Full Year 2024 Vinci SA Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Elodie Rall - JP Morgan - Analyst : (interpreted) Thank you very much and congratulations for this final presentation personally, Xavier. I'd like to start with maybe a hot topic right now. We've got politicians pushing through a budget through Parliament right now in France. Do you think that the increase in taxes is likely to be temporary? And furthermore, this is maybe a question for the Board, but everyone is wondering what you will do when it comes to the dividend in 2025? I know that you're probably going to answer that, that will be seen in 2025, but we'd like to get some visibility. Are you expecting payout policy to be a little bit more ambitious to protect the dividend and to offset the tax? That's my first question. Xavier Huillard - Vinci SA - Chairman of the Board and Chief Executive Officer, Chairman of the Executive Committee and Chairman of the Management and Coordination Committee (interpreted) Well, I guess we need to hire you Elodie, you understand everything immediately. As to the temporary tax, honestly, I can't answer that. It's quite a simple equation really when you look at it, that tax only exists because this country hasn't been doing anything to keep it spending under control for decades. If we really start to address the spending issue, then we can be confident that the tax is going to remain temporary. However, if nothing is done when it comes to public spending, then the situation is going to be the same next year as it was this year, meaning that to square the books, we have to take money out of the pockets of people who do have some in those pockets indeed, as we're seeing through this tax increase. So I couldn't answer that. I tend to prefer to be optimistic. It's my job to be optimistic. So I believe politicians. I believe that most of them maybe not all of them, but most of them, the important politicians have understood that we have reached a breaking point, and we're going to start to see an eviction effect that would actually reduce tax income. That's not our case, but it's not unlikely that some people might start to, well, look around and think that, well, if they need to invest in a new industrial unit, maybe building it in a country that is ridding them with taxes, isn't the best idea? This is a theory from a major economist. There comes a point where actually raising taxes lowers tax income, and I think that we might be at that point. So I'm betting on politicians keeping this temporary.

Question: Elodie Rall - JP Morgan - Analyst : (interpreted) Okay. So still on current affairs and politics, the infrastructure tax is actually quite good for you as we saw on the slide. Well, that's not how we pitch it , but yes. So -- we're at about 50%, including the tax, Christian. What about potential litigation and getting your money back? Xavier Huillard - Vinci SA - Chairman of the Board and Chief Executive Officer, Chairman of the Executive Committee and Chairman of the Management and Coordination Committee (interpreted) Nicolas?

Question: Elodie Rall - JP Morgan - Analyst : (interpreted) A question about America. Because Xavier says this might be the last question. So US development, Denver, you also have ambitions for VINCI Energy in the US. As it stands now, are you looking at other bids, especially for motorways? And is the VINCI Energy strategy likely to be jeopardized by the Trump administration? Xavier Huillard - Vinci SA - Chairman of the Board and Chief Executive Officer, Chairman of the Executive Committee and Chairman of the Management and Coordination Committee (interpreted) As to your final question, no, I don't believe it would, unless something completely unexpected were to happen and investments by non-American people might be taxed in a particular way that would dissuade them from investing. But honestly, that will be a fantastic bullet in their own foot. And I don't think that's going to happen. And on top of that, in America, especially for VINCI Energy, we're kind of flying under the radar. We are a pretty small fry over there. If they start taxing foreign investment when they buy companies in America that have EUR100 million in revenue, honestly, we're a long way away from that. I'm not particularly concerned about that. I can elaborate and then Arnaud can follow up. And as I've said already a number of times, our American strategy is to take our time. And it's always been to start with legacy VINCI Energy businesses. So distribution, energy distribution. It took a little bit longer than we expected to integrate that company, but now we're ready to go. And we already had EUR100 million or so in the kind of actinium world, by that, I mean, services to the industrial world. A number of acquisitions that will probably be bolt-ons that will help build up that actinium business for VINCI Energy. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 9:30AM, SGEF.PA - Full Year 2024 Vinci SA Earnings Call Another business line that you didn't mention and that is being developed by Jose Maria and by Cobra is renewables. Of course, I discussed this earlier. I can't remember the exact number. We're at about 250 megawatts that were not on our radar at all a year ago. Two years ago during a strategic seminar for the Board, we realized that we really needed to lean into renewables in the US. And with their customary agility, they set up in America Cobra did, and we're now at 250 megawatts that will enter production in 2025, 2026. And that will meet the huge demand from data centers and AI. Beyond that, for concessions. We're just waiting for the time to be right for managed lanes. This is the same as I've been saying for years already now. We don't want to just spend money willy-nilly. It needs to be the right level of technicity for us. It needs to be the right size, and it needs to be in a state that we feel comfortable in either directly or through a partner. Nothing to add. Construction maybe?

