Xavier Huillard,
Chairman and CEO, VINCI
“We are living in absolutely fascinating times! Our business lines make more sense and are more useful than ever in the face of the challenges our societies need to tackle. This is what makes them so modern.”
What is your assessment of VINCI’s business performance in 2022?
It performed extremely well! We greatly amplified the upswing we had started seeing in 2021: our revenue rose sharply and our operating margins improved in all our business lines. This excellent performance has pushed our net income 31% higher than in 2019. I see this as confirmation of two things: that our teams have been remarkably agile in European markets disrupted by the economic ripple effects from the war in Ukraine – after the shockwave from the health crisis – and that our model based on our three large and complementary Concessions, Energy and Construction businesses is resilient. We strengthened its resilience by expanding vigorously, particularly in Energy, and by pushing ahead with our geographical diversification. As a result of organic and external growth combined, our revenue outside France jumped 46% year on year, and our activity outside the country now accounts for about 55% of our worldwide total.
Did the overall improvement in the health situation allow traffic to rise back to pre-pandemic levels in Concessions?
The recovery gathered considerable speed in all our transport infrastructure assets. At our airports, traffic more than doubled in 2022 and is now above pre-pandemic levels in some countries in Europe and the Americas. VINCI Airports ramped up swiftly in step with the upturn in traffic and, before that, had moved fast to optimise its costs during the health crisis. As a result, its Ebit margin rate in 2022 is practically the same as in 2019 and its net income is substantially higher. True to our long-term strategic perspective, we gave fresh impetus to VINCI Airports’ expansion by acquiring a stake in a network of 13 airports in Mexico and signing a concession contract for seven airports in Cabo Verde.
On our motorways in France, light and heavy vehicle numbers significantly exceeded those in 2019, despite the increase in fuel prices. This underscores the predominant and lasting role that roads play in the country’s transport system. The trend outside France was similar overall and our network in those markets is growing as well: we recently signed concession contracts in Germany, the Czech Republic and, at the very end of 2022, Brazil.
What about development in Energy?
We have always said that we are determined to develop in energy markets. Firstly, VINCI Energies pressed ahead on its remarkable growth trajectory, harnessing its extraordinary ability to support its customers on their energy transition and digital transformation, and took in some 30 new companies including Kontron AG’s IT services. Beyond that, the integration of Cobra IS, formerly the ACS group’s energy division, on 1 January 2022, has given our Energy business a big boost. It is clear to see today, as the challenges around energy are gaining prominence, that it made a lot of sense to reinforce our positions in energy infrastructure – especially in renewable energy projects, one of Cobra IS’s areas of expertise. Our Energy business’s revenue now amounts to over €22 billion, or 36% of the Group’s total, and ranks us among the world’s top players in these particularly buoyant markets.
What was the trend like at VINCI Construction, the Group’s third business?
VINCI Construction also delivered a solid performance, in terms of order intake, revenue and earnings, despite the difficulties in supply chains and pressure on prices of materials, which weighed upon the economic equation on some projects. Growth was especially marked outside France and VINCI Construction has strengthened its position among the global leaders in its sector as a result. Its model, which combines its proficiency with major projects, specialist expertise and local company networks, enables it to achieve extensive market coverage.
VINCI Immobilier, which is involved ahead of the works phase and is principally active in France, stood firm in a market that toughened noticeably in 2022.
How do you feel about 2023?
Vigilant but confident. In our concessions, the fundamental need for mobility should keep traffic at a healthy level on our motorway networks and gradually push it back up to normal throughout VINCI Airports’ network. However, not all our airports will see their passenger numbers reach 2019 levels in 2023, as flights in Asia only started picking up recently. Our order books in Energy and Construction remain very full, with a good balance between flow business and major projects. That being said, as the economic environment is looking uncertain and will probably be more crimped than in 2022, we will focus more than anything else on protecting our margins, to stay on our long-term growth path. This is ingrained in our DNA: our resilience is practically built-in, not only because our business model is solid but also because our decentralised structure and our management are exceedingly responsive. We show this year after year. What are your longer-term prospects looking like, particularly in light of the energy and environ.
What are your longer-term prospects looking like, particularly in light of the energy and environmental transition?
Precisely: we see all the long-term potential in our business lines when we look at them through the prism of the big challenges we are facing. The issues around energy – and the crisis unfolding today is a reminder of the vital role energy plays – are spurring deep transformation. This transformation is spreading across our Energy business and beyond it to the rest of our activities. However much their budgets tighten, central and local governments will need to invest considerably in the energy transition, to massively develop infrastructure to produce and distribute low-carbon electricity, to transform the built environment or to usher motorways and air travel into the low-carbon era. Beyond the energy transition, we are also seeing that practically everything we do is changing ever faster – housing arrangements, how we work, how we produce, how we live in cities and regions, how we travel short and long distances, and so forth. All these shifts are brimming with long-term opportunities for all our companies.
How are you tackling this major challenge in your business lines?
We have embarked on deep transformation ourselves. This transformation is similar in scope to the one that the 20th century’s momentous technical breakthroughs brought about in our lines of work. The difference, today, is that progress first and foremost means preserving the planet. We are channelling our innovation potential towards this overarching goal. The ambitious commitments we made when we started rolling out our new environmental policy at the beginning of this decade are now our new frontier for all our business lines. This is making us rethink and recast our design and production processes and our products, services and solutions around two objectives: reducing our own environmental footprint and helping our customers and infrastructure users reduce theirs. The momentum is incredibly powerful and our teams are rallying around it. It is already giving rise to many initiatives, and tangible progress, in our companies. Cutting carbon emissions in construction, reusing materials, using recycled materials, driving electric vehicles on our motorways, gravitating towards net zero emissions at our airports, working with communities and industrial customers to lower their energy consumption and shrink their carbon footprint, bolstering resilience in cities and developing green surfaces to provide a cool island effect, pledging to seal less land in our property development operations: those are a few examples of what real life looks like in our business lines nowadays. The environmental transition is also becoming our central focus in our innovation and foresight hubs, where we are working alongside academic partners and startups to turn today’s experimental leads into tomorrow’s green solutions.
How do you factor the environment and society into your vision of all-round performance?
They are both intimately linked: the environmental transition will not go far, or fast, unless we pay more attention to the social dimension. The sea changes happening today also carry the risk of fraying social bonds. So we have a duty, now more than ever, to be a company that stands for inclusion and solidarity. This has led us, for instance, to step up our integration programmes for young people: we are now leveraging our strong local presence to substantially scale up the learning and apprenticeship programmes we offer them. Our outreach through our network of foundations in about 15 countries stems from the same eagerness to fulfil our role as a socially responsible company, by caring for the communities around us as much as we care for our employees.
To sum up, what is your view on all these deep changes?
We are living in absolutely fascinating times! Our business lines make more sense and are more useful than ever in the face of the challenges our societies need to tackle. We have the resources – the technologies, the people, the finances – and the managerial energy to be a driving force in the renewal of the built environment, infrastructure, industrial plants and processes, and mobility. We want to forge a sustainable world, while serving a useful purpose and caring for the planet. It is an ambitious and inspiring journey, and most of what lies ahead has yet to be invented and accomplished. This is precisely what makes a group like ours so modern.