Eiffage SA (FGR) Earnings Call Transcript & Summary

Good evening, everyone, and thank you for being here for this presentation of the annual results of group Eiffage. I would also like to greet members of the Board and of top management. After our publications on half year results, in spite of the uncertainty caused by increased costs in the war in the Ukraine, the year 2022 ended well both in concessions and contracts. We have an increased revenue, improved profitability, improved momentum in our order book. And so we can see the end of '22 with an order book up 14% over the year. In the contract business, business was up both in France and the rest of Europe. In buildings per se in France, we will be looking more specifically at new housing. That will suffer from lower business on the part of property developers. By contrast, demand remains high because of stepped-up plans of renovation, the reconfiguration of buildings and new momentum in public buildings and industrial operations. And so this has enabled us to implement a number of solutions that address the issues of the environmental transition and offset, to some extent, the lower business in new housing. Regarding real estate, what has been driving business is the level of reservations that occur prior to the COVID crisis and some office building operations. Nonetheless, reservations of new housing in France is down for the second year running. In line with the market, we only have 2,481 reservations to be compared with the 4,164 reservations in 2021 and 5,095 in 2019. The significant drop is the direct consequence of the low number of permits delivered, I mentioned this before, but also higher construction costs and a more challenging access to credit especially for private individuals, but for investors as well. Traditional business of property and urban developers in Europe and significant operations for office buildings should help us compensate the decline in the new housing business. The latest success in Belgium was the beautiful project of the headquarters of the Ministry of Defense in Brussels. Regarding road building, business remains good even though the effect of inflation was quite significant and has hampered the budget capacities of many of our customers. On an equivalent revenue level, we are using less materials, as is shown by the lower volumes in our industrial business, but our teams were able to adjust to the situation remarkably. The road business, of course, remains at the service of mobility and is there to provide connectivity for regions in the country. And our capital expenditure and R&D with the completion of our green offer, combined with the work to accelerate the circular economy for our resources, have stepped up there again our own ecological transition. In civil engineering, over the past few years, we've decided to reinforce some of our know-how in certain fields of expertise: demolition, deconstruction bridge and viaduct repair, maritime engineering or indeed railroad. It is essentially to have our own know-how and be present on the ground to complete our projects successfully. But of course, this business is mostly driven by large infrastructure projects. There are many of them in Europe. And so our teams are now working on the HS2 motorway in the U.K.; the A3 motorway Germany; the E18 in Norway; the rail link between Lyon and Turin; the metro in Toulouse with lots #1 and 2 that we recently won; and of course, the pursuit of the Grand Paris Express project. And so our teams have now completed boring the major portions of the Grand Paris Express tunnels. We were involved in these tunnels as many as 10 TBMs were involved at any one time. On Lot 1 of Line 16, which is the largest of the Grand Paris Express tunnel project, the latest breakthrough occurred on 24 January 2023. So that completed the boring of some 19.6 kilometers of tunnels, involving as many as 6 TBM in as many as 2,000 workers at peak time. In metal construction, with more than 20 years' experience, we can leverage our significant position as one of the main European suppliers of transition parts for foundations or substations of offshore wind turbines. For the year 2022 alone, we secured as many as 9 contracts worth almost EUR 700 million in orders. Beyond wind power, Eiffage Metal has been active, renovating buildings and bridges and viaducts. You have the railway station in Duisburg and the bridge in Leverkusen in Germany. You have them on the screen. I know how an industrial capacity in Germany, Belgium, Spain, France, Poland, the U.K., is a remarkable driver to take advantage of the significant pent-up demand, especially in renewable energies. We have been able to build on that capacity in December with the acquisition of Momsteel in Portugal. Momsteel is a builder of metal structures and frames for solar power plants. Eiffage Metal accounts for more than EUR 1 billion in revenue, including 70% in offshore wind turbines in 9 European countries and upwards of 2,700 employees. This, of course, is a significant differentiating factor for our group. Goyer, our facade builder, has been also very active on the ecological transition, working on 2 lines of action: the development of mixed facades involving wood, timber and aluminum; and an office building renovation with 2 tall buildings being redeveloped in La