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spk04: 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.
spk06: 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.
spk07: 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.
spk06: Thank you, Christian. I will now briefly comment on the financial statements on slide 22, starting with the P&L. We have already discussed first quarter sales and current operating profit from activities at the beginning of this call. Let me add a few comments in this morning. First point, author operating income and expenses which do not reflect operational activity were negative at 42 million euros in the first quarter. This amount notably includes non-current charges in relation with the Equence Management Incentive Plan, which represented 23 million euros. I remind you that the Management Incentive Plan only started in the second quarter of 2023. Let me also add that some non-current charges will be recorded in Q2 2024 in relation with the Employment Protection Plan, which was launched in April at Bouygues Immobilier. Second point, financial results to that minus 74 million euros compared to minus 98 million euros in Q1 2023. This improvement is mainly explained by the combined effect of the increase in cash and its remuneration rate, given that debt is at fixed rates. Third point. A tax charge was recorded for €7 million, an amount comparable to that of Q1 2023. On fourth point, contribution of associates decreased from €15 million to €-4 million, notably due to the decline of Tipco Asphalt Contribution, a collation venture based in Thailand, due to slower start of activity in Q1 2024. As such, net result attributable to the group was minus 146 million euros, down 12 million euros year on year. In a nutshell, I would say that the decrease in net result attributable to the group could be simply explained by the consolidation of collapse losses at 100% versus 96.8% last year. Let's now turn to slide 23 to describe the net debt evolution between end December 2023 and end March 2024. As you see, net debt increased by 1.5 billion euros since the end of 2023. This change is usual and related to the seasonality of our activities and includes, first, acquisition net of disposals totalling minus 7 million euros, including small acquisitions at Equance and Colas, purchase of TF1 shares and investment in joint ventures by Brick Telecom. Second, capital transactions of others for minus 24 million euros, including treasury share buyback and exercise of stock options. And last, minus 1.4 billion euros from operations that I will comment in the next slide. Turning to the breakdown of operations for the first quarter of 2024 on slide 24, you can observe that first, net cash flow, including lease expenses, stood at €332 million, an improvement of €49 million compared to Q1 2023. Second, net capex was €633 million, an amount very similar to Q1 2023. And third, you can see on the chart that the change in working capital requirement related to operating activities and other stood at around minus 1.1 billion euros, a usual change for Q1 due to seasonality. As we do every year, we will remain very proactive during all 2024 to manage the working capital. I will now turn our attention to the group financial structure on slide 25. The group maintained a high level of liquidity at 13.1 billion euros, which comprised 3.5 billion euros in cash and equivalents, and 9.6 billion euros in undrawn medium and long-term credit facilities. As you can see from the graph on the right, the debt maturity schedule is well spread over time, and I remind you, that our next bond redemption is in October 2026. Moving to slide 26, net debt was 7.7 billion euros at the end of March 2024, a strong improvement compared to end March 2023. As such, net gearing was 55%, improving by nine points compared to end March 2023. Last, I would say the group benefits from a particularly strong financial position and that our financial credit ratings remain strong. I will now conclude this presentation on slide 28. We are confirming the group outlook for 2024. Equance will continue to improve its results in line with its strategic plan. Bouygues Immobilier will continue to face a challenging market environment with low visibility on the timetable for recovery in an uncertain economic and geopolitical environment and after a year of strong growth BRIC is targeting sales and creating profit from activities for 2024 that are slightly up on 2023. Thank you for your attention, operator. Please open the floor for questions.
spk04: Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Thank you. We'll now take our first question from Jacob Bluestone of BNP. Your line is open. Please go ahead.
spk00: Hi, good morning. Thanks for taking the question. I was wondering if you could give a little bit of an update on the state of the competitive environment in the telecoms segment. It sort of looks like there's been a bit of a pickup in promotional activity. Your net ads may be a little bit slower year on year. I'm just interested in how do you see the current state of competition there? Thank you.
spk07: So first, I would like to remind you that thanks to the support of our customers who have followed us and appreciate the quality of our service, our mobile eBPU has progressed for several years, and we have now the highest eBPU in the mobile of the market. Due to inflation, we saw a decrease of purchasing power for customers. And so the customer changed their behavior on this market. So today they subscribe to cheaper offers. They kept the same terminal for a longer period of time. And there is a lower market growth due to the decrease of multi-equipments. The consequences of that is, first, a lower market volume growth. And second, a stabilization of eBPU for one year. So what we can say about the market today is first, on the high head segment, competition remains moderate. But at the same time, the competition is now mainly focused on the low-end market, which currently represents the most subscribed offers by clients, given context of purchasing power. Today, Book Telecom would like to respond to customer needs by giving them purchasing power back. And so we have decided to adapt our offers a few weeks ago with sustainable prices, so less gap between first year and second year, and some promotion mainly for conversion clients. This new marketing approach will lead to stabilization or even a slight decrease of our mobile EVPU in the next coming months. But the goal is to have a better customer satisfaction. And so the result of that, a decrease in churn and an increase in sales. That is our marketing strategy in a more, I would say, stable market in the mobile. Regarding the fixed activity, the market has returned to a more normal volume growth after the boost in FTTH since the pandemic. We have seen good volume growth in fixed and FTTH in Q1 2024. Book Telecom, the situation in terms of ABPU is very different compared to the mobile. Book Telecom has the lowest eBPU on this market, on the fixed market, for historical reasons of aggressive pricing policy that we had many years ago. Today, our fixed services, our fixed network, and our box equipments are recognized for their excellent quality. And so we market our offers at the same prices as our competitors. And so our eBPU in the fixed should just mechanically increase as it catches up the market pricing level. And moreover, in the fixed business, we continue to gain market shares, whether in dense areas or in non-dense areas where we were not present with DSL.
