Vinci SA (DG) Earnings Call Transcript & Summary

Good morning to you all. Thanks for joining us for the presentation of VINCI's half yearly results, you'll see -- and I'm sure you've already read that our financial performance is excellent, I would say, even once again excellent. I'm joined today by Thierry Mirville, CFO of VINCI since the 1st of June, Thierry has been the group for over 30 years. He's a pure product made in VINCI, and notably was CFO of VINCI Energy for 12 years, taking an active part in this tremendous success story. He was Head of Treasury Finance and tax of VINCI at the holding for 3 years with Christian Labeyrie. He was schooled in Gotham. So he was CFO of VINCI Construction for 5 years on my side. During which we learned to get to know 1 another work together and we form a tandem that works very well. I'm also joined this morning by other members of the Executive Committee as well as Gregoire Thibault and his Investor Relations teams will be available to answer all your questions. Now this first half delivers once again an excellent performance by VINCI driven by the dynamic trajectory of Energy Solutions. This result is quite remarkable in the current context of geopolitical macroeconomic context that you're familiar with that weighed particularly on Concessions traffic. The takeaways over and above Energy Solutions that we'll return to that in this environment, our teams were able to adapt rapidly to control at best the cost. It's a new illustration of the our decentralized organization, agile, responsive, tirelessly focusing in our 3 businesses on a margin increase, cash flow generation of value creation over time. It also reflects the ability of group's companies to pass on inflation. Furthermore, in this fragmented global environment. Our belief is strengthened that investment requirements in vital infrastructure, notably energy, digitization, mobility, urban development, as said, to intensify mid- and long term, will continue to accelerate, driven by sovereignty issues in various parts of the world. VINCI is ideally positioned to leverages acceleration as witnessed by the very good order intake in record order book that I'll present to you. Another key takeaway of this half is the group is posting an increase in its revenue and its earnings, free cash flow is positive as of H1. It's not systematic, as you know, owing to the structurally unfavorable seasonality of some of our activities early in the year. At the end of this day, this overall good crop allows us to confirm our 2026 guidance in spite of a more prudent outlook for concessions and led the Board of Directors to approve an interim dividend of EUR 1.10 per share in respect of 2026 as compared to EUR 1.5 per share for FY 2025. Shown here are the key financials of our performance. Thierry will cover those in a moment. The key figures increased revenue, plus 2% in H1, of which plus 4% in Q2 with continued international expansion of the group strategy implemented with consistency and discipline for 15 years now international represented in H1 2026, 59% of revenue. It's a significant increase more than 2 percentage points more than the H1 2025. Another key number, EBITDA grew plus 4% coming at EUR 6.4 billion an increase in value, absolute value terms and margins plus 48 basis points, and it counts for us more than volume growth, what counts for us is profitable growth. Strong increase in earnings per share, double-digit plus 11%. Free cash flow is already positive, as I said, at EUR 264 million. And order intake, particularly buoyant both for Energy Solutions as well as Construction in France and internationally. All in all, they are up 8%. All this is a remarkable performance in the current macro and geopolitical climate that reflects the strength of our model based on a diversified geographical footprint and our 3 highly complementary businesses. Turning now to details by business, starting with Concessions. Revenue growth at plus 1.5% at actual structure, plus 2.7% like-for-like EBITDA margin comes in at 69%. That's an increase of over 150 basis points versus H1 2025 and all Concessions businesses grew their margins this H1. Well done to Nicolas Mora and his teams. Diving deeper what we can emphasize for VINCI passenger traffic was stable in H1. This performance reflects the good geographic diversification of the network and its resilience in the face of cyclical salsas if the conflict in the Middle East, any consequences on the price of fuel as well as Cyano-Chinese tensions had an impact on some of our airports, London Gatwick, Kansas in Japan, many other airports, notably in Portugal, Edinburgh, Budapest, Belgrade, Dominican Republic, Brazil or Kaveda continue to post good traffic levels. Against this backdrop, VINCE Airports revenues up over plus 1.8% like-for-like, plus 5.3%. It's EBITDA grew to EUR 1.4 billion. That's a margin up, reaching 62.6%. For VINCI Autoroutes, well, no, a cyclical weakness of traffic, primarily due to the sharp hike of fuel prices in March, to which was added a negative effect of several exceptional heat waves that occurred since the end of May. In this context, whereas light vehicle traffic dropped by 3.7% that of heavy vehicles is up by plus 1.6%. The limited decrease in revenue to minus 0.7%, thanks to this traffic mix and the productivity efforts achieved. VINCI Autoroute's EBITDA is up to EUR 2.4 billion to reach a margin up at 75%. VINCI Highways that international highways portfolio. We