Speaker #1: Please enter your dial-in PIN and press pound when finished.
Speaker #2: Vinci confirms in 2026 guidance, further growth in its revenue, operating earnings, and net income attributable to owner of the parents, and a free cash flow that could reach $6 billion.
Speaker #2: But this guidance does not factor in the adverse impact of a possible increase in France's tax on long-distance transport infrastructure operators, mainly those operating motorways, which is currently being reviewed by the French Parliament.
Speaker #2: As an initial estimate, the potential P&L impact of such a measure on Vinci's operating earnings and net profit in 2026 would be an additional charge of around $450 million to be paid in 2027, so I insist it means that it wouldn't have no cash impact in 2026.
Speaker #2: So we would like to thank you for your attention, and before taking your questions, I will emphasize that I will not make any additional comments on the current discussion that the French Parliament regarding the national budget for 2027 has this discussions are at early stage, and sometimes quite erratic if I may say so.
Speaker #2: Now it's time for the Q&A.
Speaker #3: Thank you so much. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad, and wait for your name to be announced.
Speaker #3: To withdraw a question, please press star 1 and 1 again. Please stumble, we'll compile the Q&A roster this will take a few moments. Once again, if you would like to ask a question, please press star 11.
Speaker #3: And now we're going to take our first question. And it comes through the line of Luis Prieto from Capital Shure. Your line is open.
And it comes from the line of Louis PTO from Capital. Your line is open, please ask your question.
Good, good afternoon. Good evening Louis. PTO here. Thanks a lot for taking my questions.
Just just 1 for me today. Um, there is mention of various disposals in today's statements. Uh, that you just made reference to um, in this context, I wanted to take a chance to ask you about potential further, progress in The Wider portfolio review that you have commented about in the past. Thank you.
okay, so so sorry, your question, I would say
It's there will be no, major change or behavior in terms of review of or portfolio. That means that indeed, it's an ongoing process. But at this stage, nothing has changed compared to what we have already said since the beginning of the year.
Understood, thank you.
Thank you.
Dear participants. As a reminder, if you wish to ask a question. Please press star 1 1 1 on your telephone keypad, and wait for a name to be announced.
And now we're going to take our next question.
And the question comes line of Christian Nadal from UBS. Your line is open, please ask your question.
Hi, thank you very much. Um, could I ask you in terms of the inflationary pressures that that we're seeing out there? Um, could you give us a bit of color around? Um, your confidence, um, around the, a bit margins in construction and and energy systems
you believe you can um you can maintain them stable and and growing year-over-year um any any color on your ability to to pass through the
Inflationary pressures.
The second I can ask on the share buyback.
Um, when you decide, what's the appropriate level of shared, by by that you're doing? Could you elaborate a little bit of the factors that you're considering
You know, I I could argue that.
You know, the share price is at a at a low level at, maybe an appealing level to, to buy more than you're currently doing, what would be the, the counterargument of doing that.
um and um maybe the the last 1, if if I could kindly ask you um
Yeah, the the yields are increasing. Um, could you, could you talk a little bit about the impact, um, on your on your interest cost? Um, I guess on your, you know, you have some refinancing that had, you have some, some, um, some of your debt that has a variable component. Um, so could you, could you help us with a bit more detail? How how you're thinking about um, about this aspect? Thank you.
So okay. Uh so I'm showing you your first question about inflation. So first, so uh, your your best position is against inflation is the fact that most of our contracts are very short.
Uh, for instance, both for Energy Solutions and Vinci construction. The huge majority of the revenue is done with contracts which lasts a few weeks or a few months. So that means that we are able to adapt very quickly for pricing to the inflation pressure and for the bigger contracts but it's forbidden since months. Now, since Co has been set to take 6 price contracts. So that means that for all big jobs, all of our big job are either Cost Plus jobs or
So uh drugs is escalation clause, which protect us against inflation knowing that in terms of a cost we don't still have so much inflation pressure in your cost but when it when or if it occurs, we are confident that we thanks to the granular granularity of a contract. And this I would say discussion close or contractual schemes. We will be able and it was the the case in the past to pass through inflation to our clients.
So, that's the answer that inflation about share buyback. Indeed, we have Asos says the question given the the level of the price of the share that indeed, if
stay in line with what we have decided since the beginning of the year knowing knowing that as I did mentioned, we are already among the
first player.
In the Shai back in France, but we want to keep a very strong liquidity in our balance sheet because, uh, we don't know what will happen in the next month in terms of refinancing. So that means that we want to be able to choose the right window in order to issue on the uh, and not to feel Under Pressure, to issue Bonds in a bad conditions knowing that also, we have started to refinance in advance some of the uh, bonds which will mature next year.
so the first explanation, why we have kept this level of 2 billion, and the second explanation is we are convinced that the the period will bring us many development opportunities, as it was the case,
During the Euro crisis with the acquisition of Anna during the co the acquisition of uh Cobra which did create a lot of value for the groups. And so we won't be able to catch any opportunity which could come in the coming month. So that's what we have decided.
