VCISF - Vinci SA (VCISF) 2023 Annual Results Earnings Call Transcript

2024-02-09 00:24:02 ET

Vinci SA (VCISF)

2023 Annual Results Earnings Conference Call

February 08, 2024 4:30 AM ET

Company Participants

Xavier Huillard – Chairman and Chief Executive Officer

Christian Labeyrie – Executive Vice-President and Chief Financial Officer

Pierre Anjolras – Chairman-VINCI Construction

Nicolas Notebaert – Chief Executive Officer-VINCI Concessions

Arnaud Grison – Chairman and Chief Executive Officer-VINCI Energies

Conference Call Participants

Jean-Christophe – CM-CIC

Luis Prieto – Kepler

Gregor Kuglitsch – UBS

Nicolas Mora – Morgan Stanley

Presentation

Xavier Huillard

So, good morning to all. Thanks for joining us this morning for the Presentation of our 2023 Annual Results. It's a rather special presentation. You'll recall Jean-Christophe Lefevre-Moulenq is attending for the last time and I'm sure later we will express our affection to him. For 35 years he's been following the construction business in general and VINCI for 30 years. We should almost have hired him. Christophe we're going to miss you, but you'll no doubt come back and attend our various meetings. So just a few words on the photographs you recognized on the cover page, the preferred stadium of the French people. We're proud of it because we built it together with Bouygues. We know we've been operating it for over 25 years. A 30-year concession is probably including globally the stadium that will have hosted the greatest density and diversity of major events. You all attended the Beyoncé Concert in 2023, the World Rugby World Cup in 2023. You're all going to attend the opening or closing – closing ceremony of the games to be held at the Stade de France as well as that of the Paralympics. So we're extremely proud of this and has been present in the group since this existed under the name of VINCI. And it's an asset to which we're particularly attached.

And this shot shows that the amendment pertaining to the western bypass of Montpellier that underwent a few difficulties is now back on track. The amendment was approved at the end of last year. We're going to be able to start the work, keenly awaited by the local population. There are people sometimes who are against it, but essentially widely awaited by the locals. And this is just to illustrate defined success of VINCI Airport. The Dominican Republic has granted it a 30-year extension of the concession that will run through to 2060. This is an asset that we've been managing since 2016, which was expiring in 2030. We've extended terminals, recertified environment projects, a new terminal on Las Américas Airport in Santo Domingo. And this, of course, was useful in convincing the government made sense to team up with us through 2060. A symbolic shot of our resolve to roll out highways beyond French borders, we acquired with the closing in May 2023 Entrevias managing 570ks of highway in São Paulo and section after section of this dual carriageway. That was inaugurated for two new sections very recently.

Next, VINCI Energies signed with SENELEC, the Senegal Power Authority, a fine project, 1,350 high voltage power lines with the transformer substations to offer universal access to electricity. This success, hence the photograph, is a fine example of what we call networking, the ability of the various entities to come together to deliver successes. Of course, local teams here, but great many French teams through French be used and also Moroccan be used. It's the addition, the combination of these three strengths that allowed to achieve this fine success. Still, HV lines, this time a Cobra in consortium with two partners, one a significant PPP 35 years on the design, financing, building, operation and maintenance of several hundreds of lines of HV and associated substations to collect green power from new fields inland to deliver it to the coast where the major consumers are, New South Wales, Australia.

It's also important to show you this one because it's part of Cobra Specialties. Cobra was a pioneer in PPPs awarded in Brazil for HV lines. They've won and delivered about 20,000 kilometers, maybe 22,000 kilometers over the past 20 years. It's symbolic because it's proof positive of the need, the needs for the energy transition as such that public purse isn't enough for a number of countries before Brazil, now Australia, a number of countries use this to accelerate this transition and to muster private money through PPPs. We think this PPP model is going to continue to be rolled out on the energy front, perhaps not on all countries, maybe not in France, but in many countries worldwide. And we're of course very comfortable with this concept because PPP is what we do well and engineering the building and maintenance of HV is a specialty both of VINCI Energies and Cobra.

But in the interim, before the world has reached a fully electric world, we'll have to continue to use for a while transition energy, gas, LNG. We need producers, storage tanks. We've got a real expertise through VINCI Construction in the engineering building of cryogenic tanks for LNGs. We built the three tanks shown on this photograph and the client for design and build entrusted us with a fourth tank here in Rotterdam and an artist's view of a wonderful joint and intergenerational project event by VINCI Real Estate in downtown Angers. It's both mixed and intergenerational. It's a big tree, a lot of plants everywhere. It's got a nursery, a senior residence, urban B&B, rooftop, offices, vegetable garden for those interested and of course housing units with the undulating terraces that you see with wall-to-wall plants.

So this is really just to get a better understanding of the group that's sometimes a bit difficult to understand. It's not our sense – that is VINCI. So to return to our 2023 performance, they can be described as excellent, very good quality. Revenue and earnings are sharply up, once again reaching record levels. We continue to expand internationally. That was clearly our roadmap of the past to international now accounts for 57% of our activity. Free cash flow, as Christian will agree, has reached an outstanding level exceeding all expectations, including our own net financial leverage is sharply down. Cherry on the cake order intake has renewed very satisfactorily. So we're confirming this year after year. Collectively, we're very resilient for two main reasons.

The first is that we got the right value-creating model in the three business lines, concessions, energy, construction, but we also have the right organization and management model, which means that we are a community of entrepreneurs, very involved, agile, as seen during COVID, but also extremely rigorous and constantly seeking the right balance in the three dimensions that achieve global performance, economic, environmental, and social. In particular, this year it confirms and illustrates the opportunities that lie ahead with the very powerful drive on the back of the energy environmental transition. In all our activities, we're directly involved in what is happening regarding the future of the planet. It's a central challenge for our businesses today. We're convinced that it will be increasingly so and increasingly defining for our businesses.

Going forward, I decided that the leading thread of my swift presentation will be this economic energy and environmental transition. So in concessions, low-carbon transport infrastructure is the precondition so that we can continue to move about, travel, ship goods and, of course, the mobility needs have never been so high worldwide. And since transport represent a significant share of CO2 emissions, the world won't achieve net zero if it doesn't look at decarbonizing mobility. It's our conviction. That's what VINCI Autoroutes is – with the low-carbon highway initiative, making available charging stations for passenger vehicles. That's now done. There are charging stations everywhere. Across all the service areas of VINCI Autoroutes, trialing dynamic recharging by induction or rail in the ground, it's being trialed on two sections of the A10, just outside Paris. And once we get the result, that is around 2025, we'll have to find the ways and means in conjunction with other stakeholders and the state, if it's smart, to roll this out across certain corridors, so that at particular trucks, but not only, can partially recharge on the road, offering trucks with electric batteries that are lighter because some of the electric power is captured on the road....

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