Défense. And Eiffage Energy Systems is enjoying the highest level of growth with buoyant markets right at the heart of the ecological and digital transition, but also thanks to new energy and industrial sovereignty policies. Business has been up 12% at EUR 5.3 billion, including 7% growth in France and upwards of 22% growth outside France, mostly in Europe where Spain, the Netherlands, Switzerland, Belgium and Germany have been recording significant growth. The branch is positioned in the 4 great markets that are manufacturing industry, office building, infrastructure and services provided to towns and local authorities. You have the 4 respective brands, up on the screen. Demand remains high in all these markets. And more generally speaking, and over a long-term trend, we find that the portion of technical lots taken up by the Energy Systems branch has been growing both in building and public works. Over and beyond organic growth, the branch has been pursuing its external growth strategy, acquiring smaller units but enabling it to broaden its territorial coverage and strengthen its expertise in Europe. The year 2022 also enabled us to complete a more significant operation, the acquisition of SNEF Telecom with about 1,000 employees distributed all over France. Altogether, as many as 11 operations were completed in 2022 with a full year revenue of more than EUR 300 million and 1,700 employees. The stepped-up policy of external growth has contributed to upwards of 4% of our revenue. Growth is also driven by our own recognized position as a European leader for ground-based solar farms. That accounted for about 1 gigawatt worth of capacity in 2022. As we'll see in a moment, this is a significant growth driver that has enabled us to make a headway on the value chain and become concession holders for renewable energies at Eiffage Concession. And then we should also mention our involvement in the restoration of our historical heritage, quite significant indeed, because the stonecutters of the Construction branch and electricians of the Energy Systems range have been involved in restoring the cathedral of Notre-Dame in Paris. Regarding motorway concessions in France, 2022 is the first year since 2020 where we have not been impacted by travel restrictions. So traffic has resumed growth, as you can see on the slide. We are pursuing capital expenditure and investment to reduce our carbon footprint on our motorways and promote new mobilities. We met our commitments regarding the setting up of charging stations on 100% of our rest areas on motorways to meet our customers' expectations, and our teams continued with the development of the Fulli service areas on our motorway network. We've just completed a new capital expenditure plan worth EUR 410 million for APRR and AREA. That investment plan is a small-scale example of the many possible investments that will be conducted as part of the accelerated ecological transition of French motorways, which is a key element of the decarbonization of mobility in line with government policy. And that includes the development of car-sharing parking lots, the development of lanes reserve for carpools or public transportation, multimodal transportation interchanges, the development of free-flow toll gates and the integration of 17 kilometers of the A6 motorway south of Paris. That's part of our -- well, the capital expenditure, of course, give pride of place to biodiversity. Over and beyond our legacy concessions, namely APRR and AREA, our group also holds in its portfolio, a number of assets that are gaining ground as the units go by: you have the A41 motorway between Annecy and Geneva, this is not consolidated, but the concession holders will be until the year 2016; you have the A65 motorway between Pau and Langon in Southwest France until 2067; the new A79 motorway between Sazeret in the Allier and Digoin in the Saône-et-Loire department, this is the first free-flow toll gate motorway inaugurated in France on November 4, 2022; and of course, the Millau Viaduct, where the rolling areas was recently refurbished. In Germany, we're pursuing the work on the A3 Motorway, which is the largest motorway PPP ever built in Germany. Regarding airports now, you have the Lille Airport and the Toulouse Airport where traffic remains below its 2019 level. Nonetheless, it significantly picked up in 2022. Looking at Toulouse, in January, traffic was only 50% of its 2019 levels but reached 85% of that level in December. So we may get back to 2019 levels in 2 years' time. And so we are confident and we have resumed our investment program. We are starting the building of parking lots with solar panel rooftops with an installed capacity of [ 16 ] megawatts, including 50% for our own consumption. In railroads, we celebrated in 2022 the fifth anniversary of the high-speed lines between Brittany and Loire, which we will provide maintenance for until the year 2036. Regarding buildings now, the concession for the Ministry of Defense is called the Nové project. This is a significant contract for Eiffage Construction because between 2023 and 2030, this will generate as much as EUR 1.4 billion in housing renovation and building of new housing. This, of course, augurs well at a time when the building of new housing is at a standstill. In 2022, we finalized the acquisition of 75% of