Question: Graham Hunt - Jefferies - Analyst : Yeah, thank you very much for the questions. Just two from me. First, on the capital allocation slide, the last slide of your presentation I just wondered about the sort of, I suppose, the bit that's missing, which is potentially on disposal side. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 9:30AM, SGEF.PA - Full Year 2024 Vinci SA Earnings Call How are you thinking about that at the moment? And is that sort of something that's still traditionally, advances been a buy and hold type strategy or at least recently, is that how you see things going forward, just on that? And then second question relates to your confident investments in energy and energy efficiency. Do you -- are you concerned that the markets that you're in are starting to move away from energy efficiency as a priority. Is that something that you are seeing and maybe need to protect against a little bit in the portfolio? Thanks. Xavier Huillard - Vinci SA - Chairman of the Board and Chief Executive Officer, Chairman of the Executive Committee and Chairman of the Management and Coordination Committee To disposals, we do some a bit under the radar because their companies are kind of modest scale. Personally, I don't see the point of doing disposals for the sake of disposals and activities for which we continue to be convinced that we're capable of extracting value. When time will come for some of these activities, will have a sense that we come to the optimum of the value, then why not imagine disposing of them but to dispose because we're continuing the story through buildup and improved performance of these assets. Well, we need to keep them. We might as well keep the value for 100%. No point in doing disposals for the sake of it. It's not a dogma. We're capable of selling. We only sell when we feel that others are better placed from, to tease out the additional value. And thus far for the time being, we were well advised to keep the bulk of our assets, the most significant in the terms of capital. As you've seen in our performance, we've been able to continue to extract value from being more efficient in the way we manage them, but also by generating network effects on VINCI Airports. There's a real network impact of VINCI Airports. That is when you buy a new airport, it's bought on its own merits, but it brings value to the other airports because aircraft move from one airport to another. So remove one airport from VINCI Airport, it destroys, it can create value as compared to the price paid when we look at the asset to it can destroy value overall. All in all, we believe that our growth in VINCI Airport isn't over. There will be further opportunities that they'll be bought on their own merits, and what's more they'll produce additional value because of the network effect. So once again, it's not a dogma. We're fully capable of disposing and we do it from time to time with VINCI Energy, sometimes VINCI Construction, as long as we feel capable of teasing out more value. We keep them -- no, let's not be polluted by the debate. Okay, they're going to be a bit over and above the statements. Not everyone today thinks that full decarbonization of business, maybe not 2050, '26. I mean, it's something that applies to all. We're all in agreement that if we don't do it, our children, above all our grandchildren, will hang us. Even in the US, where we're hearing things that we're going through a period of regression. Look at the states look at Pierre. No, it wasn't at this session. It was in Texas, you can't get more Republican in Texas. There aren't I mean oil producers in Texas, that's where we developed our first renewable energy contracts with huge potential brought about by the fact that there are huge needs, and Texas is an electricity Island collected nowhere. We need additional production and storage cap with a base load that can serve the data centers. So the US site that cut and dry, there may be kind of federal stances that are of a certain time. There are lots of places in the US with the momentum in favor of renewal power continues as vigorously as previously. Right, Elodie. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 9:30AM, SGEF.PA - Full Year 2024 Vinci SA Earnings Call

Question: Luis Prieto - Kepler Cheuvreux - Analyst : Thanks a lot for taking my questions. I had two if I could. The first one is the following. After various developments globally, such as the (inaudible) concession termination or the tax revenue in France that we've discussed. Would you say the toll road assets are slightly less attractive than a few years ago? In other words, are you at all concerned about generally less friendly grantors and or politicians? And the second question, I'd like to come back to data centers. We have seen ACS buying Dornan, for example, to try to capitalize on the data center opportunity in the old continent. Would you need to take similar steps? Thank you. Xavier Huillard - Vinci SA - Chairman of the Board and Chief Executive Officer, Chairman of the Executive Committee and Chairman of the Management and Coordination Committee (interpreted) So toll roads are attractive today. Yeah, well, in France, there aren't that many -- there aren't that many. So no questions about it. Do you want to tell us a bit about?