spk02: Thank you.
spk04: Thank you. Once again, ladies and gentlemen, as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Thank you. And we'll now move on to our next question from Molly with City. Your line is open. Please go ahead.
spk03: Hi, thank you for taking my questions. I have a few. Just firstly, looking at the backlog at construction, specifically Kola, I'm just wondering if you're able to give us a split in terms of volume versus inflation. Because if we adjust for inflation, it seems to me like there's been a little bit of a slowdown. And I'm just wondering, is this something that you're seeing in terms of long-term projects or short-term projects? And similar question for Equans as well, please. Just looking at the backlog, how much of the decrease versus Q1 of last year relates to the sale of the businesses in the UK and the Netherlands? And again, is this slowdown kind of more generally because you're focusing on bottom line? Is it something that you're seeing more in shorter term projects or longer term projects? A little bit of color there would be really great. Thank you.
spk06: Okay, starting with the equance backlog in the UK. It's not related to the IAS sets we have seen last year because we have not realized last year. the backlog related to these activities. More related to what I mentioned earlier, the fact that we are, due to market conditions, we are declining the backlog we had in the new build activity, which is, in terms of profitability, not satisfactory for us. So that is the main reason for the decrease in the backlog. And concerning COLAS, we don't have any anxiety in terms of activity for this year. So that means that probably the decrease we have is related to long-term contracts. But we have no doubt about the fact that we will be at a normal level of activity at least this year. No anxiety, in fact.
spk03: Great. Thank you very much.
spk04: Thank you. And we'll now move on to our next question from Matthew Robillard of Barclays. Your line is open. Please go ahead.
spk05: Yes. Good morning. Thank you for the presentation. I had a few questions. First on equals, I realize your guidance is for slow revenue growth, but in Q1 you did post a solid revenue growth, it seems. And so I was wondering why you would expect that to slow down for the remainder of the year. Then on Colas, it seems that the backlog in France is a bit down, and I was wondering if that reflected maybe less demand still from municipalities or regional projects, or if it was just something very temporary. And that would be my two questions. Thank you.
spk06: First, on equants, effectively, in our strategic plan, in our perform plan, we have decided to be more focused on the bottom line during the first year in order to improve the profitability of equants, which was not satisfactory at the beginning of this situation. when we acquired Equant, so we are focusing on the bottom line. This doesn't mean that we will have a decrease in revenues. We are selective, and if we are going, it's okay for us, but it's not a priority for the Equant group. The second concerning COLAS backlog, globally it's quite stable. You have seen that minus, I think it's quite minus 1%. We have seen that the order during the first quarter are very good because we are perceiving now the first effects of the election cycle. In France, you know that before election we had some an increase in orders intake and we have seen that during the first quarter. So it's okay also for France.
spk05: Thank you. If I can follow up actually with a question on telcos on fixed as you flagged being very strong ARPU growth. Did you feel you moving also up into in terms of the profile of the customers getting higher and
spk07: consumers on fixed and if that's the case I mean is that something you you're taking from other players in the market or it's just the market is becoming higher end in itself well on the fixed business there are two things the first one you're right customers are moving to FTTH and so the market is becoming more high end than it was in the past first thing and the second point as I said before, is the fact that we have the lowest eBPU of the market and so we are filling the gap with competitors as our quality in terms of box, network and so on is now the same as competition. And maybe one point, but I'm not sure, probably the fact that eBPU is is maybe higher in rural areas than in modern areas. And as we are taking some market shares in rural areas, probably it could help us. Thank you.
spk02: Thank you very much.
spk04: Thank you. As a final reminder, ladies and gentlemen, if you would like to ask a question, Please press star 1 on your telephone keypad. Thank you. We will take our next question from Eric Rivari of CIC. Your line is open. Please go ahead.
spk01: Yes, good morning. Two questions. First one is on BRIC immobilier cost cutting plan. Could you quantify the restructuring cost that will occur in Q2 and also the cost savings plans and when they will have a positive impact on BRIC immobilier cost base? And second question is on La Poste mobile acquisition. Could you give us an update on the process and especially I will take the first question.
spk06: In fact, as you know, we are under negotiation, so it's quite difficult to have a precise view on what will be the final cost of this plan. Let's say that if we compare to what has been done in the same sector by others, we expect to have a cost around 20 to 30 million euros. But it's not a precise estimate because we are too early in the process. So we will have to implement that cost-cutting program, which will take place during the next two quarters. So let's say that this will have a marginal impact during the third and the fourth quarter this year, and probably it will have a more massive impact during 2025.
spk07: About your second question on La Poste Mobile, so SPA has been signed, and we got an employee's representative's positive opinion on the acquisition, and so SFR, which has a right of preemption, has been notified, and now their decision is now pending.
spk02: Okay, thank you.
spk04: There are no further questions in queue. I will now hand it back to Pascal Grandje for closing remarks. Thank you.
spk06: Thank you for joining us today. We'll be announcing half year 2024 results on 26th of July 2024. Should you have any questions, please contact our investor relations team. Their contact information is on the facilities on our website.
spk04: Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.
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