must note the successful integration of our recent developments in Brazil, where we manage a network of 1200 kilometers, strong increases of revenue, EBITDA and EBITDA margin. Turning now to Energy Solutions. This half confirms its excellent positioning excellent positioning on lastingly promising markets, electricity markets with production, storage and transmission also increased electrification, optimizing industrial processes, enhanced building performance markets linked to AI development, data centers, digital infrastructure services not forgetting defense and sovereignty issues. All in all, Energy Solutions revenue comes in at over EUR 14.5 billion. That's a 7% increased 4% like-for-like. Very strong momentum in Q2 growth, plus 9% -- 10% internationally, plus 6% in France. This growth is accompanied by a further improvement in margins 40 basis points coming in at 7.8%, which clearly positions us once again amongst the most high-performing players in the industry globally. Congratulations to the teams for this very virtuous growth. So some color you see top right VINCI Energy delivered strong revenue growth in Q2, plus 9% in France and internationally, VINCI Energy continued to roll out M&A policy constantly with discipline, acquiring some dozen companies this half internationally, growing its EBIT margin over 30 basis points at 7.5%. For COBRA, activity is up in Q2 by 7.5%. This growth is sustained, both in flow business, particularly in Spain, and also in EPC project, the energy asset portfolio long term was strengthened in this half, more in a moment, COBRA margin is up once again plusing 8.4%. So focus on long-term renewable energy production Cobra through its subsidiary, Zero.e continues its road map. We implemented in the spring of this year, 2 new solar farms in Texas, capacity 280 megawatts, 80% of the power producers sold to Google through its data centers through 10-year PPAs. At the end of the first half, Cobra's portfolio reaches 1.5 gigawatts, including the Texas far and 4 gigawatts in ready-to-build capital invested by Cobra in production of renewable energy reaches EUR 2.6 billion to date. Furthermore, in electricity transmission long-term area of expertise for Cobra, we won 2 new PPPs, 30 years in Brazil after auctions organized by the Brazilian power authority that 650 km additional power lines, strengthening the portfolio for a construction cost just over EUR 200 million. The power line portfolio is now made up 5 PPPs in Brazil, over 2,500 of line form under construction, 1 in operation, a PPP in Australia, over 200 kilometers of airlines in -- under construction in the storage, production, transmission of electricity. It's an increasingly important long-term portfolio set to grow although more so the opportunities are many in number developing rapidly, notably in Australia, Brazil, the United States. These are markets that our teams are tracking very closely. Turning now to Construction revenue, it is stabilizing at EUR 15.5 billion in margins, although they're not represented representative in H1, as you know, a stable for VINCI Construction, thanks to a solid Q2 up 2.6%. The revenue for the half is stabilized at EUR 15 billion situations contrasted by segment, geographies, a decrease in activity of major projects that represents deliberately less than 10% of revenue due to the progress of the HS2 line in the U.K. A downturn in France, on the back of the traditional elections and the phasing of some construction projects in other segments, growing activity, good dynamic in Oceania and Central Europe. In a disrupted environment. VINCI Construction's EBIT margin is stable, well done to the teams of VINCI Construction, brails to the teams of VINCI Immobilier real estate, it depressed property development market grew EBITDA, maintained EBIT margin stable. Thanks to the continuous effort to cut costs in order to stay the course. Order intake in H1, posting a high level at EUR 34.4 billion. That's an increase of over 8%. The takeaway here order intake, particularly noticeably in our flow business, that make up the bulk of the group's revenue in Energy Solutions and Construction. Noteworthy is the amount of order intake is greater than current activity, both in Energy Solutions and VINCI Construction is that the order book continues to grow. This slide, just to share with you news in terms of data center construction, several construction and installation contract, multi-technical lots for data centers were won by the group in H1 2026 for a total amount of some EUR 900 million. This is a market in which VINCI has clearly a key role to play, particularly in Europe, notably Spain, France and also in certain Asian geographies. And I can tell you the best is yet to come because we have a number of projects in the pipeline or in advanced negotiations with several GAM, and we don't rule out announcing some good news soon. On the order book, as I mentioned, it's up plus 8% on a year, plus 10% since the end of December, reaching close on EUR 77 billion. This is a new historic record for the group. It represents, in total, 15 months of activity. It's quality book that offers visibility to view the future with confidence without departing from our policy of selectivity, focusing on margin over volume. We note the share of France is less than 30% out of Germany, close on 20%. The rest of the world, over 50%. I'll now hand over to Thierry who'll run through the financial performance of the group for the half.

