EuroBusiness Media (EBM): VINCI, the world's largest concession and construction group, reported 2013 results. Xavier Huillard, welcome. You are the Chairman and CEO of VINCI. How would you characterize VINCI’s financial performance in 2013?
Xavier Huillard: VINCI has once again turned in a strong performance in 2013. We owe this to the fact that each of our business lines, each of our divisions and each of our business units held fast to our fundamentals in an often difficult business environment. Our managers constantly apply this rigor which is now second nature. VINCI has proven yet again that its business model is sound, and this can be seen in our 2013 numbers. In fact, we actually did better than forecast, with revenue up 4.4%, EBITDA up 3.3% and perhaps best of all, net income increased 2.3% where we were expecting a slight decline.
EBM: And what is your update on your Concessions business ?
Xavier Huillard: In our Concessions activities, the key event was our acquisition of ANA, the concession holder of Portugal’s 10 airports, which allowed us to multiply by four the size of our airport activity. We also increased our stake in ADP to 8% and now have board representation. We have been saying that the airport concession business is a strategic priority for us, and now we are following through: we are expanding in a market that is benefitting from the growth in worldwide air traffic.
EBM: And what about your Contracting business ?
Xavier Huillard: In our Contracting business, our international expansion outside of Europe continued to move ahead in 2013. We won new contracts in Russia, the US, Africa, the Middle East and Asia by deploying the synergies of our various business units. Once again, we are executing on a key strategic priority: expanding our global footprint in growing international markets.
EBM: How did things go in your markets closer to home in 2013?
Xavier Huillard: Our European activities mostly held their own, sometimes we had to restructure in order to protect margins in low growth environments.
I mentioned before our strong performance, and this was especially the case in France where we generate about 60% of our revenue. Motorway traffic continued the improvement that started in 2012, for both light and heavy vehicles. And fast-tracking the synergies of our different motorway networks allowed us improve our operating performance again. In Contracting, it is worth pointing out the ramp up of the largest project in our history, the Tours-Bordeaux high speed rail line, which combines the expertise of all of our contracting divisions. It is advancing at an impressive rate and is on schedule. We have also worked on some fantastic projects such as the Stadium in Nice, the Luis Vuitton Foundation and the MuceM in Marseille. But we should not forget that underlying these high profile contracts are our smaller bread-and-butter projects, in construction, road works and electrical engineering, which make up the bulk of our activity.
EBM: VINCI was quite busy managing its asset portfolio in 2013. Some analysts are even calling it “asset rotation.” How would you define your policy in this area?
Xavier Huillard: It pretty much follows from our overall strategy: straight-forward and proactive. Our aim is to create value in the areas which we have targeted for expansion. This is what we are doing in the airport management business.
We are trying to do the same thing at VINCI Autoroutes: we are ready to invest 2 billion euros to grow and improve our motorway networks in exchange for an extension of the concession contracts. This plan could be signed in the coming months, and you cannot come up with a better example of a win-win-win scenario: the French economy and construction sector win because €2 billion of job-creating investment would be made without public financing; our clients win because the motorway networks would be improved; and finally VINCI wins because its concession contracts would be extended.
Our expansion strategy could lead us to open up the capital of some other assets. This is why we announced the sale of a stake in VINCI Park’s capital. VINCI Park needs to invest in order to acquire new long-term contracts, accelerate its international growth, and to retain its lead in services. The move is designed to give it the resources to do that without stretching the Group’s balance sheet.
And lastly, we can also point out the reshuffling of the capital of CFE, our former Construction subsidiary in Belgium. VINCI used to own 47% of CFE but this was not sufficient for us to pursue our strategic ambitions. The transaction that we completed with AvH allowed it to become majority holder of CFE and for CFE to become 100% holder of DEME, one of the world’s leading dredging companies. VINCI now has a 12.1% stake in a group with good growth prospects, and we were able to reduce our net debt and increase our 2013 net income.
EBM: And finally, how is 2014 shaping up?
Xavier Huillard: Given the positive trends in Concessions and the high level of our Contracting backlog, we are feeling rather confident. We are targeting a stabilization of our 2014 revenue on a constant structure basis. On an actual comparison basis, revenue will be impacted by the deconsolidation of CFE at the end of 2013. As far as margins are concerned, we are counting on a slight improvement in Contracting. VINCI Autoroutes EBITDA should hold up. And finally, the sale of a majority stake in VINCI Park, on which we are currently working, would positively impact net income.
I would like to finish by emphasizing what I said at the beginning: VINCI will rise to the challenges of 2014 as long as our managers continue to hold fast to our fundamentals: rigor, selectivity, margins over volume. These values form part of our collective DNA, they are the foundation of our performance on our European markets. And when you mix in to that our international expansion strategy combined with the long term needs for countries worldwide to develop and modernize their infrastructure, VINCI has a bright future ahead of it.
EBM: Xavier Huillard, Chairman and CEO of VINCI, thank you very much.
Xavier Huillard: Thank you.
