Construction majors held up in the first half of 2019


The weather for the first half of 2019 has been crystal clear for construction majors. At the end of August, the major groups publish their financial results mid-way through the current fiscal year, and the figures show a consolidation of their activity.

Good results … and movement at Bouygues

To begin, the construction activities of the Bouygues Group posted sales of 13.39 billion euros, an increase of 11% year-on-year. Bouygues Construction's current operating income increased by € 6 million over 12 months to € 179 million. That of Bouygues Immobilier retracts by 49 million euros, falling to 29 million in total. Since the beginning of the year, this trend is due to the very weak activity in commercial real estate and to the increase of the cost of the works consecutive to the peak of bookings of housing recorded by the market in 2017. The global order book is stabilized at a high level, with € 33.8 billion recorded at the end of June 2019: in France, Bouygues' construction activities were however down 4% to € 14.5 billion; Bouygues Construction's order book stood at 8.7 billion, down 2%, but including the contract to build the new Issy Coeur de ville eco-district for 258 million euros (see box).

At Bouygues Immobilier, the order book amounts to 2.2 billion, which represents a fall of 14% compared to 2018. The private group explains this situation by the fall in the residential market and the shift in real estate projects. companies, which are expected to end in the fourth quarter of 2019. On the international scene, the major remains on the other hand anchored in buoyant markets: the order book thus reaches 19.2 billion at the end of June 2019, all construction activities combined, up 8% compared to the same period a year earlier. It should be noted that Bouygues Construction has won a contract for the construction of an office tower in Hong Kong for € 89 million. Globally, international accounts for 61% of Bouygues Construction's and Colas' order book at the end of June 2019, compared with 57% in June 2018. Lastly, the Bouygues group suffers from the poor performance of the industrial company Alstom, of which it holds about 30% of capital: the net profit of this industry has declined by 50% in one year.

Colas wins a number of markets but digs its debt

As for Colas, its turnover in mid-2019 recorded + 9%, reaching 5.8 billion euros. In detail, France's share rose from 2.8 to just over 3 billion between the first half of 2018 and the first half of 2019, an increase of 8%, while the international share rose from 2.5 to 2, 7 billion in the same amount of time, which represents an increase of 10%. Net income group share improved from -129 to -102 million euros (+ 27%). On the other hand, Colas' net financial debt continues to widen from 1.3 billion euros to 1.5 billion euros, an abyssal drop of 241 million euros.

By business segment, roads posted sales of € 5.1 billion, up 10%. The French market benefits from a certain dynamism and allows the turnover of metropolitan France to record + 13%. On a European scale, Colas' turnover for road works is up slightly by 3%, thanks to the UK and Irish markets. In North America, the increase in activity is 16%, with significant growth in the United States but stability in Canada. In the rest of the world (and therefore internationally, excluding Europe and North America), road revenue shrank by 1%, with activity declining in Africa but growing in Asia-Pacific.

The other specialties of Colas posted a turnover of 800 million euros in the first half of 2019, down 1% compared to the previous year. Rail, another important segment of the group's activity via its Colas Rail entity, jumped by 17%, but was nevertheless offset by Spac (networks), which fell by 12%. Note: Colas sold its Smac entity to OpenGate Capital, resulting in a contribution of the sealing activity equal to that recorded in the first quarter of 2019, ie 100 million euros. Overall, Colas' backlog stood at 9.9 billion euros at the end of June 2019, up 4%, with 3.6 billion euros for metropolitan France (+ 9%) and 6.3 billion euros for the year. international and overseas (+ 5%). The group also believes that the good shape of its roads business should offset the impact of the sale of Smac in the coming months.

The civil engineering activity of Eiffage takes off 57.5% in France

On the side ofEiffagethe time is also good news. The number 3 tricolor BTP has enjoyed an increase of 11.6% of its turnover in the first six months of 2019, to reach 8.54 billion euros. At the same time, the group saw its net profit rise by 33.6% year-on-year, reaching 290 million euros.

"The semester confirms the growth momentum and is marked by major successes in the concessions"said Benoît de Ruffray, President and CEO of Eiffage, during the presentation of the results. "The growth of the first half results and the good performance of the order book reinforce our outlook for growth in activity for 2019", echoed Eiffage's CFO, Christian Cassayre.

In fact, the Works division accounts for 14%, to more than 7.1 billion euros, for a turnover of 4.9 billion in France (+ 14.3%) and about 2.2 billion to the international (+ 13.2%), of which 5.8% – 113 million – due to the 2018 acquisitions in Switzerland (Eiffage Switzerland) and the Netherlands (Kropman). The group stresses that Europe now accounts for 26% of the turnover of its Works branch, concentrating a major part of the international development of the major. The Construction division's business grew 10% to just over € 2 billion (+ 8% in France and + 15.9% internationally). The group's real estate activity concentrates 2,534 housing bookings compared to 2,237 in the first half of 2018. The Infrastructures division saw its turnover grow by 21.1% to 3 billion euros, with a marked increase of 29.4% in France and a less spectacular 7.5% internationally, including 5.2% in Europe. In France, the road recorded + 14.3%, metal + 9.1%, while civil engineering took off by 57.5%, thanks to the ramp-up of the construction sites of the Grand Paris Express. The Energy Systems Division benefited from an 8.6% increase in its activity, to 2.1 billion euros, 3.8% of which in France, and 21% internationally. Lastly, the Concessions business posted a modest growth of 1.3% to more than 1.4 billion euros.

The outlook for the remainder of the 2019 financial year remains positive for the Eiffage Group, which highlights the order book (€ 14.9 billion, + 3%) of its Works division, which should insure more than one year of activity to his teams. In addition, the major relies on its designation in several concession operations: on June 13, 2019, the Ministry of Ecological Transition chose the consortium composed of Eiffage (agent) and APRR (entity of the group dedicated to highways) as "unique prospective dealership" for the concession of the famous Route Center-Europe Atlantique (RCEA, nicknamed the "road of death" for its dangerous character), lasting 48 years. And last July 12, the group Eiffage (majority) – Marseille-Provence Airport was selected to manage the concession of the airport of Lille and for a period of 20 years.

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