[Interpreted] Good morning, everyone. It is indeed a privilege to be presenting VINCI's results to you for the first time as CFO. Thank you, Pierre, for placing your trust in May. And thank you to your Christian, who I believe is listening in for the quality of our discussions over all these years and particularly over the past few months. So it's both an honor and a pleasure as we have once again delivered an excellent set of results. Now revenue. Following a very strong Q2, first half revenue increased by 2.1% to EUR 35.6 billion. And this was despite a negative currency impact of minus 0.6%, resulting from the strengthening of the euro against our main currencies, particularly the U.S. dollar and the British pound. Changes in scope, 90% of which related to acquisitions outside France contributed plus 1.5% to growth, representing more than EUR 500 million in additional revenue from recent acquisitions. Now these measures in scope related mostly to VINCI Energy's acquisitions, which contributed over EUR 300 million to revenue growth. Pierre talked about the 12 acquisitions made in the first half of 2026, and we also made 33 acquisitions in 2025, which are having an impact on revenue in '26, but we also need to bear in mind VINCI Constructions acquisitions, which contributed over EUR 200 million to our revenue growth. So mostly Conway. Last year, in Fletcher whose acquisition we recently completed. In concessions, there were both positive and negative scope effects, but the key point is that Entrevias in Brazil, which has been fully consolidated since October 2025, this has offset the reduction in revenue in Cambodia following the expiry in September 2025 of our long-standing concession agreement for Pompe Airport which was replaced by a service contract. This means that organic growth came to plus 1.3% and with a strong second quarter at plus 2.9% organic growth. Growth was driven by international markets with revenue increasing by nearly plus 5%, including 3.3% organically. And the share of international markets continued to rise, accounting for 59% of our total revenue in the first half compared with 57% a year ago. Now by business line, as Pierre has already highlighted, growth was driven by the continued strong momentum in Energy Solutions, plus 7% on a reported basis, on a natural basis and plus 4% like-for-like. In Concessions, revenue increased by 1.5%, including growth of plus 2.7%. So the successful integration of the Brazilian motorways and revenue growth at the airports offset the temporary softness in the French motorway business. Conversely, Construction revenue declined slightly by 1%. It is worth noting, however, that the business recorded growth of plus 2% in Q2. Revenue growth came with increases in operating earnings and net income. So profitable growth in other words. ROPA, which we call EBIT came to nearly EUR 4.4 billion, up 5%. So the operating margin, therefore, increased by 40 basis points to 12.3%. As Pierre explained, our ROPA or EBIT was very strong across all our businesses. Now the other income statement items reveal the following key points. And I will try not to overwhelm you with too many technical details. The combined impact of the various items was broadly stable compared with last year. Now more specifically, we're seeing an increase of just under EUR 15 million in the contribution from equity accounted companies and other operating items. And we're also seeing a charge of minus EUR 40 million under nonrecurring operating items, which does not call any particular comment. Now EUR 66 million income last year relating to several disposals carried out by the group. Now turning to net financial income and expense. The cost of net financial debt increased from EUR 627 million to EUR 682 million. So that's a EUR 55 million increase. This mostly reflects changes in scope, particularly the impact of developments for VINCI Highways in Brazil. Other financial income and expenses included a favorable change in the value of the ADP shares held on the group's balance sheet. So a positive movement of around EUR 20 million in the first half compared with a negative movement of around EUR 40 million in the first half of '25. Lastly, the income tax charge increased by around EUR 100 million, and this is a mechanical impact. This is -- this reflects the strong operating performance delivered by our businesses in the first half. I'd like to remind that this amount includes the corporate income tax surcharge applicable to large French companies, which was extended into 2026. And in the first half, this represents a little over EUR 300 million. So a slight increase on H1 '25. And this charge is expected to total slightly more than EUR 400 million for the full year. Overall, net attributable income increased by nearly 10% in the first half of '26, reaching close to EUR 2.1 billion. Bearing in mind that the strong increase cannot necessarily be extrapolated to the rest of the year. And as we already indicated, this means EPS increased by 11%, reflecting our proactive share buyback policy. Now net financial debt increased by around EUR 3 billion between the end of December '25 and the end of June '26, that's a typical first half pattern for our businesses. This increase reflects EBITDA of EUR 6.4 billion, up by around EUR 300 million, with the increase driven almost equally by Concessions and Energy Solutions. And