Bouygues

Hello and welcome to the Briggs Q1 2024 results conference call. My name is Laura and I will be your coordinator for today's event. Please note this call is being recorded and for the duration of the call, your lines will be on listen-only mode. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your questions. If you require assistance at any point, please press star zero and you will be connected to an operator. I would like to introduce Pascal Grandje, Deputy CEO and CFO of the Bouygues Group. To begin today's conference, thank you.

Good morning, everyone, and thank you for joining us to discuss Bouygues First Quarter 2024 results. With me today... is Christian Lecoq, CFO of Bouygues Telecom. Following our presentation, we'll be answering your questions. Let's start with our highlights. First, I would start by saying that we confirm the group outlook for 2024. Second, the very solid backlog in the construction businesses provides visibility on activity. Third, Equan's COPPA and COPPA margin improves year on year. in line with the strategic plan being deployed. Fourth, Bouygues Immobilier is pursuing its adaptation to the challenging market environment. I will come back later on this point. And last, the financial structure remains robust with a high liquidity and the net debt improving strongly compared to end March 2023. Let's now have a look at our key figures on slide five. First, let me remind you that, like every year, and notably due to the sustainability of our activities, especially at Colas level, Q1 results are not indicative of half-year and full-year results. That said, group sales were up 3% in the first quarter 2024 compared to the first quarter 2023, mainly driven by equance and brick construction. Like for like, on that constant exchange rate, group sales also increased by 3%. In the first quarter of 2024, the group COPPA increased by 17 million euros compared to the first quarter of 2023 and reached 26 million euros. This increase was led by equance, where COPPA improved by 35 million euros year on year, Bouygues Immobilier's COPPA decreased by 26 million euros over the period in relation with a strong decline in activity, measures being gradually put in place and having yet to produce their effects. Net result attributable to the group was minus 146 million euros, a level slightly down compared to Q1 2023, obviously not representative of the first half on annual results. Last, net debt was 7.7 billion euros, a strong improvement compared to the 8.8 billion euros at end March 2023. The increase compared to end December 2023 was a usual increase due to seasonality. I will provide you more details about these figures later during this call. Let's now turn to the review of operations on slide eight. Let's begin with the backlog in the construction businesses. The backlog at end March 2024 was at a very high level of 30.4 billion euros, up 4% year on year. The increase in the backlog was driven by both Bouygues Construction and Colas. At end March 2024, note that 70% of Bouygues Construction and Colas backlog were in international markets, a proportion that is growing gradually each year. For example, at end March 2021, This proportion was 65%. Looking into details on slide 9, I would say that order intake at Bouygues Construction amounted to 2.9 billion euros. Momentum remained good in the normal course of business, which represented around two-thirds of the total order intake during the quarter. Order intake also included significant contracts in Q1, such as Rabat Hospital in Morocco for around €460 million and a solar farm in Kalkar, Australia, for around €140 million. As such, backlog was up 4%, or around €700 million year-on-year, at €15.7 billion, with international up 7%, offering visibility on activity. At Bouygues Immobilier, the general market conditions remain challenging. However, reservations were stable overall in value thanks to increase in block sales, offsetting decline in unit sales during the quarter. For its part, commercial property market is at a standstill. As a result, Bouygues Immobilier's backlog was down 29% or around 400 million euros year-on-year. Due to this situation, Bouygues Immobilier continues to adapt and took the decision to launch early April a negotiation procedure on a proposed employment protection plan preceded by a voluntary redundancy period. This decision is aimed at safeguarding the company's competitiveness in a challenging market environment. This plan, affecting 225 jobs, will prioritize voluntary redundancies and internal redeployment. Last, Colas order intake reached 3.5 billion euros. Colas achieved a good commercial performance in rail activities, notably with a significant order in Egypt for the new metro line between Alexandria and Aboukir, a contract worth around 310 million euros. In Rhodes, momentum was good in the US and in a lesser extent in France, offset by decline in Canada and EMEA. Backlog was up 6%, or around 800 million euros year-on-year, with hail up 34% and roads down 4%. Let's now look at the construction activities key figures on slide 10. The construction businesses recorded results which, like every year, due to seasonality, are not indicative of the first half and the full year results. Sales were up 2% year-on-year and 3% life-or-life and at constant exchange rates. First, BRIC construction sales were up 6% year-on-year, driven by international building and to a lesser extent by civil works. Second, at BRIC Immobilier, sales were down 15%, reflecting low activity and requiring further decisions to adapt the context as explained previously. And third, at Colas, sales were up 1%, driven by rail, up 5%, on roads, up 1%. Current operating results from activities of the construction businesses was minus 264 million euros, slightly down compared to Q1 2023, impacted by Bouygues Immobilier, where COPPA was down 26 million euros year-on-year, highlighting the decrease in activity. COPPA at brick construction was slightly up compared to Q1 2024, with a stable COPPA margin, and as usual, COLAS had a non-representative minus 300 million euros in current operating results from activities, very comparable to Q1 2023 figure. Let's now turn to the review of operations for Equance on slide 12. Equance continues to deliver significantly improved results in line with its roadmap. During first quarter 2024, Equance's commercial activity was solid. Order intake stood at 5.7 billion euros with continued momentum for significant projects such as data centers, smart buildings, solar farms, gigafactories, biotechnology sites, notably in Europe and in the US, and also good momentum for recurrent maintenance contracts and for small short cycle activities. One important comment is that the underlying margin of the order intake continued to improve highlighting positive impacts of the PERFORM plan. The backlog stood at 26.2 billion euros, down 2% compared to end March 2023 figures, but up 6% or 1.4 billion euros compared to end December 2023. This level reflects the combination of strong order intake in Q1 2024 and selective approach to contract strategy as such as gradual exit from the new built activity in the UK due to market conditions. Equant's contribution to the group's revenue on COPPA represented respectively 4.6 billion euros and 133 million euros with a 2.9% COPPA margin up 0.7 points year on year. This is a good start for the year. To end with equants on slide 13, let me just add that 2024 guidance is confirmed with equants aiming for sales figures close to that of 2023 because it will factor in both the effects of growth in equance markets and the scope effects related to the asset-based activities disposals at end 2023 and the selective approach to contract strategy. As a reminder, equance is aiming for, from 2025 onwards, an acceleration in organic sales growth to align with that of the market piece. In 2025, current operating margin from activities close to 4%, and in 2027, a current operating margin from activities of 5%. The conversion rate before working capital requirement of between 80% to 100%. Turning to slide 15, let's talk briefly about TF1's results which were released on the 30th of April. First, the TF1 group has strengthened its leadership within its main target audiences in the first quarter of 2024. The total audience share among women under 50 who are purchasing decision makers was up 1.3 points year-on-year at 34.5%. The total audience share among individuals aged 25 to 49 was up 1.5 points year-on-year at 31.4%. And the promising launch of TF1 Plus resulted in attracting 33 million monthly streamers on average in first quarter. In the first quarter 2024, TOTO sales were up 7% year-on-year, driven by good advertising performance. Media sales increased by 8% with advertising revenues up 7%, driven by the return of most advertiser sectors on Linear and by the new streaming platform TF1+. UN Studios posted revenue down 3% year-on-year, close to Q1 2023 level, no main program having been delivered in Q1 2024. COPPA amounted to 37 million euros, close to Q1 2023 level, and COPPA margin was 7.3% in Q1 2024 versus 8.3% in Q1 2023, explained by, first, the cost of programs up at 217 million euros in connection with linear and streaming premium programming in the context of recovery in the advertising market. And second, the integration of specific costs related to the launch of TF1+. Turning to slide 16, I will end on TF1 group by saying that 2024 outlook is confirmed as follows. Keep growing in digital, building on the promising launch of TF1+, maintain a broadly stable current operating margin from activities close to that of 2023, and continue to generate solid cash flow, enabling the TF1 group to aim for a growing dividend policy over the next few years. I now turn the call to Christian Lecoq for Brick Telecom's performance.

