Vinci Sees Earnings Rise While Seeking More Airport Contracts

Updated on
  • Europe's biggest builder sees wider margins as revenue falls
  • Highway concessions, airports business will sees sales growth

Vinci SA is targeting further airport-management contracts after an expansion into aviation and toll roads helped Europe’s biggest builder forecast a rise in 2016 earnings even as the French construction business remains subdued.

“There are a lot of opportunities -- it’s a very competitive business with a lot of players with deep pockets,” Chief Executive Officer Xavier Huillard told reporters in Paris on Friday, referring to airport concession. “For us, it’s about getting off the beaten track. Passenger traffic will double by 2030 or 2035.”

The company has been expanding in faster-growing markets such as energy-engineering and airport-management to reduce its dependence on France, where construction and roadworks activities have slowed. It took control of Portugal’s main airports in 2013 and is part of a group that’s been running the Santiago de Chile hub since October. It’s also due to operate the Kansai and Osaka airports in Japan from April, and has signed pre-contracts to operate six airports in the Dominican Republic and two in Iran.

Once the deals in Japan and the Dominican Republic have been finalized, Vinci will manage or co-operate 33 airports with passenger traffic exceeding 100 million passengers per year. The company said it will bid for Lyon and Nice airport concessions in France and in countries such the Philippines and Serbia, as well as for highway concessions in Columbia, New Zealand, Peru and Poland.

Vinci shares gained 1.6 percent to 61.28 euros at 12:50 p.m. in Paris, valuing the company at 36.1 billion euros ($40.4 billion). The stock has gained 24 percent in the last 12 months.

Sales will fall slightly on a comparable basis in 2016 while operational profit and net income will grow, the Rueil-Malmaison, France-based company said in a statement after the market closed on Thursday. Revenue from highway concessions will probably increase about the same as in 2015 and sales at the airports unit will rise, albeit at a slower pace than last year.

Net income fell 18 percent to 2.05 billion euros after earnings from the sale of parking operations weren’t repeated. The average estimate of analysts in a Bloomberg survey was for 2.0 billion euros. The company plans to pay a dividend of 1.84 euros per share, compared with 2.22 euros last year.

Vinci has reorganized the management and operations of its French construction business after sales declined in France and in African nations where budgets have been hit by lower oil and gas revenue, Huillard said. It plans to boost the margin of the French unit by about 1 percentage point per year to a range of 4 percent to 5 percent, compared with less than 2.1 percent last year, he said.

Sales in French roadworks and construction may decline at a slower pace this year than in 2015, Huillard said.

“In a market that’s stabilizing in France, and uncertain outside France in some areas, Vinci companies will continue to prioritize improving margins ahead of volumes,” the builder said.

(Updates with CEO comments in second paragraph.)
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