this also reflects the change in working capital and current provisions, which is traditionally negative in the first half as a result of the seasonality the Energy Solutions and Construction businesses and resulting in a negative cash flow impact of minus EUR 1.9 billion. Now this movement may appear significant, but it was exactly the same as in the first half of '25. Therefore, this does not represent a reversal following 7 years of significant and continuous improvement in working capital requirement. Rest assured that we remain highly focused on keeping WCR firmly under control, and this requires cost intertention and reflects the strong cash culture of our group. A culture that prevails among all our managers. Now finance costs increased, as I explained before, as did taxes, I'd like to remind you that -- the corporate income tax surcharge had no cash impact in the first half as it is paid at the end of the calendar year. Operating investments and investments into Concessions were stable compared with last year at EUR 2.4 billion. So you combine all of these items, you get free cash flow for the period, that's positive at EUR 264 million higher than at the same point last year. Bearing in mind, as the next slide will show that virtually all of which is free cash flow is generated in the second half. Below free cash flow, as you can see, cash outflows relating to acquisitions amounted to mere EUR 400 million in the first half, and this mainly concerned the VINCI Construction and VINCI Energies transactions referred to at the beginning of this presentation. Lastly, to conclude our review of cash flows. Cash outflows relating to dividends and share buybacks as part of VINCI shareholder return amounted to EUR 3.2 billion, higher than the first half of 2025. This can be broken down between payment of the final 2025 dividend amounting to EUR 2.2 billion and share buybacks amounted to EUR 1 billion. Overall, consolidated net financial debt stood at EUR 22.4 billion at June 30, 2026, below its level at 30th June 2025, which came to EUR 23.3 billion. This is a very manageable level given the group's strong recurring and sustainable cash generation profile. It represents only 1.6x the group's EBITDA over the last 12 months. Free cash flow generation, as you can see on this slide, generating positive free cash flow in the first half has not been a consistent feature in recent years. This performance, which is better than last year is therefore particularly noteworthy. And as mentioned earlier, VINCI generates its full year free cash flow in the second half and indeed largely at the very end of the year, given the nature and the seasonality of our businesses. This is a highly distinctive profile, which reflects the importance of year-end cash collections. The entire VINCI organization, both operational and finance teams, therefore, remain fully focused on this critical year-end milestone. Now our financial position is extremely strong. At VINCI, we have always placed great importance on maintaining a strong liquidity position. That's the price to pay for maintaining our independence and the freedom to implement our capital allocation policy, which we will discuss shortly. Now Christian made this point repeatedly for nearly 30 years, and I am now taking up the mental. What is our goal? Well, we seek to be able to raise substantial amounts of funding very quickly when required so that we can meet our commitments, namely the repayment of debt as it falls due. And also be able to seize acquisition opportunities that are aligned with our strategy. We also want to be able to deal with unforeseen events such as the crisis that have become increasingly frequent in recent years. And lastly, we want to be able to optimize the borrowing terms by choosing the best time to raise funds. At the end of June, we had a net cash position of EUR 11.5 billion as well as an undrawn EUR 6.5 billion committed revolving credit facility at VINCI SA level, maturing in January [ 2027 ]. And this brought our total liquidity to EUR 18 billion. Therefore, we are well equipped to extend the instability and unpredictability of our environment while continuing to grow. Credit ratings S&P and Moody's continue to demonstrate their confidence in VINCI through their strong credit ratings. And these credit ratings are a major asset for VINCI. It's 1 we must preserve by maintaining a disciplined and consistent approach to financial management and capital allocation. And this enables us to secure financing on attractive terms of the first half ones again demonstrated since the beginning of the year, VINCI and its subsidiaries have successfully raised a total of EUR 1.8 billion in new financing with an average maturity of 8 years and an average cost of 3.2%. Among these financing transactions, I would highlight the EUR 500 million bond exchangeable into Groupe ADP shares issued in February 2026. The bonds issue to have a 5-year maturity and they carry an annual coupon of only 0.75%. This transaction, there are 4 forms part of VINCI's value creation strategy by optimizing its cost of capital and its cost of debt and actively managing its portfolio of equity interests. These various transactions enabled the group to extend the average maturity of its debt while keeping its average cost at around 4.5%. Thank you for your attention. I will now hand back to Pierre.

