Vinci SA (DG) Earnings Call Transcript & Summary

VINCI's Q1 '22 Revenue Conference Call. I will now hand over to Mr. Gregoire Thibault, Head of Investor Relations of VINCI. Sir, please go ahead.

Thank you, Laurent. Good evening, and thanks, everybody, for attending this conference call. I'm today with my colleagues of the Investor Relations team, Boris and [indiscernible] Maria [indiscernible] Head of Corporate Controlling and Accounting; and Christophe Ferrer, Head of Group Cash Management and financing. As usual, I will try to be brief to have more time for the Q&A. So what are the key takeaways of this publication? Firstly, a good start to the year of all our businesses. In a nutshell, for VINCI Autoroutes, the traffic was much higher than last year and higher than in Q1 '19. For VINCI Airports, passenger numbers continued to recover progressively, benefiting from the reopening trend in many countries, especially in the Americas and in Europe, notably in our 2 main assets, Portugal and London Gatwick. For VINCI Construction, the momentum was good. For VINCI Energy, business levels and order intake were up billions. Finally, have in mind that Cobra is consolidated since the 1st of January 2022. I will give you more granularity by division later in my presentation. All in all, total revenue was EUR 12.8 billion, up 26% year-on-year and up 12% like-for-like. International, which now accounts for more than half of the total, was up 51% and up 19% like-for-like. Changes in scope were boosted mostly by the integration of Cobra. Exchange rate movements had a positive impact of 3% as several currencies, particularly the U.S. dollar and the sterling rose against the euro. France, accounting for 49% of the total revenue, was up 7%. Regarding the order intake, order intake at VINCI Energy and VINCI Construction in Q1 '22 were EUR 11.4 billion, almost unchanged year-on-year, despite the high base for comparison. Keep in mind that last year at the same time, VINCI Construction won large project and notably, the same [indiscernible] between Denmark and Germany for around EUR 1 billion. Order intake at Cobra totaled EUR 1.1 billion this quarter. The order book amounted to EUR 55 billion at the end of March. This represents a year-on-year increase of 20% and 2% excluding, Cobra, and it represents 14 months of average activity. This all-time high order book gives us good visibility and a lot of serenity allowing us to continue being selective in terms of business at a time when markets are affected by the war in Ukraine, which results in cost inflation and supply shortage. Among this order book, note that the international part is 68%. In terms of financial position, the net financial debt of VINCI at the end of March amounted to EUR 20.7 billion. The limited increase of EUR 1.4 billion since the year-end 2021 reflect the seasonal increase in the working capital requirement, reflect as well our share buyback program for around EUR 600 million and the acquisition carried out during this quarter. VINCI's liquidity remains substantial at EUR 15.5 billion at the end of March, of which we managed net cash of EUR 7 billion, a large part of it being centrally managed. As a result, we saw a financial position. VINCI is well prepared to continue dealing with unexpected and continue its development. Although have in mind that S&P confirmed in March its confidence in the group's credit quality by affirming its A- rating with stable outlook. Let's now have a closer look at the main divisions. VINCI Autoroutes Q1 revenue of EUR 1.3 billion, up 15% year-on-year and up 9% versus Q1 '19. In the Q1 '22, the traffic continued to rise up 15% year-on-year. Compared with Q1 '19, light vehicle traffic was up 1.5% and heavy vehicle traffic was up 6.7%, thanks to firm economic activity in France and growth in e-commerce. The slight decline in light vehicle traffic in March was mainly due to the different timing of school winter holidays between 2019 when these holidays were spread over February and March and 2022, when holidays were mainly concentrated in February. VINCI Airports revenue of EUR 405 million, 2.6x the revenue of Q1 '21. You have already seen the encouraging traffic figures published last week. VINCI Airport passengers numbers in the Q1 '22 were 3x the numbers seen in Q1 '21 and were [ 46 ] below the level of Q1 '19. The gradual return to pre-pandemic level is on track. The picture gets brighter even trends vary between geographic areas. In the Americas, in the U.S., Dominican Republic, Brazil, Chile, Costa Rica, we see a good momentum. The good trend continues with passenger numbers close to or higher than 2019 levels. I'd like to remind you that the 7 airports in Brazil's North region that have recently joined our network started their operations in January and February this year. In addition, speaking about Americas, I see this opportunity to tell you that the new international terminal of the Santiago Airport has been inaugurated a few weeks ago. That's a key entrance for Chile and it will double the airport capacity to 38 million passengers per year. Let's go back in Europe. The easing of COVID restriction led to remarkable improvements in Portugal, in France and in Serbia, notably. In the U.K., the loosening