To keep low liquidity in the balance sheet knowing also, that probably even the, the, the situation, the, the level of the price of the share will probably would stay quite low in the coming month. So with the the figure at the end of the the year, and for instance, we will decide what will be on policy for next year.
And in terms of interest rates. So perhaps to summarize, what is interest rate management policy? So
today we have half of for Road dates, which is in variable rate, Alpha, which is in the fixed rate and in front of the date in variable rate. Uh, we have almost the same amount of cash which has also almost the same remuneration of the cost of the net date. That mean that when there is an increase of the interest rate, indeed, it costs more for the gross date, which is on the value in variable rate, but we have to compensate an increase of the revenue generation of our cache, which is rather neutral for Vinci.
That's very helpful. Am I allowed to ask 1 more if if it's not so much trouble,
Thank you. Just could I ask you on on your on your movement in that debts? Um, if if I calculate well, I think your net debt was reduced by around 2.2 billion in Q3.
okay.
Which is a higher a higher reduction than you've done over the last 2 years. So, just curious if there's there's is all of that reflective of of the free cash or generation or other other movements in there around the effects or other movements, we should keep in mind. And I'm asking from the perspective of you, you've reiterated the the around 6 billion, free cash flow targets for this year. So I was curious a bit if you can give us more color of the moving Parts in the current environment. Um, I don't know if there are some positive and some some some headwinds to to reaching that Target that you could, you could elaborate on, thank you.
And you say to you have, made yourself your calculations. So I will not give you a precise, see you but you have made your calculation. Indeed, you have all the parameters to
I would say make a rough calculation of the free cash flow. You know what, what our m&a expenses? What is your Shai box and so on and so on. So that means that indeed regarding the free cash flow. I would say.
All the indicators we have at this stage show that indeed, we are confident that we are be, are going to be able to reach the items in term of free cash flow. And as you did mention in the that, I would say, according to your own calculation, it's even a little bit better now that it was last year at the same stage of the year.
Thank you. Now, we're going to take our next question.
And the question comes to line of Nicholas Mora from Morgan Stanley. Your line is open. Please ask your question.
Yes. Good evening. Um 2 or 3 for me, please? That'd be quite quick. So first 1 on on France? Can you uh tell us overall a little bit? What you're seeing on the ground?
We?
Met, you mentioned a soft investment back drop, uh, from from the municipal cycle, uh, and construction. Mostly, I think we have that in mind. Are you seeing anything any kind of slow down or so, in?
In the energy space and in terms of water intake, uh, of late.
We're just trying to access a little bit. What uh what the uh uh the current environment could be carrying in terms of, in terms of risk of further slowdown. That's first point. Second point on COBRA, the the auto intake was was excellent in Q3
You mentioned in the release of a fair amount of Voters left and right, especially in data centers. Anything else you want to mention any uh, in terms of maybe
A flow flow orders versus versus large orders, and what's really driving that that print and last point on m&a. Um,
I think you've got you've just closed all 4 1 AC unit, you got 1 left.
To be delivered by the end of the year. So, Safeway concessions. Are we still on for
For the year end for the closed. Uh I think that would be it. Thank you.
Regarding the friends. Uh, I would say situation is very contrasted, so starting with the V energies. As you can see in the figures in France, both revenue and other intake is still very Dynamic and we don't really anticipate according to the the news, we have a change in the coming week or month. Demand is still there, especially in the infrastructure and building solution businesses.
Cool. That's 12 years. I would say, 4 V, construction situation is again within Vinci Construction.
Contrasted that clear that indeed for the road business. So all that business there is I would say quite a decline in them both of order intake and revenue. So it's partly due to the Electoral electoral cycle. But also indeed, there is some reduction of the investment in this in this field and probably it will continue in the coming months for this business.
On the opposite. There are still some business which is, which are still quite sustained, for instance. So everything which is linked to a water treatment is still quite a skills, strong Dynamics.
And also build for the building, uh, business.
I would say.
that clear that for the new,
Buildings as the market is quite difficult, but it's compensated by the refurbishment business.
which is still very
Strong. But that's clear that indeed, I would say for Vinci Construction.
Trans is not the most dynamic part of the business and we anticipate that it will continue like that in the coming months.
So that was about France. The second question.
So as you see, the indeed order insect was very strong in Q3.
So it's I would say the outcome of 2 factor is that I can say. Order. Insect is still very, very strong in the flow business, especially in Spain.
Namely the cooling plant for a finesse in Portugal. There is also a Peavey contract in Mexico, where Cobra is disclosed, CP to see this week, or last week.
and,
the synchronizer for red electric, there is 3 big jobs, which have, which have lifted uh,
Other intake of Cobra in Q3.