Thank you, Thierry, for this very clear presentation, and I now turn to our outlook. As Thierry just indicated, the amount of our financial investments was quite modest. During the first half of 2026. But for all that, VINCI remained active, very active in terms of expansion. I'll illustrate this with a few examples in Portugal, Lisbon first of all, on the new airport project in which we've initiated studies at the request the Portuguese govement since early 2025. I mentioned that regularly. Last week, a new milestone was reached. We submitted the engineering costs and construction report to the Portuguese government, we jointly presented progress on this major project for Lisbon for the country and for its economy. As you see, this project is proceeding in close conjunction with the Portuguese authorities in the U.K. London Gatwick, we welcome the rolling end of June by the U.K. High Court that confirms the government's decision to approve the Northern Runway project. It's a foundational project for the airport for the U.K., notably in terms of economic fallout. These 2 examples clearly illustrate the significant potential of airports that we operate in addition for our -- to our development potential through M&A in France. Vince was designated preferred concession holder of the new A154-A120 highway route 97K as Western Paris for 35 years. VINCI Autoroutes will manage the project, fund it and operated VINCI Construction will design and build the signing of the Concession contracts submitted to competent authorities is expected in Q3 2026. In India, VINCI Highways in March, signed and agree with a view to acquire the portfolio of Safeway Concessions made up of 9 highway toll concessions, some 700 kilometers contractual maturities between 2048, 2058. This transaction is subject to the competent authorities for a financial close expected by the end of the year. In New Zealand, we finalized and made the acquisition of Fletcher Construction will allow us with our other local operations to become a major player in the very dynamic market of infrastructure in that country. In the United States and Brazil, as I mentioned, our long-term energy asset portfolio continue to grow. And lastly, VINCI Energy has accelerated its expansion in digital infrastructure services with recently a takeover bid on the Gem company or for EUR 500 million of revenue in respect of FY '25, digital infrastructures, as you know, constitute a key market for VINCI Energy through its Axians brand. That represents EUR 4 billion in revenue in the construction of digital infrastructure, telecom, data center, fiber cloud, enterprise network, but also deliver services around the digital infrastructure, either business application data applications and workspaces, cybersecurity. This would consolidate the leadership of VINCI Energy, drive its ambitions and the high growth of digital infrastructure services, ERP solutions, new generation, AI business applications, cloud and data analytics. All these development projects reflect our value creation strategy and ability to afford relations of confidence throughout the world, be it in our long-term or short-term activities. Turning now to our 2026 guidance. After the excellent financial performance of VINCI H1 notably with the dynamic trajectory of Energy Solutions. VINCI confirms its 2026 guidance. Further growth in revenue, further growth in operating earnings, further growth in net income group share, free cash flow that could reach EUR 6 billion. It is, however, important to note that the geopolitical and macro events, these past few months lead us to generally adjust performance for stable airport traffic and water route traffic down slightly. And all in all, we confirm the group's guidance. Given the quality of performance achieved in H1 are confident in the outlook of the group. The Board of Directors approved the payment of an interim dividend in respect of FY 2026 EUR 1.10 per share paid of EUR 15 compared to an interim dividend of EUR 1.05 in 2025. Furthermore, in addition to share buybacks in line with the proactive policy expressed at the start of the year that I'll recall the group bought back some 8 million shares in H1 for a total sum of EUR 1 billion in terms of capital allocation. The strategy remains consistent for the shareholder. Remuneration around the dividend with target payout ratio of 60% of the group's net income and furthermore, share buybacks over the prime goal aimed at offsetting dilution brought about by Newsies created as part of employee share ownership. The group may undertake opportunities to share buybacks depending on its financial regroom after taking into account M&A, the valuation of stock whilst preserving solid financial structure, justifying the maintenance of excellent credit ratings allocated as Thierry record terms of shareholder return. It's precisely what we did in H1. In terms of expansion, we plan to continue to invest in long-term transport infrastructure, be the airports or auto route through M&A or investing on our existing assets as well as in long-term assets of renewable energy production, storage and electricity transmission, short-term business, the group strategy is to call out in energy solution where the group's demonstrated over the past 20 years. It's now hard to acquire and successfully integrate new companies. Last year, the group remains open to opportunistic acquisitions in the construction sector. In terms of development, it's also the road map rolled out in H1 across our 3 businesses. Now we've just Thierry and I presented the financial performance of VINCI. This first half, this ability to create value over the long term. We once again demonstrated it rest of course, on a very strong VINCI culture, shared by all that makes VINCI unique on screen, the various ingredients of the -- it's a long-term mindset. It's the quest for all-around performance for us, financial performance and nonfinancial performance in Soprole, they contribute one another all-around performance. It's also a decentralized organization, agile, responsive, multi low particularly relevant in today's world. It's the reliability of its management with shared principles to the [ 4,300 ] business unmatched execution, a focus on cash generation, as Thierry mentioned, and great discipline in capital allocation. This culture characterizes VINCI across its businesses, geographies. It's a genuine cultural synergy that makes VINCI a rare and precious values only way for us to continue value over the long term, as we've demonstrated this half and as well continue to demonstrate this value creation over the long term. We'll continue to share it with our stakeholders because VINCI's real success is the success you share. Thanks for your attention, and we're now available to answer your questions.