of restriction on international travel in early February led to a marked rebound in passenger numbers at London Gatwick Airport. As a consequence, Gatwick South Terminal reopened on 27th of March, after being closed for almost 2 years because of the pandemic. That's a very positive signal. However, airports in Asia continued to suffer from border closures and ongoing restriction, particularly in China. We saw anyway a slightly better trend in domestic traffic in Japan. Let's move to VINCI Energy now. As a wrap up, VINCI Energy, this division started 2022 on a positive note, both in France and abroad. So the base for comparison was high and despite procurement issues which has already been experienced in late 2021, business levels were supported by buoyant market, driven by the energy transition and the increasing deployment of digital technology and broadly speaking, a good momentum in flow business for VINCI Energy. More in detail, Q1 revenue was EUR 3.6 billion, up 7% and up 5% like-for-like versus Q1 '21. Outside France, 53% of the total, revenue was up 9% and 5% like-for-like. In France, revenue was up 4%. Order intake for VINCI Energy was also strong in the first 3 months of the year, up 10% year-on-year. This growth was homogeneous between France at plus 10% and international plus 10%. It's worth highlighting that over the rolling 12 months at the end of March, order intake of VINCI Energy amounted to a record high of EUR 16.5 billion. Order book is EUR 12.2 billion at the end of March, up 13% year-on-year and representing 10 months of VINCI Energy's average business activity. Finally, please note that VINCI Energy remained active on the M&A front having completed 7 bolt-on acquisition in Q1 '22 essentially in Europe, representing a cumulative annual revenue of around EUR 70 million. Cobra IS. Revenue of EUR 1.2 billion, with 46% coming from Spain and 36% coming from Latin America. It was driven by good momentum in flow business, particularly in Spain, Peru and Mexico and by EPC projects relating notably to power transition lines in Brazil. Note that around 10% of revenue this quarter is linked to renewable energy projects. Order book of Cobra at the end of March is EUR 8.4 billion, a high level that represents more than 18 months of business activity. VINCI Construction. The division achieved a substantial increase in revenue at EUR 6 billion, up 14% and up 11% like-for-like. Outside France, that's 51% of the total revenue, growth was outstanding, plus 26% and plus 20% like-for-like. This growth was boosted by the ramp-up of several large contracts, including the 2 work [indiscernible] on the high-speed 2 in the U.K. but as well Motor and rail projects in Canada, Australia, New Zealand and some proprietary works on the [indiscernible] channel between Denmark and Germany. In France, where we saw a good momentum in road works, revenue was up 3%. The 9% decline in order intake year-on-year of VINCI Construction resulted from a high base of comparison that I mentioned earlier. In addition, given current market trends and given the very robust order book, VINCI Construction is lengthening a particularly selective approach to taking on new business. In particular, note that we have recently taken the decision to stop signing contracts taking place over the medium term unless they have price adjustment clauses. No more fixed-price contracts over the medium term for VINCI. VINCI Construction order book ended the quarter at [ EUR 34.3 billion ], almost unchanged year-on-year, only down 2%. It represents more than 15 months of average activity. VINCI Mobility, revenue of EUR 337 million, up 5% year-on-year. Production remained in both the residential and commercial sector. The number of homes reserved in France was 1,102 units, down 28% versus Q1 '21. In Q1 '21, remember, there was a sharp post-COVID catch-up. In other words, the comps were quite challenging this quarter. In conclusion, despite a more challenging economical and geopolitical environment, we confirm our previous 2022 guidance. VINCI Autoroutes expects full year traffic levels to exceed those of 2019. VINCI Airports anticipates that passenger numbers will continue recovering to around 60% of their 2019 level, enabling it to achieve net income close to breakeven. VINCI Energy, which operates in buoyant market, should be able to continue growing its business while solidifying its operational performance. Cobra IS, benefiting from firm momentum in its core business and the ramp-up of some EPC projects, is expecting revenue of around EUR 5.5 billion and operating margin in line with the industry's best-in-class. VINCI Construction, thanks to its very large order book, is likely to remain busy and improve its operating margin while taking a selective approach to new business. Overall, we confirm that VINCI expects net income in 2022 to be higher than the 2019 figure. More broadly, in beyond 2022, we remain confident that VINCI will be able to maintain a consistent growth. The group has a number of key strengths since its energy services, construction and mobility businesses place it at the heart of the green growth. We would like to thank you for your attention and my colleagues and myself are now ready to take your questions.

