And there'll be a 10% price reduction on offer. That's significant in terms of the service we're providing to the road customers broadly.

[Operator]

Now questions from the telephone. We'll hear French language questions online first. [Operator Instructions] First question from Stephanie D’Ath from Bank of Canada. Go ahead, madam.

[Stephanie D’Ath, Bank of Canada]

Thank you very much. Great results. First question on free cash flow €5.4 billion this year. If I understood in the presentation you're expecting €4 billion to €4.5 billion in the current year. Could you help us understand what the negative impact would be on WCR and capacity increases? The two items that will have an impact on free cash flow in 2023. Could you briefly talk to us about CapEx in Portugal and development of Motus [ph]? Where do things stand there?

The second airport that you want to develop the Montijo and you've also talked Elizabeth. Next dividend payout you usually pay out 55%, 50% 2022 the ratio of 54%. Can our expectation be a gradual increase over the years of the dividend payout ratio?

Next question on the stimulus plan for highways stimulus is significant. What about investment plans? Oise CCI [ph] has announced second February €10 million investments plan. Is this something you're also working on?

[Xavier Huillard, Chairman & Chief Executive Officer]

First of all, free cash flow complicated answer. Therefore I'll give you some time to think about it right or not?

[Christian Labeyrie]

No the bulk of the difference aside from the WCR, which is impossible to predict at this juncture due to interior the fact we have interim amounts at the end of 2022 that you might not have ended 2023. Thinking of CapEx we'll hand over to Nicolas going to be CapEx from Mexico plus all the other CapEx that had been deferred. I don't know if you'd like to answer on this one. MLT show. We need Nicolas get a microphone.

[Nicolas Notebaert, Chief Executive Officer, VINCI Concessions]

Under free cash flow 2022, you've got a major contribution from airports and the data about it. During the COVID crisis we'd cut works that weren't compulsory weren't indispensable. So free cash flow for airports around €1 billion in 2022 whereas it had been further negative in 2021. It's true we'll complete some of the compulsory work like Belgrade will be delivered as foreseen summer of 2023.

We'll also resume around €100 million worth of CapEx that had been postponed. There'll be Gateway Portugal some pretty much worldwide order of magnitude between €200 million and €300 million in airport CapEx this year will be around €700 million and €800 million. That's the order of magnitude but this is wholly normal. We're coming back to the normative level.

Specifically on Portugal traffic, very good in all the airport hubs not only Lisbon. CapEx will be as foreseen including existing airport. Lisbon the Portuguese government as expected did a strategic survey of the environment and it's going to be ongoing throughout 2023 so that they can select the best ways and means to continue with capacity in Lisbon. The solution that's interesting on the table, we make best use of the existing airport in the Montijo basis. And you know that we've got an exclusive relationship once this solution has been opted for to perfect the solution to put it together with the government.

So growth is buoyant end of the year, beginning of the year in Portugal. Growth is well above 2019 at this juncture. And we're expecting -- awaiting the results of that survey. It's on time meeting the deadline by the end of 2023. Thank you. Payout ratio is not exactly 54%. It's 53.5% actually. This is very much in line of what we've said just before beginning of the pandemic. Back at that time we said we recognize the change in the group's profile considering the increasing proportion of concessions, the unchanging role for about 20 years of a 50% payout. We realized it gradually that would need to be increased, that payout.

You will remember we had begun suggesting that present it for the dividend pertaining to fiscal 2019. If memory serves, we were to pay out a dividend equal to 52% payout. But we didn't do that in the end. We didn't pay out in the end due to the subsequent arrival of pandemic. We stand at 53%. Now this just means that we're coming back to the principal. We already talked about back at the end of 2019. Now as to how things will pan out in the future and it will all depend. It will depend on what we achieve and what our investment projects are in the meantime.

Regarding talking about a master plan contract SANEF, in 2022 SANEF had a major plan that the negotiated ASF we had to bypass the western -- bypass of Montpellier. End of 2022, we completed negotiation for the master contract Cofiroute €400 million worth of investments needs to be brought before the ART as well as the state council to be fully authorized. And then we started ASF negotiations in Escota for master contract similar order of magnitude under the rates tariff laws between the different portions of these rates specific percentages there. Thank you very much.

[Xavier Huillard, Chairman & Chief Executive Officer]

Thank you. We're going to move on to questions on the telephone in English this time. Headsets need to be.

[Operator]

The next question comes from the line of Sathish Sivakumar from Citigroup. Please go ahead.

[Sathish Sivakumar, Citigroup]

Hi, there. Thanks again for the presentation. I've got two questions here. Firstly on the concessions specifically in the airport. Can you -- where we are on the pricing negotiation with different airport portfolios for 2023. For instance in Gatwick, I assume it's RPA linked which is plus 12%. So what should we expect like an average price increase for 2023? And secondly on construction. Any color on what is your exposure to civil contracts there in that business? And where do you see like the impact of patient into those contracts? And do we have any pricing tax mechanism over there too? Thank you.