And the last question was about the Safeway but Safeway we are still waiting for some authorization in India, but uh, it's on track and we are confident that the closing will occur before the end of the year.
and I would say,
By year end, it's very unlikely that there will be significant uh, other acquisition which will be closed. Probably I will say a few smaller ones for initiated energies as usual but but the significant 1 know, it's very unlikely.
Excuse me, Nicholas. Any further questions?
No, sorry, sorry I was on mute. Uh, no nothing, thank you very much.
Thank you so much.
Your participants as a reminder. If you wish to ask a question, please press star 1 1 on your telephone keypad,
Or just a moment. We just got another question. Come through just give us a moment.
And the question comes line of Martin vo from Bank of America. Your line is open, please ask your question.
Oh yes, good afternoon, thank you. I, I I've just got 1 question on a Motorway traffic in, in France. Uh, we have been reading in the Press about shortages of of fuel in some of the petrol stations in particular, diesel, uh, could you could you comment, has that impacted your, your traffic volumes has there been perhaps any hesitancy to travel due to this shortages or the performance that you are seeing is mostly driven by expensive fuel prices. Thank you.
No, no. So there is no shortage of the as well on our motorways. I would say the declined traffic is only due to the high price.
Of gasoline or gasan. But I would say there is at this stage. There is no shortage of the ideal or other fuel on our Motorway.
Thank you, Martin.
Now, we're going to take our next question.
And the question comes from Jose, Manuel aoy, from Santa, your line is open, please ask a question.
Thank you, just 1 question for me. I wanted to ask you about your opinion on the minus Lane Market in light of the recent outcomes. We have seen in 2 in 2 projects. Is this a market that remains attractive to 1 C and could see the participating and the current conditions in future? Thank you.
So I would say you probably certainly know what your views regarding the management. I would say that still that we need to have certain conditions to be made to be made in order to build for such land lines. We did try North Carolina, we were not selected and so we we are still open.
Uh,
to be for management where these conditions are made.
Now, when we see the figures for the last 2, beads 1 by ferrovial, that's clear that we we don't know much detail but when you, we only read the figures.
Try to understand better, what is the economics of this kind of Bill? But indeed despite that I would say if there is 1 management or management.
Which meets the required conditions in order to be attractive for all that we are still open.
Excuse me, any further questions from you?
No, thank you. That was all. Thank you very much. Thank you so much.
Now, we're going to take our next question.
And the question comes from Larry kin from RBC Capital markets. Your line is open. Please ask a question.
Uh hi. Good afternoon, just 1 question um and and no problem, if you can't answer this, give me your comments to the start. But are you interested in bidding in, um, future confession and will potentially in Time auto returning opportunities? How would you approach them? Uh, given you know, current budget proposals, would you?
Just a bit for them at the high risk premium. What's your thinking about that? If you can comment, thank you.
I would say.
uh,
First uh indeed we are under no pressure to did for new conversation of not always in France because we are already explained we have since 20 years, we have a good. The Vinci developing share part in China and so on in order to uh not depend on the future of the French Motorway, concessions
Now indeed, when it will happen, it will depend on the condition that clear that what we experience since a few days or few weeks, we are going to be even more cautious. So we will see what will be the condition. But it's
Too early to tell, I would say we are open, we will see, but we will be under no pressure.
To win new, French motorways, concession in in a few years.
Great. Thank you.
Thank you.
Now, we're going to take our next question.
And the question comes line of Graham hunt from Jefferson is open. Please ask your question.
Yes, thank you. Just 1 From Me. Maybe Just quickly on the data center Outlook. You signed a contract in Iberia? I think. Um, maybe is this a
You've talked about, you know, a much larger scale of opportunities in Europe. Uh, this year, should we see this order is, is there a lot coming behind that, um, is this, um, kind of the scale? We should be expecting, um, just a bit more color in terms of what you're seeing over the next 12 months, in terms of the data center pipeline would be helpful. Thank you.
I think the data center, so that's clear that if you're a member of the boss of kubas need, I would say
we speak about the significant amount for the the sensor especially in Spain. So as you probably know there is I would say
so drugs of decree in Spain, strengthening the conditions, in terms of electricity supply for the new data center, which has I would say, uh,
Make think again, some clients before launching the project. And also, there is some delay in terms of construction permit and so on. So that means that the project are still there. I would say it's
Slower than what we were expecting due to this factors that that clear that this project are still on the table. We are still well positioned position, when this, uh, project will come.
For this new project. So to summarize, indeed we are we are still strong expectations in the DC field for the name coming months.
But it's slower than what we were anticipating in July.
Understood, thank you.
Thank you, Graham.
dear participants as a final reminder, if you would like to ask a question, please press star 1 1 on your telephone keypad,
The speaker surround offer the questions for today. I will now like to hand the conference over to your speaker. Theory, maril for any closing, remarks
No, thank you. Uh
See you soon.
That does conclude our conference for today. Thank you for participating. All disconnect have a nice day.
