Bouygues

Ladies and gentlemen, welcome to the Buick first quarter 2020 results conference call. I'll now hand over to Corrine Adam, head of Buick Investor Relations. Please go ahead.

Thank you. Good morning, ladies and gentlemen. I would like to remind everyone that you can find us on the company website at www.buick.com. The earnings press release, the presentation we will be commenting on during this conference call. An Excel file with historical key figures for the group and each business and the company financial statements. Statements made on this call are forward-looking statements. Such statements reflect objectives that are based on management's current expectations or estimates and are subject to a number of factors and uncertainties that could cause actual figures to differ materially from those described in the forward-looking statements. I will now turn the call over to Pascal Granger Chief Financial Officer of BRIG.

Thank you, Karine. Good morning to all of you and thank you for joining us. I would like to welcome everyone to our conference call to discuss BRIG's three-month 2020 results. First of all, in these unprecedented times, I hope that you, your family, and your friends are all well. With me in the room is Christian Lecoq, CFO of WIC Telecom. Following our comments, we will be answering your questions. We are currently facing a situation that we have never experienced before and doing our best to act as a responsible player during this COVID-19 crisis, as highlighted on slide four. In France, Our businesses are mobilized to ensure that essential services to the population are maintained, such as communication, the ability to work from home in good conditions, information and assessments, as well as the maintenance of critical buildings. The group recognizes the major efforts of its stakeholders and has taken actions to act responsibly and support these efforts. It has already announced that Martin and Olivier Bouygues decided to relinquish 25% of their 2020 fixed and variable remuneration. The Board withdrew the dividend payout proposal at the latest Annual General Meeting and will reassess the situation in late July or early August. And Bouygues Telecom supported its small and medium enterprises partners by promptly paying their invoices in April and May without waiting for the legal deadline. Bouygues has also taken actions to support caregivers in this crisis. The group distributed 1 million European standard surgical masks to the French health authorities. Donations and financial contributions were made, notably to the Red Cross and hospitals. Furthermore, Aximum, which is a subsidiary of Colas, partly reorganized one of its plants to produce hydroalcoholic gel, as you can see in the picture on the right of the slide. Moving to highlights for the quarter on slide five, the initial effects of the COVID-19 pandemic were evident in lower results. However, in these challenging times, the group has maintained a strong financial position with 10.3 billion euros of available cash at end March. At the end of the quarter, the backlog in the construction businesses remained at the high level of 33.5 billion euros. It's important to note that Bouygues Telecom proved resilient as it has been less affected by COVID-19 in its commercial and financial results. As a reminder, as announced on 1st of April 2020, I would look for the group The construction businesses on TF1 was withdrawn and 2020 objectives for Bouygues Telecom were suspended. Let's now turn to group key figures on slide six. Q1 2020 results reflect the usual effect of seasonality and the impact of the lockdown in France since mid-March. Group sales of 7.2 billion euros in the first quarter of 2020 were down 9% and down 8% like for like on that constant exchange rates compared to the same period last year. The resilience of Bouygues Telecom, as well as the good start of the construction activities on TF1 in January and February, did not offset the significant decrease in activity from mid-March, mainly due to the decision of the French government to lock down the country. The sales decrease of 714 million euros year on year is entirely due to the COVID-19 crisis. Indeed, we estimated that the first quarter of 2020, COVID-19 had an impact of around 750 million euros, of which 600 million euros was in France. Total items explain this decrease. First, in construction activities, we experienced an almost complete interruption of work in France from mid-March and, to a lesser extent, a slowdown or shutdown of activity in around 10 other countries. Second, at TF1, we faced a gradual cancellation of advertising campaigns since March. And finally, at Bouygues Telecom, we severed from the mid-March closure of all stores. Current operating loss was 242 million euros in the first quarter 2020, an increase of €184 million year-on-year. This change is mainly due to COVID-19 despite the early mitigation measures implemented by the businesses. The estimated impact of COVID-19 on current operating loss is around €170 million. It reflects both a loss in current operating margin and unavailable costs in the three activities, such as employee fixed costs and amortization expenses. Net loss attributable to the group was 204 million euros in the first quarter 2020. It included a contribution from Alstom of 35 million euros versus 33 million euros one year ago. Finally, let me remind you that like every year, first quarter earnings are strongly impacted by collapse seasonality on IFRIC 21. Let us now turn to slide seven that shows that the group maintained a strong financial position. The chart highlights that at end March 2020, Available cash stood at €10.3 billion with €4.1 billion in cash and €6.2 billion of undrawn, medium and long-term facilities that contain no financial covenants. Moreover, the debt maturity schedule is well balanced with no debt wall. Please also note that, first, This schedule has yet to include the €1 billion bond issued in April carrying a fixed coupon of 1.125% with a redemption date in 2028. This new bond issue brings available cash to €11.3 billion at mid-April. And second, Bouygues would redeem 1 billion euros of bonds due in July 2020. Moving to slide eight, you can see that the COVID-19 had no material impact on the 3.6 billion euros net debt at end March 2020. The change between end December 2019 and end March 2020 is explained by the usual seasonal effects. The positive change in net debt between end March 2019 and end March 2020 is mainly due to the inflow of 1.4 billion euros related to Alstom. This robust financial position is key, particularly in this crisis. Let's now turn to slide 9 to see the net debt evolution between the end December 2019 and end March 2020. You can observe that the increase of earlier end is explained by three items. First, a moderate outflow of 37 million euros in acquisition and disposals, resulting mainly from the acquisition of granite contracting by Colas in the US. Second, an inflow of 8 million euros linked to capital transactions and others, including the share buybacks, The exercise of stock options and the