Bouygues

Hello and welcome to the Briggs 9 Months 2024 results. 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 question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Pascal Granger, 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 Nine Months 2024 results. With me today is Christian Lecoq, CFO of Bouygues Telecom. Following our presentation, will be answering your questions. Let's start with our highlights. I would start by saying that we confirm the Group Outlook for 2024. Then, I would point out four elements. First, the very solid backlog in the construction businesses provides visibility and activity. Second, equine sales, COPPA, margin from activities, and net cash improved year on year, reflecting the continued successful execution of its strategy plan. Third, Brick Telecom achieved a strong performance in fixed and continued to face a competitive environment in mobile. The operator launched a new brand named Big on the B2C market early October with an offer dedicated to households. And this morning, Brick Telecom announced the launch of the BNU Pure Fiber offer, specifically dedicated to digital customers. Moreover, the completion of the LabPost Telecom transaction is expected before the end of the year. Christian will talk about that later on during the call. And fourth, The financial structure remains robust with a net debt of 8.5 billion euros at end September 2024, improving compared to end September 2023. Let's now have a look at our three key figures on slide five. Group sales were up 1% at 41.5 billion euros in the nine months 2024 compared to the nine months 2023, mainly driven by equance and reconstruction. Like for like and a constant exchange rate, group sales increased by 2%. In the nine months of 2024, the group COPPA increased by 96 million euros compared to the nine months 2023, and reached 1,719 million euros. This increase was primarily led by equants, where copper improved by 97 million euros year-on-year, and in a lesser extent by brick construction and brick telecom. Brick-immobilized copper decreased by 50 million euros over the period, in relation in particular with a strong decline in activity, but also the adjustment in margins at the end of the operations, including some commercial discounts made to customers. Net profit attributable to the group was 687 million euros, a level slightly higher compared to the nine months of 2023. Please note that this net income group does not include into account the future increase in the tax rate for 2024, which would result from the new French Finance Act. Last, net debt was 8.5 billion euros, an improvement compared to the 10.2 billion euros at end September 2023. I will provide you more details about these figures later during this call. Let's begin with the backlog in the construction businesses on page 8. The backlog at end September 2024 was at a very high level of 31.8 billion euros, up 7% year-on-year. This backlog provides visibility on future activity. International backlog was up 6% year-on-year, notably driven by significant projects awarded at Bouygues Construction, reflecting a good momentum in civil works. And backlog in France was up 9% year-on-year, driven both by Bouygues Construction and Colas. Turning to page 9, you see that the increase in the construction businesses backlog was driven by Bouygues Construction. Let's go now into details. At Bouygues Construction, order intake amounted to 10.1 billion euros. Momentum remained good in the normal course of business, which represented around half of the total order intake during the first nine months of the year. Order intake also included several major contracts in Q3, notably The Torrance to Darlington Highway contract worth more than 2 billion euros, but also the Ride Hospital, both in Australia, as well as a hotel in Dominican Republic and a residential building in Florida. Backlog at boot construction was up 18% year-on-year, driven by civil works up 43% year-on-year, and building slightly up year-on-year. At Colas, order intake reached 9.8 billion euros. In Rose, order intake was slightly up year-on-year in France and was down internationally in relation notably with the completion of major projects and some delayed projects in North America and with the repositioning of activities in certain countries. In Rio, order intake was down year-on-year but this is not representative of business activity because of an unfavorable basis of comparison on the disposal of Colas High Italy. Moreover, at 8 September, the nine-month order intake did not include yet the contract to renovate Line 1 of the Cairo Metro. Colas' backlog was almost stable life-or-life and a constant exchange rate year-on-year due to the disposal of Colas High Italy, whose backlog was around 400 million euros. Backlog, as published, was down 4% year on year, with roads down 5% year on year, and rail down 2% year on year. Last, at Bouygues Immobilier, the general market conditions remained challenging. We noted French residential unit reservations showing improvements year on year, but this situation obviously does not make a trend. For its part, commercial property market is still at a standstill. As a result, Bouygues Immobilier's backlog was down 18% year on year. Let's now look at the construction activities sales on slide 10. Sales were up 1% year on year up also 1% like-for-like and at constant exchange rates. First, brick construction sales were up 5% year-on-year, essentially driven by international building. Second, at Colas, sales were stable year-on-year, supported by a solid performance in rail, where sales were up 5%. Road activities were stable year-on-year, with a slight growth in France and a slight decrease abroad. Last, at Bouygues Immobilier, sales were down 13% year-on-year, reflecting the difficult market conditions of both residential and commercial property markets. Let's go through COPPA on slide 11. Current operating profit from activities of the construction businesses reached 476 million euros a lower level than in the first nine months of 2023, resulting from the strong decrease in BRIC immobiliers' contribution. COPPA at BRIC Construction improved by 29 million euros compared to the nine months 2023, with a margin improving by 0.3 points year on year. Please remember that BRIC Construction COPPA was particularly strong in Q4 2023, an effect that we don't expect at the same extent for Q4 2024. At Colas level, COPPA was 306 million euros, almost stable year on year, with a stable margin from activities of 2.6%. As a reminder, 2023 third quarter COPPA notably benefited from a significant positive one-off related to the sale of a land asset in the US. Let's now turn to the review of operations for Equance on slide 13. Equance's commercial activity was robust with a dynamic order intake of 14.1 billion euros, including notably the award in the third quarter of some major contracts such as a project of electrical and mechanical work for the health sector in Canada and the fit out of a data center in the UK, each worth around 140 million euros. The