[Xavier Huillard, Chairman & Chief Executive Officer]

Change in airport pricing. So for all our airports, we have tariffs that are not inflation index. I'll spare you the details very mechanism we got 65 airports, but we now have quite clearly we've fully secured the tariffs in Mexico, Portugal, Gatwick and all those prices are fully indexed on the country's inflation. So it's inflation slightly higher than what we see in France. And then there are a few exceptions. But for most of the tariffs, it's also the case in Serbia. It's fully inflation linked. And that's already acquired authorizations and concessions, the authorization of the grantors or the regulate -- obtained -- have been obtained in the country site.

On construction, the situation is that if you look globally, we are in a phase that's very favorable to the growth in civil engineering, brought about by the needs for development and improved environmental performance of mobility, infrastructure, land mobility. That's why the -- we've treated a great number of projects in the four corners of the world, be it in Canada, the US, Europe, France through the Greater Paris projects in New Zealand, Australia. And I'm, no doubt, forgetting a few.

This mega trend is set to continue and it's far and away sufficient to satisfy our activity until as to have this systematically selective approach. What we're seeing is that, once we've noted that the ability to achieve -- of achievement on these major complex projects, not necessarily can't be extended. Competition isn't as keen as it was 10, 20 years ago.

So we can be more selective, but also to proceed in better conditions, because only companies that are capable having the engineering and construction assets to deliver these deals can submit a bid. So we are, I would say, in a favorable phase, not necessarily the case across all geographies in the world.

In the UK, we're heavily invested in HS2. In France, we're cyclically heavily invested in the mammoth investments for the Greater Paris, four mega contracts in design and build will be awarded. I don't know, at least, we’ll submit our bids for these four mega projects during the course of the year.

And looking further out, we will probably have a great many opportunities, given the energy transition and the paramount need to develop nuclear power in our country notably, with as you know, major projects of 8, 14 new generation EPR plants and existing EDF site. So one, the volume is there. Two, we’re selective. And three the key is increasingly the ability to have the engineering assets and to deliver which is favorable to companies such as ours.

[Unidentified Company Representative]

Next question is still in English.

[Operator]

The next question comes from the line of Gregor Kuglitsch from UBS. Please, go ahead.

[Gregor Kuglitsch, UBS]

Hi. Good morning. Thank you for taking my questions. I've got a few actually. So firstly on airports. I think your margin is now actually all-time high. EBITDA margin 59%. But your traffic is still below. So I want to understand if that is expected to increase as traffic further recovers? First question.

The second question is, I believe, in Portugal there was a bit of a dispute on the tariffs. Can you just sort of tell us what happened and whether you're going to get remunerated. I think you're under-recovering of what you're entitled to in the contract.

The third question is, the oilfield you bought at the end of last year. Can you just explain a little bit what happened? What your plan is? How much you paid for it? I believe it sort of shows up in different lines.

And then, finally, maybe a detailed question, I'm looking at the CapEx slide where Cobra's CapEx was quite high, I think like €500 million. Can we just understand what's going on there? What sort of a normal level? Yeah, if you could just help us out a little bit. Thank you.

[Xavier Huillard, Chairman & Chief Executive Officer]

Okay. Margin, so if you compare 2019 to 2022, we didn't have the four months of -- the first four months of 2019 about Gatwick in 2019, [indiscernible]. Sorry, I'm going to switch line.

We didn't have the first four months of 2019, which in 2022 are not so good months because the first four months of the year weren't great with Omicron and not the best months. That's the first point.

Secondly, the non-consolidated assets don't include in revenue. EBITDA doesn't include Japanese airports. But with markedly higher traffic levels we went from 56 to 59 EBITDA between 2019 and 2022.

So we are expecting going forward the recovery in traffic level. Continued growth of the EBITDA margin is not always steady, but we've reached cruising speed through M&A deals because the EBITDA margin of OMA is also useful in the regard. So all-in-all, we're looking at a rising trend of the EBITDA.

In terms of tariffs in Portugal what you saw there were pretty technical discussions sometimes the rules for tariff hikes provide for certain metrics, notably safety. There's a sub metric of the tariff for which the interpretation of the contract could differ.

It's not a key component. And it doesn't contradict what I said, which is tariffs in Portugal approved across airports in particular that of Lisbon are inflation indexed signed and granted. Sometimes there's a little debate on one of the components of the tariff inflated to security and safety.