Eric Lemarie from CIC. I have a couple of questions, if I may. Number one, the data centers you referenced in the press release, you say that you secured over those, particularly in Europe and Asia. I'd like to know why not in the U.S. market. could you be more active in the data center segment in the U.S. because that's where things are happening apparently. Second question, all for one, I understand that its recent financial performance isn't ideal. So maybe I'm jumping to conclusions. I'd like to hear your take on that, particularly when it comes to the acquisition of Absolute which is often referenced. ANA, you talked about the new airport in Lisbon. It is my understanding that KICOm was selected for the design aspect of this new airport. I'd like to know why, how come you're not working alone on this? And a couple more questions, if I may, regarding the productivity gains regarding VINCI Autoroutes whose operating margin has surged. It was my understanding that VINCI Autoroutes was always tightly managed. There's always ways to improve profitability. So what measures have been taken? That's my question. And 1 last question regarding VINCI Airports, excellent performance, strong organic growth, particularly in Q2, plus 6% in a challenging environment, as you said, so maybe I should do the math myself, but could you please give us an idea of the breakdown between the traffic impact on organic growth and the price effect on VINCI Airports. I understand that the passenger trends are good in Portugal and Mexico, but it comes under pressure in the U.K.

Well, you've covered a lot of ground in your questions. Let me give you a quick answer regarding OF1. The takeover process is underway, so no comments. We'll give you answers once the transaction is successful. We're not at this point at liberty to tell you more. In terms of data centers, it is true that we are still underrepresented on that front in the U.S. market. Obviously, as a result, we're not ideally positioned to reap the benefits of that market. However, we do have a clear leadership position in Europe. And there have been strong investments in data centers in the U.S. and in the rest of North America, and this is starting to happen in Europe as well, and we are ideally positioned to benefit from that trend in Europe. Regarding the ANA airport VINCI Autoroutes airports. I'll let Nicolas Sabina Remy give you more specific answers.

In the right sequence. Regarding -- now we're an operator -- we have all of the skills, and we're talking projects that are with several million euros. I mean, the new airport in this band. So of course, we have service providers. We don't have partners. We will continue to sign contracts as builders, for example, as designers. So this policy remains unchanged. And we will sinus builders as well. So we know who the design provider is. They're not a strategic investor at all. They're not an investor, they're not a partner. But in our culture, the work is never over. That's part of our culture. Now whenever we suffer headwinds such as the war in Iran, and obviously, this has caused a drop in traffic. We have to adapt. So we reduce cost, variable costs. We reduce IT services cost of certain types of multi-technical maintenance costs, and that's what VINCI Autoroutes did right away in a very big way. We did that at the time of COVID across the board in all of our businesses. That's a strong component of our culture, and we will continue to do that so we can keep on meeting our obligations. Now regarding airports, most of the price hikes don't materialize from January 1. We have to wait until March 1, April 1, and this is true for Gatwick, Everton is been same thing. The effect is more felt in Q2 than in Q1 in terms of pretax. There is a gap. And we have to bear that in mind, that time lag. So this is the shortest answer I can give you in VINCI Airports. VINCI Autoroutes have worked really hard so as to protect our EBITDA margin.

Now as a subscript to Nicola's answer, you may have seen this from 1 crisis to another. And there have been many more crises in recent years. The pandemic, the war in Ukraine every time our consortium teams have behaved in exemplary fashion. And when we compare ourselves to the competition, we find that our teams are extremely responsive and quick to adapt in the face of loss of revenue. And -- as we said before, this is part and parcel of our VINCI culture unrivaled quality of execution. That's how we stand apart from the competition. If there are no further questions in person. Pierre Sylvain.

Congratulations on your excellent performance. I have a question regarding energies. A strong acceleration in growth in Q2. I'd like to understand the underlying drivers behind that improvement, particularly -- is there a strong impact from digital at this stage? And -- how much would that represent in terms of margin. We're also seeing a significant surge in margin in this half year. So what would be the share of that sale. Now in Zero.e has significant CapEx invested in it. Could you give us an interim guidance before 2030, considering the size of the assets being built or ready to build at this stage? And 1 last question, a short-term question. Could you please tell us more regarding the impact of the heat waves on traffic, particularly the latest trends in France, particularly when it comes to motorways in France.