[Operator Instructions] And we have our first question from Jean-Christophe Lefèvre-Moulenq from CIC.

I have question regarding optimistic guidance you have just provided, Gregoire. In particular, on VINCI Construction. VINCI Construction posted an EBIT margin, I think, of 3.7% last year. Are you able to improve this margin level, both in via -- and in VINCI Construction -- as a former VINCI Construction from the perimeter? And second issue regarding VINCI Airports, we have a contrasted situation. Better in Portugal, still difficult in Cambodia, in aéroport de Cambodia. Were you able and are you still able to continue to reduce the costs, given the very low level of the traffic and in Lisbon, we have an improvement. Will you restart the CapEx program of the new airport or not?

Yes, so regarding the guidance, you say it's optimistic, but it didn't change. It's exactly the same. We confirm what we already said. Yes, for VINCI Construction, as I just told, despite the current environment, and we may come back more in details about that, we wrote the guidance that we expect to be able to increase the EBIT margin. So to speak in detail of the EBIT margin is not exactly the topic of this call. But last year, you're right. In 2021, the EBIT margin of VINCI Construction was 3.7%. So when you read the guidance, yes, this margin can be, let's say, increased a bit. And we don't make the split, and we already told you that between, let's say, the old VINCI Construction and Eurovia, no, because there is a new organization. Some teams are very, let's say, close to each other. So we are not, let's say, it doesn't make sense anymore really to break down the old VINCI construction and Eurovia. Now we only speak in terms of VINCI Construction, new look. For VINCI Airport, Jean-Christophe, I think in your question, there were many different questions. So can you -- what was the -- can you repeat it, please?

Yes. If we go into the details, first, we have a contrasted situation with a good improvement in Portugal, in France and still a difficult situation in Cambodia. In Cambodia, were you able last year, and will you be still able in 2022 to reduce the cost of aéroport de Cambodia, Cambodia Airport. And secondly, regarding ANA, you have stopped a big CapEx program, but given the improvement of the traffic, will you restart it or not?

Okay. So regarding the cost for Cambodia, we see a very slight, let's say, beginning of improvement. Of course, it remains very, very low, and it's particularly affected by the fact that China has very strict rules in terms of restriction. So there is a direct impact on Cambodia. That being said, the costs have been reduced as much as we could. And you know that VINCI Airport as a whole was probably the best cost cutter of the market. We did what we could. So if traffic, let's say, stays at the very low level, I'm not sure we can further reduce the cost. But on the other hand, they will not increase. So the other airport, you're right to focus at the bright spots because Cambodia is not the brightest one, but you mentioned France, Portugal, so that's right. Since the traffic will increase, of course, and that's good news, the cost will increase. And the CapEx for airports, I think you referred to Montijo Airport, let's say, we are, of course, at the disposal of the grantor to make this CapEx. But today, the decision is not in our [course] I remind that, yes, the government and Mr. António Costa has been reelected as Prime Minister in January in Portugal. And good news is that he had as well a majority at the parliament. This government is determined to resolve the airport capacity faced in Lisbon. Today, there is an environmental assessment process, which is ongoing, and the results should be expected maybe in 2023. Within this environmental assessment process, there will be very detailed analysis of the Montijo option. But clearly, of course for a country like Portugal, improving air transport accessibility is really key for such a country. And to them, of course, is one of the main economic resources. So it will advance, but today, it's not, let's say, us to push the button, but we are always like everywhere helpful at the disposal of the public authorities.

Okay, I have a follow-up question that I think it is an important subject, Gregoire, on the work in progress for a public authority in France and more generally, in Europe. As you maybe saw, the French first minister [Foreign Language] has just issued a circular on exceptional circumstances, [Foreign Language]. Is this decree now applicable? And are you now able to -- have you the right to be fairly compensated for the extra raw material costs for the works in progress or not? I think the thing aren't fully clear for this new decree.