remainder of the reconfiance capital increase reserved for employees. And third, an outflow of 1.3 billion euros from operations stable year on year that we will detail in the next slide. Turning to the breakdown of operations for the first quarter on slide 10, you can observe that. Net cash flow, including leases, expenses, was down 69 million euros year-on-year. This decrease was led by the three construction business segments and TF1. Net capex was up 21 million euros, mainly due, as expected, to Brick Telecom and, to a lesser extent, TF1. Net capex for construction activities was down reflecting early adjustments due to COVID-19. Last, change in the working capital requirements and others improved by 75 million euros, mainly explained by the positive change in working capital requirements related to operating activities. We expect the pandemic to have an impact on the Group's working capital requirements and net debt for the full year 2020. It is too early to quantify amount since feasibility remains very low and it will depend on how customers react to a situation we have never uncut before in the second quarter. We should see a distortion of working capital requirement related to the shutdown of activities that should recover over time. I will now turn to the review of operations, starting with the construction businesses. Let's begin with the backlog on slide 13. At 33.5 billion euros, the backlog in the construction businesses remains at a high level at end March 2020. As you can see on the chart, It is the second highest level in the past five years. The commercial momentum at Colas, and to a lesser extent at Brick Construction, remained good in the first quarter 2020. Colas backlog at Enmarsh was up 3% year on year, restated from many disposals and acquisitions, and at constant exchange rates. It remained stable in roads and improved strongly in rail. Brick construction backlog does not include the C1 stretch of the high-speed rail line project in the UK, worth 1.1 billion euros, which will be taken into order in the second quarter. Last, brick immobiliers backlog suffered, as expected, from a decline in reservations. Residential reservations were down 16% year on year as delays in obtaining building permits linked to municipal elections resulted in a lower supply. The overall backlog at end March 2020 was down 3% compared to the same period last year. Let's now look on slide 14 at a few major contracts won by the construction activities. In the first quarter, wood construction gained several contracts. On the upper left of the slide, we show the construction of the control center for lines 16 and 17 of the Grand Paris Express, worth 141 million euros. Just below that big picture, we see the completion of a housing complex in Monaco worth €115 million. On the upper right of the slide, we display the building of a combined cycle gas and steam power plant in Leuna, Germany, worth over €100 million. Furthermore, as shown on the bottom right of the slide, COLAS notably warns The construction of two highways and a taxiway in Alaska were 75 million euros. Let's now look at the construction activities key figures on slide 15. Q1 2020 results of the three business segments were impacted by the sharp decline in activity since the lockdown in France and in neighboring countries such as Belgium, Switzerland, and Italy. Despite the good start of activity experienced by Colas and Brick Construction in January and February, sales were down 12% year-on-year at 5.2 billion euros in the first quarter of 2020, and 11% like-for-like at constant exchange rates. This 686 million euros decrease was entirely explained by the COVID-19 as we estimate its impact to be around 700 million euros in the first quarter. Since the lockdown started mid-March in France, the decrease was particularly strong at 18%, whereas international activities proved more resilient with a decline in sale of 4% despite the slowdown or shutdown of activity in about 10 countries. We expect international sales to be further impacted in the second quarter in line with the spread of the pandemic. Brugge Immobilier was also penalized by the low supply in residential property development resulting from delays in obtaining building permits linked to the 2020 municipal elections, which are not yet over. The situation has worsened since the COVID-19 crisis. The current operating loss was 140 million euros, larger than last year, despite early mitigation measures implemented through cost savings and the use in France of partial unemployment for an average of almost one-third of brick construction and collapsed working hours in March. We estimate that the impact of COVID-19 on current operating loss was around 150 million euros in the first quarter, more than the increase in the loss compared to last year. Let us now turn to slide 16. Before the end of the lockdown, the construction activities have been planning on organizing to progressively restart their activity in France. They have capitalized on brick construction experience in Hong Kong, which restarted its business in February after an interruption of 15 days. Before resuming work, some essential requirements must be satisfied. personal protective equipment, clients' agreements, and the availability of the supply chain and of employees. Since mid-March, the business segments have gradually relaunched their activities in France. By mid-May, about 90 of sites have been restarted and reconstruction at Bouygues Immobilier. and 85% of roads work sites have collapsed. The productivity is affected by the safety precautions, particularly in buildings, due to limits on people from different trades working simultaneously. Outside of France, the situation is mixed depending on how affected the countries are by the COVID-19 prevention measures. We expect the activity to gradually resume when the relevant conditions are satisfied. Finally, a number of external factors could foster a recovery of the construction businesses, such as the introduction of economic stimulus plans and the launch of sustainable construction projects to deal with the outcome of the crisis. Let's talk briefly about TF1 as its results have been released on 19th of April. First, turning to slide 18, TF1's audience share was maintained at a high level during the first quarter. Nevertheless, TF1's financial performance was hit by the COVID-19 crisis as sales year-on-year were down 9% like-for-like and at constant exchange rates. Sales were affected by the gradual cancellation of advertising campaigns since March and the discontinuation of production shooting activities since the lockdown. Current operating profit reached 42 million euros, including cost savings on programming of 23 million euros. In the first quarter, we estimated that the COVID-19 impact on current operating profit was around 13 million euros from both loss of current operating margin and unavoidable costs. As stated on 1st of April, CF1 withdrew its 2020 outlook and expects that the COVID-19 crisis will have a very strong impact on second quarter 2020 results. Now, let me turn the call to Christian Lecoq.