Thank you, Pascal, and good morning to everyone. Turning to page 18, let's begin with the commercial performance in mobile and fixed. At end March 2024, Brick Telecom had 15.5 million mobile plan customers, excluding M2M, thanks to 17,000 new customers in Q1 in a more modest growth market. As you can see on the right side of the slide, we had a total of 4.9 million fixed customers at end March 2024. This represents an increase of 38,000 customers in Q1. FTTH continued to experience strong growth with 134,000 new customers joining us during the first quarter. With a total of 3.7 million subscribers, FTTH customers represented 75% of our fixed customer base up from 67% one year ago. FTTH performance is a result of a strong FTTH footprint combined with a very good network quality. Let's have a look at the key figures on slide 19. First, we achieved 5% growth in sales built to customers. On one hand, mobile eBPU was stable year-on-year at 19.7 euros, confirming the move of some customers to lower bundles. On the other hand, momentum remained good and fixed, with fixed eBPU up 2.2 euros year-on-year at 32.5 euros. Total sales were down 2% year-on-year, affected by the decrease in other revenue, down 21% year-on-year, mainly due to lower B2S revenues. EBITDA after leases increased by 30 million euros compared to Q1 2023 and wasted 429 million euros benefiting from the growth of self-built-to-customers and a tight cost control. EBD after leases margin increased by 0.9 points compared to last year, which is consistent with our goal to progressively deliver margin expansion. The current operating profiling from activities of €130 million was very comparable to Q1 2023, reflecting the continued increase in DNA in line with BookTelecom's CAPEX trajectory. you can notice that gross capex was 476 million euros in Q1 2024, a lower level than in Q1 2023, capex mainly related to continued investment in our networks. Moving to slide 20, we are confirming our 2024 targets that are an increase in sales bill to customers, an EBITDA after leases of above 2 billion euros, and a worth capex of around 1.5 billion euros, excluding frequencies. Regarding our EBD after-legis guidance, I would like to remind you that, first, mobile eBPU has been remaining stable for two quarters. Second, the mobile market worth has become more modest. Third, we continue to increase the size of our network in new areas. And fourth, we are in a rental mode in fixed business, which generates technical costs in OPEX. These reasons, all together, imply that we maintain our EBDA after leases guidance. And now Pascal, I'm giving you back the floor.