the Sun'R Group, which has now become the development platform for renewable energy concessions. The development of hydro power and solar power plants should enable us to drive our capacity from 100 to 500 megawatts. This will enable us to decarbonize our own energy consumption, but the developments being built on our own land, on the roadsides of motorways, but also on land acquisition, in those areas where we have a presence, just like we do for other concessions in the group. And you have a picture here of the Boyer and Jugy solar power plant, which is located on the side of motorway A6. Now there's one highlight of the year, and that is, of course, our increased stake in Getlink. We purchased EUR 1.2 billion worth of shares. And now with 18.79% of the capital, we are getting main shareholder, being, of course, the concession holder for the channel terminal until the year 2086. The outlook is to account for this stake on the equity method starting in Q2 2023. Apart from our European presence and the balance between contract and concession, we have to follow 2 lines of action, human resources and our low-carbon strategy. Regarding HR, human resources, our own attractiveness, our ability to draw talent in all social, professional categories is indispensable for our development in France and Europe. We have to focus on 4 major challenges: training, recruitment, integration and employee loyalty as well as diversity. And of course, we're delighted to be #2 in building and public works, top 500 companies as seen by the employees and industry workers in a survey conducted by Capital Magazine. As to APRR, it's #1 in the good transportation and logistics department for the ninth year running. The second part of our strategy, the low-carbon strategy, will definitely drive us for the coming decade. The real challenge is our ability to integrate and roll out the low carbon and biodiversity strategy and leverage European policies that have an impact on all our business. This is, in fact, a great growth opportunity and indeed synergy accelerator because it means that all our businesses in the various countries where we do have a presence can work together and produce a differentiating offer. For the second year running, we have decided to increase the portion of our work eligible to the European strategy. In 2022, that portion remained close to 50% as it was in 2021. Regarding alignment, we engaged in that exercise for the first time with recently published legislation. We found that the alignment rate was about 17%, mostly to do with renewable energies and railroad infrastructure. It will take some hindsight and industry benchmark to have a true assessment of that performance. And in the year 2022, again, we presented an application for our low-carbon strategy, with SBTi expecting an answer, feedback sometime this year. Now it is somewhat simplistic to summarize all these achievements in just a few figures. But nonetheless, these are some of the take-home messages as it were for the year '22. '22 turned out to be an outstanding year for the group in spite of the war in the Ukraine. All our teams remained tight-knit and well mobilized to achieve that performance. Revenue for the first time became more than EUR 20 billion, up 8.5% compared to 2021, including 7.3% in organic growth. We managed to improve our profit margins in Concessions. Well, that was expected. But also in contract, in spite of the sudden resumption of inflation in 2022, this was not a foregone conclusion back in August. You may remember, I had shown reservations at the time. But all in all, that means we were able to generate upwards of EUR 2.2 billion in current operating profit, up 15.3%. 15.3% is also the increase of the net profit attributable to the group, which now stands at EUR 896 million. Net debt remains under control. It's up only EUR 835 million (sic) [ EUR 834 million ]. Although we have invested as much as EUR 1.7 billion in growth assets such as acquisitions and new concessions. And finally, the order book ended up 14% at EUR 18.5 billion. Once again, this is a record high level in spite of increased activity. And so this provides excellent visibility and enables us to remain selective in choosing our deals. For the year 2023, on the strength of that order book, we are expecting growth in the contract business. In the concession business, we will be able to take advantage of a return to normal in airport traffic, the integration of Sun'R, the contribution of the A79 motorway in the full year but also a robust motorway traffic, which enables us to look forward to increased revenue as well. In this context, we are looking forward to an increased current operating profit, both in the contract and the concession business. The resulting increase in net profit will also take advantage of the accounting for Getlink as an equity affiliate starting in Q2 2023. On the strength of that good performance, we will propose a dividend of EUR 3.6 per share at the next AGM for the year 2022. Regarding our financial resources, they are quite significant again. And so I'm very confident in our ability to pursue the group's growth, both in terms of organic and external growth. Thank you for your attention. And now I'll give the floor to Christian who will give you a detailed presentation of the financial performance.