It's not a decree. It's a circular. It's a Prime Minister circular. It has been issued on 30 March. And so maybe for other people who may be not so familiar with this subject, this circular relates to the performance of public procurement contract, and it's something very positive in the current environment of rising prices. In fact, it will make this negotiation, let's say, easier with the public clients. It's a bit like in the same spirit on what has been issued, you remember, in April or May 2020. So it should have a positive influence on public clients. It goes in the right direction. So we can only, let's say, welcome such a circular with the application of the top 3 of the enforceability, as you say, that's very important. And maybe ultimately such a circular can also have an influence on the private sector personnel. So that's very positive. And as far as I know, it's valid, it's in place.

We have another question from Luis Prieto from Kepler.

I have a couple of very quick ones. The first one, would it be possible to isolate or quantify any potential Q1 impact of fuel prices on light vehicle traffic? Any indication -- in the same direction, any indication you could provide on how April is performing in terms of this hypothetical impact, if any, at the moment? And the second question, in light of Q1 performance and your selective order intake approach, which you highlighted again, just a moment ago. Can we rule out the possibility of cost inflation and/or potential supply chain disruption translating into hypothetical contracting execution slowdown in the coming months?

So yes, regarding an old risk, yes, I mentioned that there was underperformance of traffic on VINCI Autoroutes in March 2022. The traffic in March 2022 was down 2% versus March 2019. And it's -- there are 3 reasons for that. First one is what I told a negative calendar effect. That's what we explained when we released the traffic in February, which was very strong. We said, okay, February had a positive comp, March will be the reverse, will be the opposite. So the winter school holidays in 2022 took place, let's say, mainly in February. In 2019, it was spread over February and March. So high comps. Second explanation is -- but it was important, some very bad weather condition in March in France. For those living in France, you know that we were under the rain all day long during a long part of the month, so it's such a weather. It doesn't feel -- make you feel like going and traveling too much. And finally, because it's -- I know it's your -- I read between the lines. We cannot rule out that there was a negative impact of the violent increase of the oil price because of the war in Ukraine. And you know that on a [qualitative] point of view, and that's what we observed in the past is that when there is such a violent and sudden rise in fuel prices, it may temporarily slow growth in light vehicle traffic. It's a kind of, let's say, short-term psychological shock for the driver. But what we have said as well is that there is quite a quick normalization thereafter. I mean people adapt to the new level of price. They take this new level of price into account in their personal budget because the need for traveling is so important. It's a human burning desire to travel. And so as soon as petrol price in addition, when material price decreased, let's say, the pent-up demand materialize and demand is back. Good news is that since the beginning of April compared to the peak of the oil price in France at the end of March, the oil price decreased a bit, and you will see the April traffic figures mid-May. I think I missed 1 question of Luis. So the question, yes, in the current situation, there may be some delays, yes, because of a shortage. There may be some revenue postponed from 1 year to another. There may be sometimes some wait-and-see attitude from the clients waiting for, let's say, better price. So what I think is that ultimately, we are in a new world in terms of inflation. We are in a new world and the clients, the market will have to relearn how to live with inflation. Finally, probably there will be no other choice. The prices will increase. Prices of construction projects will increase because this price increase of the price of components of fuel price and so on, that's the risk. We, VINCI, as a contractor, we will not take, and our competitors will do the same. They will not take such a risk. So ultimately, the prices will go up. So maybe at a certain point, we don't see that today. And today, it's very difficult to make some let's say, forecast. The visibility is very low. But ultimately, maybe such a current situation can drag down a bit demand and order intake in volume terms but not necessarily in value terms. Let's say, the lower volumes compared to what is expected can be compensated by higher prices ultimately more value. But again, at this stage, it's very difficult to predict the indirect impact of such a crazy war.

So we have another question from Elodie Rall from JPMorgan.

