VINCI, the world leader in concessions and construction, reports full year results for 2012. Xavier Huillard, welcome. As Chairman and CEO of VINCI, how would you characterize VINCI’s financial performance in 2012?
VINCI proved once again that, in a pretty difficult environment, its business model is well suited to withstand negative market trends, to pursue its strategic objectives in a methodical and opportunistic manner, while at the same time creating shareholder value in the short, medium and long terms. Our numbers speak for themselves: growth in the top line (+4.5%); improvement in operating income, net income and EPS; a high cash flow; growth in the backlog; and reduction of net debt. Thanks to our M&A efforts, we have increased the footprint of our contracting activities in Canada, Germany and India. And we will have profoundly transformed our Concession business outside of France with our purchase of ANA in Portugal which should be finalised soon. And finally, VINCI was very proactive in terms of shareholder remuneration in what was a very volatile equity market: we returned over €1.7 billion to our shareholders in 2012 in the form of dividends and share buybacks.
What is VINCI’s secret for obtaining such results?
Adrian, of course, there is no secret. Our people are disciplined and motivated professionals focused on profitability and cash flow. Given the size of our backlog, our geographic diversification, which we will continue to expand as we move forward, and our largely flexible cost base, we can step back when market conditions become less favorable. And of course, on top of that, we benefit from our French motorways which showed in 2012 that they can withstand negative traffic patterns and still deliver modest top and bottom line growth. VINCI’s business model is adapted to create value for our stakeholders when times are good but also when times are tough as they are today. We have set ourselves on a trajectory that should allow us to weather rough seas over the next few quarters and come out with better prospects and sustainable profit growth.
Could you provide us with some more information on the ANA transaction? Why is this an attractive proposition from your shareholders’ perspective?
There are many reasons. The airport business gives us access to high top line growth rates and EBITDA margins, and ANA is no exception. It is well exposed to growth in buoyant economies in Latin America and Africa. It is also a major destination for Europeans, especially tourists and Portuguese expatriates. The concession contract is for a period of 50 years, there is a limited capex requirement over the next 10 to 15 years, and we have the opportunity to expand revenue streams from retail activities. We also will be operating in a very sane regulatory environment, plus we have a very clear framework for deciding with our grantor if and how a new airport in Lisbon can be put in place. And finally, we have an excellent management team already in place. The transaction is not expected to close until sometime around the middle of the year and this transaction will be accretive on Day 1.
How would you characterize your attitude as you begin the year 2013?
Each year has its own unique opportunities and challenges and 2013 should be no different. We have a very high order book, 2/3 of which is scheduled to be executed in 2013. We also have the ramp up of our Tour-Bordeaux high speed rail project, with this year’s activity expected to approximately double compared to last year to around €1.3 billion. We will also have the full year impact of our 2012 German acquisition in the energy infrastructure sector. On the Concession side, the full year traffic trend on our French toll roads will depend on GDP growth which remains uncertain today. We just opened a new section of the A89 near Lyon which will add both traffic and higher non-cash charges this year. We should also benefit from a higher contribution in our airport management activity. On a more cautious note, order intake slowed in the 4th quarter last year due to our selective approach to signing new projects. A slowdown is expected in French local authorities’ spending this year. This could be partially offset by a small boost that traditionally occurs before municipal elections that will be held in 2014. Overall, 2013 may be a challenging year, but, as we have proven in 2012, we know how to cope with such situations.
Which leads to me to my final question: what are your financial targets for 2013?
Given everything I have just mentioned, we expect revenue to be stable before taking into account the ANA or any other potential acquisitions.
Xavier Huillard, CEO and Chairman of VINCI, thank you.
Thank you.