That's what you read in the media. But the tariffs finally approved are indexed on inflation in Portugal. Regarding Cobra investments, I'll hand over to Christian Labeyrie, quickly and José María if necessary. But let me just say, [indiscernible]. We have to look at it this way.

What does it boil down to? We've got EPC activities in Engineering, Procurement and Construction in oil and gas. And we have had for a long time at VINCI Energy, also VINCI Construction. And very naturally this was also the case at Cobra. We do not intend to fully halt those activities EPC.

As it so happens on that deal in Brazil, we've got a special contractual provision. We are paid for endeavors in oil not in money. So don't see this as our intention to branch out into oil production, but rather we intend to continue exercising our lines of business Engineering, Procurement and Construction.

And with the next requisite flexibility to adapt to the various contractual points that are on offer and the methods of payment that are offered. I'll hand over to Christian Labeyrie, who will give you if necessary, if you want to give you some figures. And then, I will give the floor to José María, if he would like to speak.

[Christian Labeyrie]

I'll try to not get lost in the table because they're all over the place. If you put aside the oil operation, I'll talk about later. CapEx 2022 for Cobra around approximately €500 million. You have to add concessions CapEx that's €150 million. Now the renewable portion here would be broadly approximately €400 million, if I'm not mistaken José María.

Now on the oil point, we bought assets we didn't buy a company we bought assets. The booked cost in 2022 is approximately €800 million. Approximately, there will be an additional to be paid of €150 million approximately next year. The €800 million was more than offset by an advanced payment we received in phraseology called by the offtaker which is a British company that fully funded this acquisition.

So this is a neutral impact actually a slightly positive impact on our 2022 flows. By the same token in 2023 there'll be additional advance. We sold in advance as this is done in the oil industry a portion of upcoming year's production. So ditto next year, this should have no impact or a slightly positive impact. Next operations as Xavier said will generate its own income, its own cash flow. And maybe José María could build on this to tell us how he sees the ramp-up of operation of this deal in terms of production.

[José María, Chief Executive Officer, Cobra IS]

Just a couple of figures on possible production. We generate revenue to cover works construction. We invest in this asset okay? We – as Christian said, we collect a prepayment linked with our capacity, with our technical capacity to extract and a level of barrels okay? Then we have now –– and we are going to repay with the barrels to sell Selestatker we can say that. Then show by the whole production of the field to us with this prepayment they pay us for the next five years of the production of the field. And we have now done seven barrels per day.

We're extracting that. And we think that we can go with our investments and with our knowledge to at least 20,000 barrels in next two years. With that we are going to cover by far the prepayment that shall give us. This is 100% fund. And as Christian said, this must be we must do an exercise of strategy in the future to see if we are going to put Shell for example of [indiscernible] as an investor and we only remind as the operator of the field.

[Xavier Huillard, Chairman & Chief Executive Officer]

We have one last question in English.

[Operator]

The last question comes from the line of Graham Hunt from Jefferies. Please go ahead.

[Graham Hunt, Jefferies]

Yes, thanks very much. I'll make them two short ones. Maybe just on Energy's margins and the guidance. Just wondering why perhaps a bit more optimistic here given the strong trends that you're seeing in this business to go for slightly higher profitability in 2023 rather than defending the current position.

And then similarly on Construction, maybe just on why you do have the confidence to push for margin expansion there. And maybe a bit more color on what the project inflow, where you're seeing those higher margins and what kind of projects you're seeing those in the construction business? Thanks.

[Xavier Huillard, Chairman & Chief Executive Officer]

In Energy, we didn't say, we'd remain stable. We said, we'd be growing both VINCI Energy and at Cobra. We even said we'd grow by at least 10% at Cobra due to the scale of the order book, particularly the big deals in the order book acquired during fiscal '22. In addition, we said operating margin at VINCI Energy should remain at the record level where it set itself in 2022. Cobra's margin will remain among the top of the class, top of the standards in the global profession. So you can do your own modeling based on that.

Regarding construction, we have to remember that in the world of construction, it's always allusive to think you can grow revenue and margin at the same time. And yet our view is that the current margin is highly satisfactory because it's growing, but we haven't yet reached the end of that effort. We feel we need to target operating margins above the 3.8% achieved in 2022.

The only way to achieve this is to be ever more selective and to never target revenue growth. Revenue growth can happen after the fact as a bonus after adhering to your good principle, but not in addition any strategy designed to up margin via increasing revenues leads to problems and big disappointments in terms of margin. That's quite clear. This is very much in VINCI Construction's corporate culture. I don't know if I've said this right and I'll be corrected if mistaken. But I think 120,000 employees of VINCI Construction feel the same way.

[Xavier Huillard, Chairman & Chief Executive Officer]

Okay. As everyone finished the questions, thank you to you one and all and we can now meet over lunch. Thank you.