Gregoire, I have 2 questions. The first one is on the order book and the risk in contracting in general. Even you mentioned that 68% of the order book now is now generated from outside of France. How do we think about risk between contracts in France and contract outside of France, given that in France, we know the market is quite consolidated with only like 3 main players looking really closely at margins and protecting margins? There have higher risk in your view in contract coming from outside of France. So that's my first question. And my second question is on the high level of construction activity in Q1 for VINCI Construction. Do you think that some of the supply chain constraints that I think management spoke about at the end of last year had anything to do with like renewed -- the stronger activity level, basically the pent-up demand that was there.

So for the first question, Elodie, even abroad, that's true that the proportion of international increased, and that's in line with our strategy. That's what we built up since many decades year after year. So when we are on the international projects -- you're right, in France, we know this market, of course, very well by nature. This market is very, let's say, seen. Okay. But on international, when we make activity in international, it doesn't mean we just make some kind of exports. It means that we are deeply rooted since a very long time, and we are local players. That's the case, for example, I don't know, in the U.S. In the U.S., we are there since several decades. We bought another company at the end of 2018, laying plants and paving. And so we grow our capillarity, but let's say, we have local management. We are in the country where we feel comfortable. But that's something to monitor closely. And that's exactly why there are, for example, some states in the U.S. where we will not go because we would be as a, let's say, a foreigner as a stranger. There are some countries where we don't go for many reasons because we don't understand the business behavior, let's say, the economic and political systems and so on. So our presence abroad is really, let's say, deeply rooted. It's not so only we go in a country, and we will make more than 50% outside, that's countries where we are since many, many, many years. Does it answer your question?

Yes. Okay.

And the second question, no, the very good trend, the very good momentum we printed for VINCI Construction is mainly due by the way, outside France, on large projects and the large projects we won. High Speed 2 in the U.K., some motorways and railway project in Australia and New Zealand and motorways project in Canada. That's really the ramp-up, the buildup of these large projects, which explains such a performance. It's not so much some revenue, which would have been postponed from 2021 to 2022. And by the way, what we said at the end of 2021 is that regarding its revenue postponement because of shortage was more for VINCI Energy rather than VINCI Construction.

So we have another question from Nabil Ahmed from Barclays.

I had 4 actually, if you don't mind, so I may be asking them one by one. The first one, I know it's a difficult one, but are you able to isolate the pricing impact in VINCI Construction growth in Q1? I'm thinking at material prices for Eurovia and also maybe the triggering of escalation closed for construction. I mean was that a big factor in terms of the like-for-like growth.

No, we are not -- we have, in total, when you take VINCI Construction and VINCI Energies and with Cobra, it will be even more than that. We have 300,000 contracts. So that's true that some business unit can be kind of, let's say, visibility on that. But I will not give you and will not tell, okay, x percent of the growth comes from, let's say, the price increase or the bitumen increase and the rate for volume. So I'm sorry, I'm not able to answer you. It's more complicated in our case than in other sectors. That's true that, for example, in cement that you know by heart, that's small, let's say, some drivers, which are monitored closely by you. So we do as well the same, but I cannot give an answer like that especially not for Q1.

Okay. And when you say you are more selective at VINCI Construction, is that a comment that applies to France to the overall business? And could you describe what's the environment for prices right now on new bidding? I mean is that a reaction you have because you don't see competition very rational in some of the markets, for instance?

Yes. So more selective, we are always selective but more selective maybe today than ever. It's true in France, and it's true abroad as well. If -- and probably our competitors will do the same because, again, what I explained a bit earlier is that we are lucky to have very high order book. It gives us visibility and serenity, and we are very lucky for that. We don't have, let's say, to fight like crazy to get some volume at any price. We could live very comfortably with smaller order book. So let's say, we have the means of such an ambition with such high order book. We don't want to take inflation risk. That's not our job. We are not better positioned than the clients to monitor these kind of fluctuations, which are very, very difficult. So -- and with such order books, we can be selective. And the competition, everybody what they want do what they want, but the competition, we think, will do exactly the same. So what does it mean to be selective? It's to be cautious, to be vigilant, to refuse to bid for contracts with fixed and nonadjustable prices. We have enough to do, so we don't need, let's say, to take a risky contract. And we think, ultimately, this -- the prices will increase. Again, the clients and people in the world maybe, that's something new that we enter a new world and people will have to get used again to inflation.

