Vinci Raises Profit Forecast as New Tax Law Removes Uncertainty
Vinci SA (DG), Europe’s biggest builder, raised its 2012 profit forecast as a new law removed uncertainty about potential tax charges.
The company, based in the Paris suburb of Rueil-Malmaison, now predicts net income will reach a level close to the one in 2011, it said in a statement today. Vinci in October said profit may fall by as much as 4 percent as the French government introduces new taxes to reduce the country’s budget deficit.
“The 2013 French finance law was enacted on Dec. 29, removing the uncertainties regarding the tax charges applying to 2012,” the company said.
The budget of French President Francois Hollande relies on 20 billion euros ($26 billion) in additional taxes: 10 billion euros from companies and 10 billion euros from individuals. In addition to a millionaire tax, which was ruled unconstitutional by France’s top court, Hollande has added new charges on capital gains, an increased tax on wealth, a boost to inheritance charges and an exit tax for entrepreneurs selling their companies.
In the first half, Vinci’s net income fell 3.6 percent to 784 million euros as the company paid 37 million euros to cover the introduction of a profit-sharing system and a new tax in France.
The company said today it will reach its new target “despite the margin pressure being felt in some sectors and countries.” Vinci Chief Executive Officer Xavier Huillard has warned that Europe’s sovereign debt crisis and the collapse of municipal lender Dexia SA (DEXB) may undermine public works in the region and erode traffic on the group’s French toll roads.
Vinci rose 4.4 percent in Paris trading in 2012, while the French benchmark CAC 40 Index gained 15 percent. Today, the stock rose 0.3 percent to 37.12 euros, valuing the company at 21.4 billion euros.
The company will report 2012 earnings on Feb. 5 after market close.
To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net
To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net
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