(News Bulletin 247) – The construction and concessions group revealed higher-than-expected accounts for its first half-year and generated more cash.

In this difficult results season, Vinci has joined the ranks of good students, which are not very full in any case.

The construction and airport and motorway concessions group gained 3.2% at around 3:45 p.m. this Friday, recording one of the biggest increases in the CAC 40, after the publication of its half-year results.

From January to the end of June, Vinci generated revenues of 33.8 billion euros, up 4.4% in published data and 3.8% in comparable data, a figure in line with expectations.

Gross operating profit (EBITDA) rose 6.9% to €5.67 billion, while operating profit from ordinary activities (ROPA) rose 9.1% to €3.87 billion. Both figures were 4% above the consensus, according to UBS. Net profit fell 4.5% to €2 billion.

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Airport traffic exceeds 2019 level

By division, Stifel highlights the good performances of the “energy” and airports divisions. The energy branch generated a ROPA of 900 million euros, with in particular a margin of 7.8% at Cobra IS, a company specializing in the design and development of energy infrastructures and networks. Cobra IS saw its ROPA grow by 12%, six times more than the consensus, according to UBS.

At Vinci Airports, Ropa grew by 25% to €1 billion, for a margin of 49.6% compared to 43.8% a year earlier. “The airports division nicely beat the consensus (on Ropa, editor’s note) by 6% with a higher-than-expected turnover,” Stifel emphasizes.

Traffic at airports operated by Vinci increased by 10% in the first half of the year and generally exceeded its pre-pandemic level, with a 1.9% increase compared to the first half of 2019. Revenues increased by 14% year-on-year.

The company explains that it was driven by the increase in capacity operated by airlines as well as by the good dynamics of international routes.

Vinci also generated free cash flow of €361 million, compared to €261 million in the first half of 2023, “a good omen for the future”, Oddo BHF emphasizes. Vinci generates the bulk of its cash flow in the second half of the year. Last year, free cash flow was €6.6 billion for the 2023 financial year, with only €261 million in the first half.

A catalyst in September?

Regarding its outlook, Vinci has modified those of some of its divisions, anticipating, for example, traffic on its motorways to be stable, compared to “a slight increase” compared to 2023, previously. In airports, on the other hand, the group forecasts traffic “higher” than 2019, compared to “slightly higher” previously. For Cobras IS, Vinci now forecasts an annual increase in the operating margin compared to “a maintenance” previously.

“As for the net result (of the entire group, editor’s note), it could be close in 2024 to the level reached in 2023, in particular as a consequence of the new tax on long-distance transport infrastructure decided by the French government, the amount of which is estimated at around 280 million euros,” Vinci declared.

This new tax implemented by the executive, which affects Vinci’s motorway concessions, was contested by several infrastructure operators, including Vinci, with an appeal to the Council of State for abuse of power. The highest administrative court referred the case to the Constitutional Council.

“The conclusions of the Constitutional Council on the motorway tax expected for September could constitute an important catalyst”, judges Oddo BHF.

The research firm reiterated its “outperform” rating on the stock given its attractive valuation and good operating performance. UBS says the same thing, emphasizing Vinci’s “operational solidity.”

“The recent fall in the stock, due to political uncertainty, does not reflect the value offered by the stock,” Stifel said.