Okay. The third question I had, I was wondering if you could provide some comparison of Cobra versus last year. I mean I remember you've been saying as well that you were also more selective and which I understood as there are some businesses that you are less interested in. So I would assume that maybe revenues went down versus last year. Could you provide an idea of what was the performance of Cobra in Q1 versus last year?

In fact, we are now -- I'm going to disappoint you. We are more focused on integration. I know last year was very specific. It was, let's say, an entry in a year, we -- so we prefer not to, let's say, compare Q1 '22 versus Q1, '21, for example. The current trend of Cobra is bang in line with what we expect and with our business plan for the full year. This means, okay, we had EUR 1.2 billion in Q1. That's fine. That's what we expected. And at the end of the year, we expect revenue of EUR 5.5 billion which will be higher than the revenue last year. And we asked Cobra to be very selective as well to apply the same, let's say, recipe, the same stringent rules. And the same for them, they have a very high order book, more than 18 months of activity. So let's say, relatively, it's even bigger for them than for VINCI Construction or VINCI Energy and who the project are mainly short cycle, so maybe comparison is not, let's say, relevant. But so Cobra has visibility so they can afford to be selective and to follow the rules.

Understood. Last one is the easiest one, actually. And coming back to an earlier question, I think that we've asked about the impact of fuel prices on overall traffic. Could you confirm that from the first of April, French drivers benefited from a rebate paid for by the government on baseline prices?

Yes, I confirm and it's in place until the end of July 2022. So it's a good help. It's a subsidy, which is important when you make -- when you fill your gas tank with such a subsidized, you save almost EUR 10 per full gas tank. So it can have an impact, and you may have noticed that the petrol price since the peak at the end of March for the diesel and for the unleaded petrol price, at the end of March, it increased strongly in the 10th of March until the end of March. At the end of March, it was a bit more than EUR 2 per liter. And now today, it decreased at around EUR 1.8 per liter.

And that's before the rebate?

After. [indiscernible] That's in fact because ultimately -- and after, what will be key to monitor in terms of traffic for motorways will be Q3, which is, of course, the most important quarter of the year. So if you at close, it will be -- the performance of the year will be printed, let's say, from June as usual.

So we have another question from Marcin Wojtal from Bank of America.

Yes. So I've got a couple of questions. Firstly, can you comment on the evolution of aviation tariffs in your main airports? Let's say, maybe in Portugal and London Gatwick? Have you been increasing these tariffs at all in the last 12 months? Are you planning any increases in the coming months? Or are you perhaps providing discounts to airlines to help the traffic to recover? And can you also remind us which of the main airports have tariffs, which are linked to inflation? So that would be my first question, if that's okay. And question number two, sorry to come back to construction margins. But can you just remind us, I mean, what is the main reason for you to expect profitability to improve? Is it better execution? Is it that you're finishing some old, less profitable projects? Because obviously, when revenue is growing so much, typically, there is lower profitability in the initial stages of new projects, and you mentioned several projects which are large and which are new as well.

Marcin, so inflation specifically, yes, you're on airport. Generally speaking, the sematic of inflation is very important in contracting for concession. But with concession, with motorways and airports, we are very happy because they offer us edge versus inflation. So your question is regarding airports. For ANA, this is -- the aeronautical fees are linked -- are inflation linked, inflation being the European inflation, that's the kind of a harmonized index of consumer prices determined across all the European countries. You know that's calculated that inflation, which is calculated at the end of August for an application, the year after the 1st of January. So ANA, let's say, no problem, quite straightforward inflation mechanism. And public -- the aeronautical fees for ANA are public, if I'm correct. And in 2022, the increase in average, the blended increase is almost 5% on the Portuguese airport. Okay. for Gatwick, very easy as well that some agreements with the airlines, with the clients. And these agreements are based year-after-year on RPI, on the retail price index. So the same, there will be a mechanical pass-through mechanism for Gatwick. So I mentioned ANA, I mentioned Gatwick, with these 2 airports, we have already covered 60% of the revenue of VINCI Airport of the normal year. But if you want more food, a lot of other airports have straightforward aeronautical fees linked to CPI. That's the case in Brazil, for example. That's the case in Belgrade, in Cambodia, in Chile. So I covered 90% of the revenue of VINCI Airports. After there are some situations where it's on year-after-year negotiation. But as infrastructure manager, we know and the stakeholders know, the grantor know that CPI is absolutely key. So I mean even if you don't see a formula of pass-through for CPI, you know that in the negotiation, of course, inflation is an unavoidable parameter to take into account in the financial equilibrium of the deal. So the -- for VINCI Construction, let's say, the answer is the same as the one we did at the beginning of the year is that we think VINCI Construction is still ruling to increase and to improve the operating margin because we are still, let's say, pretty far from an optimal level. Because until the end of 2020, we suffered from a loss-making project. And notably in France, to follow up on the question of Elodie, even France, we can go through big difficulty sometimes. But these loss-making projects are now behind us. So from 2021 onwards and in 2023, it will be the same. You don't have any more dilutive impact of such loss-making projects. After, it will be as well some better execution and a better organization as well, thanks to the new unique management of VINCI Construction and Eurovia. This VINCI Construction new look is led by Pierre Anjolras. He did a great job at Eurovia during many years, and he will do probably the same at VINCI Construction. So today, we are still, let's say, reasonably optimistic and the margin we see in the backlog make us confident.