Good evening, one and all. Coming back over our financial indicators, our revenues grew by 8.5% with stronger growth in Concessions as expected because they benefited from a favorable base of comparison with 2021, whereas Contracting already had come back to its precrisis level in 2021. Contracting still had very good momentum, plus 8.2%, of which 6.7% organically for the reasons mentioned in the highlights. I will come back to that. On the right, you can see that our growth engines are our locations and projects in Europe, plus 23.3%, geographical area where we are gaining market share and where we have strong expertise in the renewable energy and transport infrastructure businesses. Looking at Contracting on its own, at EUR 17 billion in revenues. You can see on the right that international operations now account for 35% of our works revenues versus 32% in 2021 and 31% in 2019. And you can see that in line with the group strategy focusing on Europe, our revenues in the rest of the world only accounts for 4% of the total. On Page 35, you can see our main countries of business in Europe. And what you can take away from that is that there's strong momentum in Spain, over 30% growth. Also in Germany, as in Belgium, year after year, we are proving ourselves as a benchmark. And in the U.K. with high revenues, we are working on main projects, HS2 and also major offshore wind projects. Regarding our works margins, they are improving, 3.8% in spite of the inflationary push and tensions on supplies that we went through in 2022. In that way, we could have additional income of EUR 61 million. In Concessions, the extra airport traffic and motorway traffic in the first half of the year led to most of that increase in operating income. Overall, the increase in operating income is 15.3% for a group operating margin of 10.9%. Now looking at the details for branches. In Construction, revenues grew by 6.4%, standing slightly above, but only slightly above, those of 2019, plus 2.4%, an uncommon situation compared to our other business lines that grew more sharply with more market growth compared to 2019. This is explained by the decline in new housing in France that was discussed already, also the lump sum and nonadjustable character of most of our projects which, in an inflationary context, urges us to be more selective everywhere and sometimes in an exacerbated manner as in Poland, for instance. Our real estate reservations declined by 40%, 35% in France. Without yet any significant effects on our revenues, that only declined by 1%. Or on our margins, this year, we had 7.6% in real estate margins, generating, therefore, EUR 83 million in operating income. With all of that, we could further improve the branch's profitability to 3.8%, notwithstanding the low growth that I was mentioning and the increase in construction costs. The A79, we've already widely discussed it. But for each branch, I will give you an example of its contribution to the success of this project because it's based on synergies between businesses and, of course, on our very compact and tight organization that you know about, without which we couldn't have pulled off such a short construction time. Eiffage Construction built the operations center of the motorway in due with PV panels on the roof. In the Infrastructure branch, business was slightly down in France, mostly due to the lower contribution of the Grand Paris Express. However, we had EUR 570 million in revenues for this operation versus EUR 716 million in 2020, and also the end of the major wind farm in Saint Nazaire. However, business was booming in Europe and our main infrastructure project, HS2 in the U.K., Norway, the A3 motorway in Germany and more broadly in Germany at large. And also it's booming in offshore, growing by 12%, a segment that has very good visibility. All that explains the nearly 20% growth for revenues. The international operations of the branch, EUR 850 million higher than the 2019 level. In roadworks, in spite of declining tonnage in industry, as you can see at the bottom right, revenues and margins proved to be fairly resilient. Thanks to more private markets, urban development operations and find management of our entities, the operating margin of the branch was stable at 2.9%. Still talking about the A79, with the widening to 4 lanes of traffic for this road made by Eiffage civil engineering and Eiffage roadworks without any traffic interruption, with 1,200 people at peak, 57 new bridges and viaducts were built, such as the one that you can see, the Aliaé Viaduct, 416 meters long based on a metal structure produced and installed by Eiffage Metal. The Energy Systems branch posted strong growth of 12%. You can see that this momentum has been steady for the last 5 years, excluding 2020, mostly for base business activity, so without any risks of ups and downs. The contribution from external growth was 4.1% of revenues in 2022 because of acquisitions in 2021, roughly EUR 100 million worth of revenues in full year, and 2022 for roughly EUR 300 million of business in the full year. What we can say is that our organization is in place to carry on with acquisitions as they crop up and also to integrate them. There again, our major European locations produced a lot of business with growth higher than the average growth of the branch in Spain, Netherlands, Belgium and Germany, and we ended the year with operating margin slightly up to 5.1%. Still on the same motorway, the 88 kilometers were equipped by Eiffage Energy Systems with all the equipment, as you can see here on screen, mostly for free flow tollgates. Six countries were equipped with infrared cameras and sensors so that vehicles can be identified with their registration or their toll tags. Regarding APRR, beyond the traffic figures that are shown here compared to 2021, we were 1.9% above those of 2019 with a beneficial impact on margin, which more than offsets the dilutive impact of the ramp-up of the Fulli motorway services on the network and the recent integration