Now 2 technical answers. When it comes to the guidance for Zero.e, please look at note 23. The portfolio has capacity 5 gigawatt at the end '25. EBITDA should exceed EUR 400 million by 2030. It's the same guidance that we shared at the end of 2025, we have not updated it with the 5.6 gigawatts, but that gives you a ballpark figure. VINCI Energies. Yes. We say this every time. You shouldn't analyze if it was quarter-by-quarter because our year -- rather our business is started throughout the year, started over several years. So just because there's a loss in 1 quarter cannot be extrapolated. Now we're seeing strong growth, as indicated in our guidance. And all our activities are contributing across the board. All geographies, yes, digital as well, the refurbishment in commercial real estate, energy infrastructure and a number of industry activities. They're all making a contribution, both in terms of growth and in terms of profit margin. I think these features in the appendices, the digital mega trend has a powerful impact on our business, 2025. This is factored into our order book and this accounts for EUR 6 billion in business. We can add to this, everything that goes with it. I mean you've got the data center per se, but there's an entire ecosystem around the data center, for example. Renewable energies in Texas, that segment ties in directly with the development of data centers in the states -- in the United States. So offtakers of that electric power or data center is Google. So clearly, these markets will undergo accelerated growth, and we are ideally positioned to benefit from that surge in top line, but also we have strong pricing power. We have the ability to deliver products and services in all those geographies where we already operate. The other question regarding sessions, Nicolas?.

Now let me give you a little bit of color regarding traffic. The heat spells don't affect the entire country at the same time. So the effect is relative in our network. We have the Brown Valley or the French refer. Usually, it's and warmer every year. Even when it's a warmer, those are regions that are used to the heat. So we're not seeing any impact on passenger traffic. There's a macro effect, maybe 1% a dip in case of a heat spot, but that's it. Let me give you a little bit more color regarding the trend. Elasticity fuel prices diminishes over time. We've seen that since the beginning of the crisis. Traffic tends to kick back up. And we know that traffic levels of good in July because people go on vacation and people traveling to France or transiting through France are sustaining those high traffic levels.

Let us start with questions in French over the phone. [Operator Instructions] First question JPMorgan.

I have question regarding the acquisition of Safeway Concessions in India, more specifically the Indian market in general. Clearly, you intend to continue making acquisitions on that market, particularly when it comes to airports and motorways. Those are considered greenfield acquisitions. Now my second question ties in with the first. Your M&A pipeline, what kind of opportunities do you see happening in the future? Or are you currently working on? And what are you doing to optimize asset rotation in your portfolios? I think you didn't touch upon that some time ago. Lastly, free cash flow. This question is for Thierry Mirville because I put this question, the exact same question to Christian many times. So H1 is encouraging. The guidance stands at EUR 6 billion, which feels a bit conservative. What do you think?

Regarding India, India is a particularly buoyant market because of its strong demographic trend and the Indian economy, which is driven by the strong population growth is a buoyant segment, a buoyant market. So the contractual framework is sound and robust. We are busy finalizing a first major acquisition. It's a brownfield acquisition because the Indian market is, by definition, a brownfield concession market. I'm talking about airport concessions and highway concessions as well. And if this first acquisition succeeds, yes, we will continue to deploy the same policy there. Now our priority right now is to complete this acquisition, we're bearing in mind that we already operate a toll of services in India. So we have that expertise in India. We're used to collecting tolls. We have that business already. So this gives us a good stepping stone for performing and successfully integrating that first acquisition. And the story goes on. Regarding our M&A pipeline and our asset rotation policy, we're not giving any specific indications, but we are paying close attention to this. There are a number of issues that we've been close attention to, for VINCI Airways, VINCI Airports and VINCI Energies. And of course, we will keep you apprised on the flow as those opportunities actually materialize. In terms of free cash flow, you're on Thierry. Okay. Well the end of June was is an encouraging milestone, but it's not significant when it comes to your cash flow generation profile. This does strengthen the guidance we issued. However, this does not mean we want to upgrade it. I'd like to remind you that every year, we work hard to improve our WCR and it's getting harder and harder every year. So we still have limited headroom. So our free cash flow performance at the end of June is comforting, but that doesn't mean we will update our guidance.

Next Nicolas Mora, Morgan Stanley.

