Vinci Predicts Flat Business in 2013 as European Economy Slumps

Vinci SA (DG), Europe’s biggest builder, reported a drop in 2012 profitability amid falling sales in markets such as Poland and said business will stagnate this year because of the economic slump.

Net income as a percentage of sales dropped to 5 percent from 5.2 percent a year earlier, the company, based in the Paris suburb of Rueil-Malmaison, said in a statement today.

The company said it may face lower traffic at its French highways because of rising unemployment, while infrastructure orders from cash-strapped European local governments and utilities may fall. To counter that, it agreed in December to buy Portuguese airport operator ANA-Aeroportos de Portugal SA for 3.1 billion euros ($4.2 billion) to benefit from growing travel to Latin America and some African destinations.

“The economic climate is expected to remain difficult in 2013, especially in Europe,” Vinci said. “The group is expecting business to be flat in 2013, before taking ANA or any other new acquisitions into account.”

Net income rose 0.7 percent last year to 1.92 billion euros, compared with a 1.93 billion-euro average of six analyst estimates compiled by Bloomberg.

The company’s backlog rose 2.3 percent to 31.3 billion euros as of Dec. 31. Vinci plans to pay a dividend of 1.77 euros a share this year, unchanged from last year.

“If trends observed at the end of 2012 continue, there could be a downturn in order intake, due to the group’s emphasis on margins rather than volume for project selection,” Vinci said.

Full-year sales rose 4.5 percent to 38.6 billion euros, helped by acquisitions and the stronger euro. Analysts had estimated 38.4 billion euros. Fourth-quarter sales climbed 3.6 percent. Excluding acquisitions and currency swings, revenue dropped 0.3 percent

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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