of 2 months of operations of the young A79 motorway. Regarding financing, APRR's credit rating was raised to A stable outlook by Fitch in November and maintained at A- stable outlook in June by S&P. And I'll remind you that APRR issued last June a bond of EUR 500 million maturing in 2029 for a rate of 1.875%. Those were still the good old days. Since then, things have changed a little bit. The APRR team resumed operations of national road 79 since the beginning of the works, contributing to its safety. And since then, they've been operating and maintaining the motorway since it's been opened. Here, you've got the Bourbonnais motorway services operated under the Fulli brand. Regarding other motorway concession assets, here, traffic was higher than 2019 for Millau, the A65, or in Senegal. That wasn't the case for our airports. However, their contribution to current operating income before goodwill impairment was mostly positive at EUR 23 million versus a EUR 1 million loss in 2021. The higher contribution and the contribution from other assets and maintenance activities grew steadily to EUR 89 million versus EUR 84 million last year. And for 2023, we can also rely on the effective start-up of the Nové contract, the first full year of operations of the A79 and contributions of Sun'R and Getlink, this one under the equity method. And here is the final outcome of the construction of the A79 with Eiffage Concessions as the main contractor for innovative and smooth infrastructure, meeting a lot of local expectations and mobilizing many local players and stakeholders. Now moving on to the financial statements. For the consolidated P&L, we've been through the operating indicators. Other operating proceeds and charges are similar to 2021. The cost of net financial debt increased by EUR 25 million, of which EUR 20 million for the Millau Viaduct. The debt is fully indexed on inflation. There's fixed rate, but it's indexed on inflation, and EUR 6 million on APRR and Eiffarie. Other financial proceeds and costs have nothing to do with the cost of debt. The increase is EUR 33 million, mostly because of the financial discounting of asset renewal and maintenance provisions and also the mark-to-market variation of the buyout options for the previous year or this year. And the tax burden was EUR 491 million for an effective tax rate of 26.7% compared to the CIT rate in France, which is slightly lower, of 25.8%. Net income group share was EUR 896 million. Earnings per share stood at EUR 9.46 per share. Regarding debt, you know this bridge chart. EBITDA was higher by over EUR 300 million. And we had EUR 3 billion in 2019. The working capital requirements generated cash for EUR 223 million after the strong decline in WCR in 2020 and 2021 for a total of EUR 555 million. Taxes paid increased logically. And so you can see the first operating flow in green, EUR 2.95 billion, a EUR 200 million increase on the previous year. Operating investment in works, in contracting increased in connection with the business, EUR 594 million. In concessions, it declined because of the end of the construction of the A79. The next flow is the reimbursement of PPPs paid as rent. Without any disposal proceeds this year, that led to a total investment of EUR 1.2 billion, similar to 2021. And in total for these flows, free cash flow was solid at EUR 1.743 billion, up nearly EUR 200 million. Regarding the next flow in blue, acquisitions, we have the EUR 1.2 billion for Getlink and EUR 260 million for the main acquisitions of the year. I'll remind you, SNEF Telecom, Sun'R. We increased our presence in the Netherlands and other smaller operations, especially in energy in France. Variations without flows of funds were higher than the previous year. The discrepancy is EUR 300 million. We reduced the amount by EUR 100 million last year, the PPP disposal. This year, we had EUR 200 million for the fair value adjustment of earn-outs on the year that increased financial debt, and the project debt for Sun'R that we increased on our balance sheet and the indexation of the debt for the Millau Viaduct. All these variations did not lead to any cash flow variation. And the equity operations, the dividend paid out by Eiffage, nearly EUR 300 million to shareholders; and the dividend paid to APRR, to its minority shareholders and treasury share operations, including the increase in our treasury share level to 3.4% at the end of 2022 versus 2.4% at the end of 2021, and we ended the year with net debt at EUR 10.166 billion an increase of EUR 835 million after growth investments of EUR 1.7 billion, so the acquisitions to which I would add the end of construction costs of the A79. This debt is split in 2 blocks. You know that we are fond of this distinction. We have no recourse debt for Concessions and debt and the cash of the holding company and Contracting. Nonrecourse debt for Concessions increased by EUR 400 million, although the main concessions reduced their debt. You'll have the details on Page 36. But the A79 is now financed as nonrecourse debt via APRR and no longer based on equity as during construction. And the counterpart is in red, the holding company and contracting benefited from this transfer of the A79, but it financed all the acquisitions of the year that we mentioned, ending the year with a debt treasury cash at nearly EUR 600 million. Now the order book, it was mentioned in its entirety by Benoit. Here, you have details by branches. In Contracting, it's stable, although you know the situation in new housing. The increase in the Infrastructure branch at 17% is higher than what we anticipated a year ago, thanks to wind energy and transport infrastructure. And in Energy, the 25% significant increase is based on 3 pillars: the good momentum in local business; more large projects, although the branch is still highly selective in this respect; and the contribution from external growth. That's it for my overview of the figures. And now we will take your questions with Benoit. Thank you for your attention.