What about Cobra? Excellent performance by Cobra in terms of margins? Are we finally seeing a ramp-up, a major adc EPC contracts, which have been secured since '23, 2024, and this adds profit margin, and this could mean a future ramp-up over '27 '28. So that's my first question. But I'd also like to give back to margins for French motorways. Now you're back at peak level, despite a challenging environment, I understand Nicolas answered. But there are other factors that must be considered, particularly provisions for maintenance and the increase in interest rates, which has led to provisions going down. We need to factor in highway traffic trends and airport traffic trends. And we're not seeing an increase in prices in Q2. We're seeing price dips in Portugal, in particular. So what about that? And also, what about Alferon Energies? Now I'm -- I missed the first part of this call. But if we look at your history, your deals are usually growth-based. And here, it seems as though we're dealing with the company that is exposed to SAP and their top line performance is difficult. They need restructuring. So is that a unique opportunity? Is that a departure, a break's from your usual policy? There's something I'm not getting.

On Cobra, Jose Maria.

In later with the margins in Cobra that has increased from, I don't know, 8% to 8.4% is because we have 2 parts in the company, contracting and long-term assets, contracting must be around 8%, 8.1%. And the increase is mainly because of the Cory contribution that is going -- is beginning now. And in the long term, this is going to increase, this increase in the margin subsidiary. At the same time, we think we can increase a little bit our future margins in contracting. Then it's true that in the next years, the margins at least must be -- increase a little bit from this position.

On the Autoroutes, Nicolas, please.

I confirm in our business, notably in Autoroute operations and at the head the changes that we make constantly lead us to optimize operating costs. We've done this for a long time. I mean, on auto routes, there's no major provisions. I mean mentioned IT services is before the end of the concession. We're optimizing a few factors. So a couple of one-offs on the airport side, very limited. But of course, we're not seeking to embellish these numbers. I mean, the margins are by half, they are half yearly. They can't really be compared from 1 half to the next, but versus the previous year and the second half must be on with the second half of the -- because there are differing effect, notably the Autoroutes, margin of H1 is always better than the H2 margin, but that's been the case for many years now. .

And just to complete that, we're convinced at VINCI because We manage our own costs we do what's known as own production on concession assets. We operate our own concession. We're not a fund. We're not just a merely a financial investor. We're an investor, but an industrialist, an operational investor in terms of energy services. We are not a general contractor that subcontracts. There are some amongst our major peers who can be viewed as comparable, the share of activity that we perform ourselves, be it in airport assets or energy services or construction. We perform a large part of what we do. And that gives us a cost inside cost containment ability to have, as I said, unparalleled executional quality and to improve margins through market effects as the others do, but working on our costs and it's a quality that sets us apart from our major peers where they have a different profile or a similar profile and needs to be recognized for what it is. On all for 1 in addition to what I said because we're in the middle of the takeover. Well, yes, the offer formal offer was submitted to BaFin the day before yesterday. We're used to even if we done -- we regularly take over a number of at the tribunal, and we can restructure turnaround recovery, et cetera. We're working in depth our portfolio each and every year in various deals. Of course, not of this size. So you don't it's something we're used to doing by rolling out our model or tools and our management culture . We're fully capable of doing that. It's a way of creating value to look at this type of company, not very expensive and things that are already optimized. And then the strategic interest, I can point good fit with our portfolio of activity. It's something we can do. It's a good fit. In Germany, we have teams that can integrate with the Mittelstand cost base recurring flow business, which is precisely what motivates it. We believe that by rolling out our model, where we tend to previous levels of profitability that it makes fully sense and we're prepared. We wanted to move forward with this deal, which we hope will complete by around Capital Market Day, we presented bolt-ons and some significant deals opportunities. It's a fine opportunity that we're able to seize.

Moving on to questions in English. UBS, please.

On the data center backlog. You mentioned you're in discussions with large hyperscalers. Any reason why we could not see 2 to 3 gigawatt of data center project in your backlog in a couple of years. Secondly, on Energy Systems profit margins midterm. We have -- you flagged the Europe's appetite to build data centers has increased meaningfully over the last months. And this will capture a large labor resource of electricians and specialized labor in an already constrained environment. So is it fair to assume that midterm this will be very favorable for further meaningful margin accretion in energy systems across all verticals. And the last one, if I may, on contracting, it's on the quality of the Q2 order intake. You had a strong order intake in Q2 in a tough backdrop. Can you make any comments around the margin profile within this Q2 order intake? And is it supportive for further margin improvement in construction? Or is the competitive environment more tougher recently? Or is there any negative mix in there we should be aware of?