So we have another question from Jose Arroyas from Santander.

A question first on the Autoroutes. I'm starting to reconcile revenue is up 9% versus the Q1 '19, but traffic is just 2%. So I wanted to understand the different moving parts here, and I was wondering, in particular, the impact of the extra board bypass is the extra board bypass counted in the revenues, but not in the traffic data? So that's question number one. And question number 2 is on Cobra IS. It's probably early days, but I wanted to check with you what progress has been made towards the commissioning of some or several of the 15-gigawatt renewable pipeline so far?

Yes, Jose. Revenue in VINCI Autoroute Q1 '22 versus Q1 '19, growth of traffic plus 2%. And in addition, you have 3 years of tariff increase. You compound tariff hikes, those hikes which took place in 2020, the 1st of February 2020, the 1st of February 2021 and the 1st of February 2022. And the other moving part is the mix effect. Sometimes it can have a positive impact, sometimes a negative impact. When the trucks outperformed in terms of traffic the light vehicles, since the trucks paid than the car ultimately you have, let's say, a further boost in your revenue. Regarding Arcos, so that the western bypass of [ Prague ] in the East of France, we commissioned and we opened this asset mid-December 2021. So it's a small asset per se. Revenue for the full year 2022 is, let's say, the beginning of the ramping up very young assets. It will be a few tens million euros, maybe a bit more than EUR 20 million. So it does not have a big impact. Don't forget anyway that since it's a young asset, and it's always like that at the beginning of the concession. That's what we call the J Curve. It's -- they will not be profitable the first year. So it may -- it will have a deal, all things being equal, these small assets will have a small dilutive impact on the profitability of VINCI Autoroutes. Regarding the second question, Jose, with Cobra, we have 3, let's say, hot projects to develop in the very short term. That's what exactly the CEO explained at the beginning of February. Let's say the 3 next upcoming renewable projects that we will operate as a concessionaire. The next one is in Brazil. That's a photovoltaic plant. It's a 570-megawatt capacity. The project should be -- the work should start immediately very, very soon. CapEx will be EUR 350 million, and this asset should be ready to produce in mid-2023. So this one is probably the works will start, if not already started, very, very soon. For production, mid-2023. The other asset we highlighted at the beginning of the year, and it goes in the right direction. So we develop, we work and so it's, let's say, it goes in the right direction. The second project is in Ecuador. It's an onshore-wind concession. It should be ready to build in the next few weeks or few months. The capacity is 110 megawatts. That's a CapEx of around USD 175 million, and it should be ready to produce by the end of 2024. And the third project, which is, let's say, very close, it's a photovoltaic plant in Spain for a bit more than 110 megawatts. It should be ready to build by the end of 2022. We are waiting for, let's say, the latest different authorization. CapEx of EUR 70 million, and it should be ready to produce maybe somewhere in H2 2023 or early 2024. So it goes, let's say, in the right duration.

So we have another question from Gregor Kuglitsch from UBS.