Elodie Rall, JPMorgan. A few questions, if you allow me, regarding your forecasts. First of all, regarding traffic on motorways. Your maybe not competitors, but peers, is saying that traffic is going to stay flat. Is that what you're expecting, too? Regarding the growth outlook for revenues in Contracting by division, especially the impact of lower property starts, will that be visible in 2023 and '24, '25 at the other divisions? And regarding margins by division, they increased slightly. Should we expect a further increase in Contracting margins, especially for Energy at 5.1%? The question that crops up every year. Are you happy with that level of margin? And for Getlink, well, you will account for your stake. And under the equity method, you're the largest shareholder. Where are you going from there? Is that also a level that you're comfortable with over the long term? Or is there an underlying strategy that is more complex? Is there anything you could share with us? And I'll stop here.

Thank you, Elodie. Maybe, Philippe, on traffic?

Good evening. Traditionally, we do not give any guidance on traffic. But the idea of flat plus seems imaginable today. After 15 years regarding road traffic, I'm still very cautious on initial traffic forecast because reality is almost never aligned with initial forecasts. So I would say that we'll see clearer at the end of Q1.

Maybe a few words by Olivier.

Well, for Contracting, what wasn't said is that the Cegelog project is not part of the order book because we can't account for it under the IFRS standards, both at EUR 200 million per year that we'll bring until 2028, 2030. And that's not in the order book. And so I'm not anticipating any decline in revenues, at least in the short term.

