EuroBusiness Media (EBM): VINCI, the world's largest publicly traded concession and construction group, just reported its financial results for the first six months of 2011 with both bottom and top line growth each exceeding 15%. Xavier Huillard, welcome. You are Chairman and CEO of VINCI. How should the market interpret VINCI’s performance?
Xavier Huillard: Well, Adrian, I think our first half results speak to the past, present and future. The past because we have demonstrated our ability to overcome difficult periods such as the one which began in 2008. The present because we’ve just had arguably one of the best six months ever in terms of activity and profitability. And the future because our backlog is at an all time record high.
EBM: VINCI appears to perform at the top of the pack on a consistent basis. Why do you think that is?
Xavier Huillard: Well, it’s probably a combination of experience, diversity of our business expertise, growing international presence, and a healthy dose of caution. We were probably among the first to actively promote a “margins first” policy, and we have relentlessly pursued that policy even when it meant incurring negative top line growth. You know, in the contracting business, the easiest thing in the world is to “go for growth.” When that becomes the main consideration, it can really be very dangerous. In our case, we kept our nerves throughout the down cycle that started with the collapse of Lehman Brothers, and we are reaping the benefits of that strategy now. This is not new; we are and will remain consistent in our approach.
EBM: VINCI has won Europe’s largest railway concession with the signing of the High Speed Rail contract linking Tours to Bordeaux. What does this mean for the Group?
Xavier Huillard: This project is the most perfect validation of our dual approach business model: combining concessions and contracting activities. With a total investment of close to 8 billion Euros, the Tours Bordeaux project will provide our three contracting branches—which are Energies, road building and construction—with over five years of activity after which time we will operate and maintain the newly created rail infrastructure for almost 45 years.
EBM: You’ve been quoted in the local press as saying that VINCI is interested in the airport concessions that Hochtief has put up for sale. Could you explain what the strategic rationale is behind such a move?
Xavier Huillard: I think, Adrian, it is more exact to say that VINCI is interested in expanding its concessions business, and the concessions business means in our case transport infrastructure. That means motorways, parking, rail lines and also airports concessions because traffic growth is in this sector above GDP in the long run. So expanding our airport concession business is one of our strategic priorities. We have recently increased the scope of this business in France with the addition of the Nantes airport and, yes, we are interested in opportunities outside France.
EBM: Finally, in view of VINCI’s excellent first half performance, the market expects an upward revision to your full year guidance. How would you characterize VINCI’s updated forecasts?
Xavier Huillard: Adrian, we have raised our guidance but in a prudent manner. No one would disagree that we are definitely living in “interesting times.” Market volatility is at an extremely high level. We’ve seen growing uncertainty surrounding the macro outlook for several of the larger OECD countries, and some GDP forecasts have already been revised downwards. At the end of June we were ahead of our guidance, which I remind you was a 5% plus growth of the Group’s top line. We have now raised this to around 7%. This comes from a combination of two factors. First, six months ago we thought that the top line of our French motorway concessions would grow more than 4%. Yet at the end of August, we are at +3.7% and we now see the full year growth slightly below 4%. Second, given the very good first half performance of our Energies, road works and construction activities, the Contracting top line should grow between 7% and 8%. In terms of Group net income, this should be up between 5% and 6%.
EBM: Xavier Huillard, Chairman and CEO of VINCI, thank you.
Xavier Huillard: Thank you.
