“2020 SHOWED ONCE AGAIN THAT VINCI IS HIGHLY RESILIENT. WE HAVE SOLID FOUNDATIONS AND DEDICATED TEAMS. SO WE HAVE WHAT WE NEED TO FACE THIS NEW KIND OF CRISIS. THEN WE WILL HARNESS THIS SAME ENERGY TO STEER THE GROUP BACK ONTO THE ROAD TO GROWTH.”
How did the Covid-19 pandemic impact VINCI’s business activities in 2020?
This crisis hit VINCI hard, as it did most other companies. But it hit us to varying degrees depending on the business line and geography. Our Concessions activities were affected the most because they were directly impacted by the travel restrictions issued by authorities. Traffic plummeted at our airports and decreased to a lesser extent on our motorways. Heavy vehicle traffic on our motorways in France, however, remained fairly steady throughout the year. This confirms the essential role that road transport plays in enabling our economies to function properly.
The impact was much less pronounced in Contracting. It was more noticeable in France, where public decisions during the first lockdown brought practically all our worksites to a standstill for almost two months. But, as our Contracting activities are expanding internationally, they held up very well overall – and actually grew in some countries.
I must point out that our companies adjusted very efficiently to the crisis, in all our business lines. This was thanks to our very decentralised organisational structures. We often talk about commitment at our worksites. But this notion has taken on its full meaning during this episode. Our teams everywhere showed how responsive, resourceful and dedicated they are when they had to keep our people safe, overhaul our working methods to factor in the new health and safety rules, and keep public services up and running on our infrastructure under concession. They showed their commitment on the job, for example carrying out emergency works on hospitals, and off the job, through a variety of voluntary initiatives backed by our network of corporate foundations around the world.
How would you sum up 2020 from a business and financial standpoint?
First of all, 2020 showed once again that VINCI is highly resilient. And it showed it in extraordinary circumstances this time. Our model, which we have been deepening for years by broadening our areas of expertise and applying them in an increasing number of countries, is showing it is solid now that we are facing severe headwinds – as it has shown it can generate robust growth when the economy is buoyant.
Our management approach and our management fundamentals are equally important factors in our resilience. VINCI company executives do what they have to do when the situation starts changing – for instance swiftly cutting their operating expenses as soon as the first signs of a slowdown appear or reassessing their investment programmes when and as required. Similarly, our financial strategy, which has sometimes been criticised for being prudent, is showing why it makes sense now: notwithstanding the crisis, we have significantly improved our working capital requirement and cash position, and shrunk our net debt. The fact that Standard & Poor’s and Moody’s confirmed our long-term credit ratings, when the crisis was in full swing, is a clear sign that our solid business model and sensible financial management inspire trust.
Bottom line, amid a historic crisis, this Group-wide resilience enabled us to generate €1.2 billion in net income in 2020, which is of course significantly lower than the previous year, and to keep our free cash flow almost as high as it was in 2019.
Has the crisis altered the balance between Concessions and Contracting?
It has done the opposite: it has under– scored the logic in our development strategy, which has always been balanced across our two main businesses. If you look back over the past 15 years, you will see that we have been investing vigorously in our motorway and airport concessions on the one hand, and at the same time grown VINCI Energie’s activity fourfold and solidified VINCI Construction’s and Eurovia’s international networks on the other. Our development strategy, like our business lines and our constructions, are entrenched in long-term trends. So we are going to continue to roll out this strategy, keeping our eyes on the value we can create over the long run, while seizing opportunities that fit our objectives whenever they surface. We are agile when we conduct our business day after day, but unwavering when it comes to staying our strategic course!
Speaking about the long term, how are you embarking on the ecological transition, which is a prime concern in VINCI’s business lines and activities?
Here again, we are intertwining our long-term vision with our commitment to act today. 2020 was also the year we started rolling out our new environmental ambition looking at 2030. We published bold commitments, covering action for the climate, the circular economy and natural environments, at the beginning of the year. These commitments include our pledge to reduce the direct emissions from our business activities by 40%. Then the pandemic struck, and awareness of the risks jeopardising the planet and human health became keener than ever. This made us even more determined to accelerate our environmental transformation.
We know that our business lines have a major responsibility. But, most importantly, we know that they have a role to play as a driving force in the ecological transition of buildings, infrastructure and mobility. This is why the dynamic we have set in motion is two-pronged: we are reducing our direct impacts, and at the same time creating environmental value in the projects we deliver to our customers and the services we provide to the people using our infrastructure and our partners in those assets.
Many of the initiatives we are taking mirror this approach: the environmental upgrades at our asphalt plants, the photovoltaic power plants we are setting up at our airports, the programme to promote low-carbon motorways with our partners in French regions and the Exegy range of low-carbon concretes from our construction specialists are a few examples. We organised our first Environment Day and Environment Awards in 2020 to encourage our teams to come on board and enrich this dynamic with their own initiatives. The goal is to share our Group’s environmental ambition with all our employees worldwide. We are also certain that the ecological transition will only move forwards if we pay more attention to social concerns, especially now that the forces holding society together are being severely strained. That is why we need to engage more than ever with the grassroots, as the humanist, inclusive company that we are. The solidarity drive we have seen these past months is pointing us in the direction we need to follow to push ahead and step up our initiatives.
In conclusion, how are you feeling about this year?
There is still a lot of uncertainty surrounding the health situation and in our economic environment, but the vaccination campaigns that are getting under way at the beginning of 2021 are a positive sign. In any event, we are confident and, most importantly, determined. We have solid foundations and engaged teams. So we have what we need to face this new kind of crisis. Then we will harness this same energy to steer the Group back onto the road to growth when we reach the other side. Again, at VINCI we focus on the long term. We have always said that our companies’ performance will be all the more enduring as we rally together to forge a more sustainable world, and that is exactly what we are doing. We don’t let storms throw us off course. Not even the exceptionally fierce one this pandemic has unleashed. We are keeping our eyes on the opportunities that lie ahead – and those opportunities have never been so big, and so fascinating, for a group such as VINCI!
Chairman and CEO, VINCI