Well, maybe for the rest for Energy Systems, you saw that the order book is quite well filled. We'll also have the switch to the full year business for the acquisitions made this year. So mechanically, there will be an increase in revenues. And that's also a business with very short projects. So price increases for some equipment as seen on the various business lines. I think Elodie, you wanted to talk about margins. I'd like to skip to the next question. Well, for the various contributions by business line and by branch, of course, it's very different. For the Infrastructure branch, I'll have the same items as on civil engineering and metal. We can maintain or at least even improve our margins. But visibility for roadworks is lower, so there could be a slightly more negative impact on roadworks. But overall, I think that we should be flat or flat plus on the Infrastructure branch. For Contracting, now we need to be resilient. The solidity of contracting is fairly good, but it's offsetting a natural decline that will come from the contribution from property, although margins are still good. That will be applied to declining volumes. So we are confident about our ability to maintain margins, thanks to the team's selectivity. On the Energy System branch, I would disappoint you if I told you that we shouldn't be able to keep increasing it a bit. Your last question is related to Getlink. We haven't changed our opinion. We are happy to have had this opportunity, to have been able to increase our stake. So now we are the biggest shareholder. Of course, we hope to be involved in the governance and to account rates under the equity method. Now in the mid to long term, that will be purely opportunistic. We are quite open to increasing our stake a little bit. Of course, raising it to 25% or 30% in the mid- to long term would be quite good, but it will only be related to price opportunities because the position that we have right now is quite comfortable for us. I already shared it before, the aim is not at all for Getlink to be an over-concentrated asset that would reconcentrate the positioning of concessions in a single asset. So a tunnel in a single place, although APRR assets are highly concentrated in our concessions, that's an asset that covers thousands of kilometers. So it's much more diversified in a way over the territory than Getlink would be. So we're happy with our current position, but we are absolutely not opposed to increasing it yet. We could increase it to 25%, 30%, not more.

Victor Acitores for Soc Gen Cross. I also have a few questions of my own. Sun'R, you mentioned a positive contribution for this year. Could we have an order of magnitude of the revenue and the target margin? Sun'R right now is an operation for your own operations decarbonized. But for Sun'R, could you consider concessions for third-parties like [ LACR ] does? And for roadwork, do you confirm that the profit margin came down in 2022? Or was it stable? I'm not quite sure. And number three, if you look at the cost of procurement and revenue, you have a 2.5% delta. You have revenue up 8.5% and costs up 6.5%. But how is this going to evolve over time, especially because on certain supply chains, there are challenges right now, can you give us details on that?

On Sun'R, there may be a misunderstanding there. What we said was that for the year 2023, we will be able to take in Sun'R revenue. So that will, of course, add to the concession revenue, but there's no significant contribution this year. But Sun'R is a development platform. And so even for the part that is already there, a significant portion is reinvested because, of course, we still need to invest to ensure our own growth. But it's not as if we are doing this for ourselves. Once we're within the 5 or 6 megawatt that the company needs for itself, there's no need to dispose of these assets. But once we get beyond that stage, for instance, in Eiffage Immobilier, we don't have land, but we find land, we develop projects and we sell the projects. Right now, we need 500 or 600 megawatts for our own consumption. Eventually, this will depend on the state of the market. It may be more profitable to sell back the assets and develop others. We develop that, we get value throughout the chain, the value chain because we are builders, operators and we provide maintenance or we could decide to keep the assets under concession. And when I said Sun'R for own use, but we also sell power outside. There's no separation. But of course, fundamentally, we need to develop, accelerate the growth of that business. But whether we sell electricity to ourselves or to third-parties, I mean the fundamental issue is can we cover our own needs. And if we generate our own capacity, that is, of course, a key point.

The profit margins on roads, no wonder you didn't quite get the numbers because we didn't give the numbers. Numbers are up, which means that we were able to -- even though volumes are down, they bring in more than the roadwork costs, and we were able to beat inflation. So volumes are down. And so the fact that profit margins on roads are up means that we have been profitable where we ought to be. I think we've been selective in such a way as to ensure that the businesses were profitable. [Somebody's speaking without a microphone, we can't hear the question.] Well, the cost for 2023 we have less visibility than elsewhere. That's why we were cautious regarding volumes. We don't have much visibility for 2023, but it is because we were driving this business very carefully, almost day-to-day. That's what enabled us to achieve the good performance, but this is very early days indeed to have an idea of the various cost components of the road business that may go up and down. But what we succeeded in doing in the past year, we should be able to do this year.