Question: Luis Prieto - Kepler Cheuvreux - Analyst : Thank you gentlemen.

Question: Gregor Kuglitsch - UBS - Analyst : Hi, thank you for taking my question. So my first question to you is last year, you spent EUR4.9 billion on CapEx in total, appreciates lots in there. But can you give us a sense where you see that trending in '25 and perhaps beyond? And then maybe within that, and those are maybe two sort of medium term sub questions, which is, number one, I think you've submitted this study on Lisbon. Can you share sort of what you're thinking is size of CapEx if that were to happen in the new airport? And then the second is on Gatwick, there were some reports that you may get authorization for the standby runway conversion. Can you remind us the CapEx bill, and what sort of the medium-term traffic EBITDA expectation would be on that? So that was a CapEx question. I have a question on Cobra. You report, I think, the renewable generation in Cobra. Can you give us a sense how much that is and where you expect that to go given there's, I think, more stuff coming online in '25? And then maybe a final question on working capital. So you -- I think you said you had EUR9 billion of inflow or something like that in the last few years. I know it's a hard question, but what do you think is a sort of sustainable number? Do you think you have to give some of that back? Maybe it's not all this year, but any sort of guide on how we should think about normalization, please? Thank you. Xavier Huillard - Vinci SA - Chairman of the Board and Chief Executive Officer, Chairman of the Executive Committee and Chairman of the Management and Coordination Committee A salve of questions. Okay, we've got some for Nicolas with Gatwick and Lisbon.

Question: Nicolas Mora - Morgan Stanley - Analyst : (interpreted) I do French, my English is a bit shaky. Just pick up for a moment on renewables. We continue to have a sense that you're not going full out, all out, as you said. Do you still have doubts about long term yields or is it really going to accelerate as a '25, '26, the CapEx thus far is a bit below what we had in on. So first question on renewable power. On M&A, you continue to do a lot of small M&A deals, construction, energy, small stakes, and concessions. We have a sense that pipelines drying up. Can you confirm that there are still sizable projects coming down the pipe in '25, '26, '27? Are you going to stick to small deals that create value, but don't really move the dial? Xavier Huillard - Vinci SA - Chairman of the Board and Chief Executive Officer, Chairman of the Executive Committee and Chairman of the Management and Coordination Committee (interpreted) That's rather unkind, isn't it? Don't you think? We're doing precisely what we said we'd do. We said two things that we feel capable at 1.5 gigawatts. For the time being that suits is fine. There'll be ample time when we're well established on that trend to ramp up the dose by doing more than 1.5 gigawatts. So we're precisely spot on the road map that we indicated when we acquired Cobra, two gigawatts of VINCI Airport and auto on the small deals, depends what you call small deals, Ferno is hyper strategic. It's what, EUR250 million, EUR280 million in revenue. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 07, 2025 / 9:30AM, SGEF.PA - Full Year 2024 Vinci SA Earnings Call Next, the two deals we did in the Netherlands. Electrical Engineering on vessels, be the military or civilian hyper strategic. The current business is that's what the price tag on that is [EUR160]. Is it small, medium, take your pick. So that means that if you every year, you do EUR740 million additional revenue full year through. Okay, 34 different transactions, which was the case of VINCI Energy in 2024. Well, it's safer to do it, as I've mentioned, rather than doing it through a mega deal of EUR3 billion in revenue that you'll complete every two or three years. Yes, stands to reasons. So all that contributes greatly to the revenue flow. And you can't really be pejorative about small or medium-sized deals. When there are bigger deals, we can do bigger deals. In a remote history, we did (inaudible) that allowed us placed us in the ICT business, Cobra, which was our biggest deal. We do some from time type in the meantime. Well, we do the small ones, as you say. And on concessions, yes, go on, go for it.