So can you just specify maybe how much you spent on M&A in the quarter? There were a few deals. I think 1 has to be as the close as well. And then maybe specifically on the 1 -- well, the 2, I guess these were actually in April, but anyway, the TollPlus deal, if you could just provide a little bit more detail and also on that smallish concession in Canada would be helpful, please. The second question is just on construction. I mean, obviously, you had a really strong Q1. I seem to remember before the message was a bit more like, I don't know, stably revenue. So should we expect that still to be true? Or is it now starting to build a little bit of upside risk given, I guess, the ramp-up of some of those contracts is probably just started. And then finally, I saw in your commentary that perhaps was disclosed before, but I'm not sure it was discussed at any particular point in time is the scope 3 reduction. If you could just maybe give us a little bit more detail around that, the 20% target? How much can you really control? What are you actually doing there to achieve that?

So regarding M&A, so we don't comment yet. And the deals we announced for April, so TollPlus and the configuration bridge in Canada. I mean I'm not sure they are closed. That's the first reason, and there are some nondisclosure agreements with the seller with the seller of TollPlus, which is with an Indian, let's say, entrepreneur, and we [indiscernible] the infrastructure fund in Canada. So I don't know what I can tell you sorry. I prefer at this stage not to tell you the amount. Regarding the transaction, the M&A, which has been closed in Q1, I prefer to give you any prices because there were not a lot, let's say, of transactions for confidentiality reasons. If your underlying question is to try to estimate other things, maybe -- yes, okay. So free cash flow, below the free cash flow, you had this M&A, but I don't comment on the amount because I prefer not. I don't know if I'm allowed or not. You have as well the share buyback in Q1 2022, we did for [ EUR 600 million ] of share buyback. So it's not nothing. It's not of importance. And above free cash flow, and I'm sure it was the sense of your question, maybe you have the working cap change. The working cap change in Q1 is negative, and that's totally normal at this time of the year. That's due to seasonal variation in our business activity, and it's negative as well because we integrate Cobra IS whose working cap change in Q1 for the same reasons of seasonality is negative as well. But if we adjust from this, let's say, scope effect, let's say, our working cap change is pretty reassuring, not too far from, let's say, a normal level for Q1. So in other words, let's make it clear, we don't see at this stage big unwind or backlash on our working cap despite the stellar performance of the working cap in 2020 and 2021. So it's pretty reassuring. The second question was, Gregor?

I think it was on CO2 emissions, the Scope 3.

Okay. Okay. We announced that we will reduce our Scope 3 emissions, which amounts currently at around a bit more than 40 million tonnes per year, by 20% between 2019 and 2030. So it's in addition to the first ambitious target we have on the Scope 1 and Scope 2, which is to reduce the CO2 emission by 40%, 4-0, between 2018 and 2030. And the good news as well is that this, let's say, ambition on this target is very important for a lot of investors have been validated by SBTi, the science-based target initiative. So to give you a few examples. We write there, let's say, maybe 30, 40 or 50 pages in the [ URD ] regarding all that. So in detail, you will find a lot of things. But for example, to reduce emissions with our supplier, we will try to push some low-carbon concrete and our ambition is to use 90% of low-carbon concrete by 2030. To give you an example, for example, in concession because we spoke quite a lot about the concession, we will deploy some electrical charging stations for airports. We can set up, let's say, an industry to develop some green hydrogen and liquid hydrogen to boost the future organization. We can propose in the airports the modulation of ironical fees depending on the environmental performance of the aircraft and all these kind of initiatives to try to make some more green efficient, more energy-efficient buildings for our clients to help them to monitor their CO2 emissions and to have a real impact on that, so that's all these kind of initiatives.

Okay. And then construction, the revenue outlook given the strong Q1?

Yes. The guidance did not change. So we said that we will keep, let's say, we will stabilize a high level of revenue. So Q1 is only a Q1 record, all of you, it's maybe too early to extrapolate too much. And what we said is that we will be selective. So at the end of the year, will the growth be as strong as in Q1? Q1 does not -- you cannot extrapolate. Maybe it will be flattish, but if it's flattish, flattish plus because we are selective and because we will not run after volume, let's say, desperately, it can be a good news as well. So I cannot be more specific than that, Gregor.

So we have no further questions, sir.

Okay. So thank you very much. We hope to see you in person very soon. And in the meantime, as usual, Rallis, Boris and myself, we are at your entire disposal, should you have any questions or follow up, we are here for you and the same for the buy side in this call. Bye-bye.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.