The main thing here is that there were significant effects due to inflation, we were able to address that, to cope with that. But inflation is still there. and inflation is still part of the change. So the inflation initiatives for 2023 will be just as significant as they were in 2022, which is why we have to remain conservative. But we were able to show, to demonstrate, that we were able to address this efficiently.

Nicolas Mora from Morgan Stanley. I had a question about the cash position and M&A. What do you do with the cash in 2023? There were as many as 11 acquisitions of Energy Systems, and some Getlink and Sun'R. Where do you stand in priorities? Could you be buying yet more acquisitions? There were EUR 200 million in '21, EUR 300 million in '22. Might you invest as much as EUR 500 million in 2023? Do we have an idea of the budget you have, I mean not just 2023 but 2024, '25, any idea of just how much you might be spending on acquisitions?

Well, on the contract side, we are focusing mostly on Energy Systems, as you were able to see. This didn't stop us from acquiring Momsteel in Portugal to complete our manufacturing capacity for Eiffage Metal. But we're focusing mostly on Energy Systems. But this is the conversation in France. We have the managerial capacity. We have territorial coverage. And most of the potential acquisitions stem directly from the people we work with in the areas where we have a presence, so businesses that can actually complete our own network. And that is what drives our acquisition of small units over time. But with a bigger acquisitions like SNEF Telecom, then, of course, we had to decide on that opportunity at a branch level. But if you go outside France, in Europe, a few years back, in the Netherlands, we acquired the company called Kropman. It had national coverage, but it was not comprehensive. It didn't cover all the businesses either. So we have become better acquainted. Now that partnership works well. And we do have the managerial capacity that will enable us to conduct bolt-on operations. And indeed, 2 such acquisitions were conducted this year and more may well follow suit. So in the Netherlands, we do have the managerial capacity that provides, as it were, the bridgehead that comes with organization values and operations. Belgium, likewise, there were a number of units we were able to bring together under the same bridgehead. And so they organize with the 4 main markets. And there, we were able to conduct a few operations, a few acquisitions. Well, a few years after the Netherlands, but we did more or less the same thing. In Spain, we have significant managerial capacity, but if you have a 30% organic growth, well, we cannot engage in external growth because organic growth is taking up so much of our time. In the air conditioning business, we acquired a small company that generates electricity. And so the 2 companies can together provide all the services. And so that will enable us to grow and make further small acquisitions. The one country where we haven't really looked is Germany because at that stage, we neither have a territorial coverage or a business coverage. So we have a sample of 4 or 5 very successful companies in their own territories. But what we need there is a larger, more significant acquisition, properly integrated. And then the next step would be to do the same as we did in other European countries. So here, that would be the idea to be able to generate what we managed to do in other countries to do it in Germany. But until such time as we have the wherewithal to complete these operations, we need to find the right size, the right values, the people we can work with effectively, and then add what already works to that, fully integrate. And then once that's completed, we can step further. But until such time is that is done, we cannot go faster than that. But for our other businesses, civil engineering, roadworks and metal construction, we can forge ahead. But for Energy System, we're talking about EUR 250 million, and we are not very consolidated. The 2 main players generate EUR 2.5 billion. And that is much less than what the main players in France are doing. And yet the potential capacity is much bigger in Germany. So of course, there's potential there. We'll have to be working on this, but we have to do things in the right order.

On Sun'R, I mean, it depends on the permits we receive. But CapEx could be EUR 30 million to EUR 50 million, EUR 150 million in 2024 and upwards of EUR 200 million in 2025. But that is subject to authorizations and such. But we would like to keep the debt for such projects and keep the cash for the concessions.