order intake margin is on the up, highlighting the ongoing positive impact of the PERFORM plan. Equance backlog stood at 25.8 billion euros, up 4% compared to end December 2023, and slightly down year on year. Equance pursues its selective approach to contract strategy in a supportive environment and is continuing its gradual exit from the new-build activity in the UK. Equance sales stood at 14.1 billion euros, a 3% increase versus end September 2023, thanks to good overall momentum in France and abroad, despite the disposals completed at the end of 2023 and the impact of the gradual exit from the new-built activity. Sales were also underpinned by the strong growth in specialty businesses, notably in solar, data centers, and smart factories. COPPA reached 474 million euros with a margin from activities of 3.4%, improving by 0.6 points compared to the nine months 2023, underlining the continued successful execution of the PERFORM plan. To end with equants on slide 14, let me just add that 2024 guidance is confirmed with equants aiming for sales figures close to, yet slightly above, that of 2023. will factor in both the effect of growth in Equance markets and the scope effect related to the asset-based activity disposals at end 2023 and the selective approach to contract strategy. As a reminder, Equance is aiming for 2025 onwards, an acceleration in organic sales growth to align with that of market peers, In 2025, the current operating margin from activities closed to 4%, and in 2027, the current operating margin from activities of 5%. The cash conversion rate before working capital requirement of between 80 and 100%. Turning to slide 16, let's talk briefly about TF1's results, which were released on the 30th of October. First, the TF1 group audience remained strong with its main target audiences in the nine months of 2024. Second, in the nine months of 2024, total sales were up 3% year on year. Media sales increased by 4%, with advertising revenue up 5%, driven by TF1+, up 40%, confirming the platform's appeal to advertisers and which linear up 2% year-on-year. Q3 linear advertising revenue remained steady in July and August, despite the broadcast by France Télévisions of the Olympic Games and was down in September in relation with an unfavorable basis of comparison due to the broadcast of the Rugby World Cup in Q3 2023. New One Studios posted revenue down 3% year-on-year with JPG, which has been acquired end of July, contributing to New One Q3 2024 sales for around 8 million euros. As mentioned in the previous quarters, New One Studios will deliver flagship shows in Q4 2024, such as Marie Antoinette and Memento Mori second seasons. COPPA amounted to 198 million euros close to 9 months 2023 level. Q3 2024 benefited from the divestment of a brown license and the decrease in the programming costs. As such, nine months 2024 COPPA margin was 12.4% and remained down versus nine months 2023 margin. Turning to slide 17, I will end on TF1 Group by saying that 2024 outlook is confirmed despite a more challenging economic environment for the rest of the year. TF1 aims at keep growing in digital, building on the promising launch of TF1+, maintain a broadly stable current operating margin from activities, 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 BRICS Telecom performance.

Thank you Pascal and good morning to everyone. Let's begin page 19 with the commercial performance in fixed. FTTH continued to experience strong growth in volume with 159,000 new customers in Q3 for a total of 408,000 new customers joining us since the beginning of the year, and for a total of 4 million FTTH customers. As you can see on the right side of the slide, we had a total of 5.1 million fixed customers at EDS September 2024, with an increase of 82,000 customers in Q3. Performance was also strong in value with a fixed ABPU up 2.3 year-on-year at 33.2 euros per client and per month. FTTH performance is the result of a high penetration rate and a strong FTTH footprint with 79% of our fixed customer base on FTTH up from 71% one year ago and also with national coverage of around 90% and 37.5 million FTTH premises already marketed. We expect around 40 million premises by end 2026. Regarding mobile, on site 20, the market environment remains competitive. At end September 2024, Book Telecom reached 15.8 million mobile prime customers thanks to its good performance of 170,000 new customers in Q3, leading to a total of 246,000 new customers since the beginning of the year. Mobile ABPU was down 0.2 euros year-on-year at 19.6 euros per client and per month. This decline in mobile ABPU was expected due to sustained competition in low-end segments and the persistent pressure on purchasing power, leading to the migration of some customers to more affordable mobile plans. Turning to slide 21, let me remind you that the B2C mobile market is undergoing changes in 2024 due to a slowdown in volume growth and increased competitive pressure since the second quarter, particularly on online mobile entry plans. Book Telecom launched in October its innovative marketing strategy featuring its newborn Big Hill. This launch is a strategic pivot towards household exclusivity. As explained early October, Big proposes a new definition of households extended to those who do not live under the same roof. Big Offer is built on three main pillars. First, Big Savings. address customer concerns about the cost of living by offering a sustainable, unique, progressive pricing structure. On mobile, BIG provides progressive discounts for all the lines including in the pack, subscribed and already held. On fixed, we provide a reduced and stable price. Second, BIG solutions. Our offer includes multiple services that respond to households' needs like the Gigaboots option, which allows to get a 20 additional gigabytes boost on eligible packages for free and up to three times a year. Third, Big Tranquility. We offer an exclusive support to facilitate household life with, for example, the possibility to use multi-bank accounts BIC is available in all Brute Telecom's distribution channels. With this bond, Brute Telecom aims to enhance our customer satisfaction and reduce churn for profitable calls. This new strategy is a big opportunity to catch up with household exclusivity and capture mobile packages with the household. Turning now to slide 22, Brooks Telecom announced this morning the launch of BNU Pure FreeBAR, the first internet-only fiber offer on the market designed for a specific segment of digital customers. With this offer, Brooks Telecom wants to address a specific segment of digital savvy customers and only looking for high-performance connectivity with no other additional services like a fixed line telephone or a TV service. As of today, no existing offers respond to this customer need. Our offer consists of, first, a powerful B-Box with high-speed internet. Second, a fair and attractive prices with no commitment. And third, an offer available exclusively online from subscription to after-sales service. Let's now have a look at key figures as you can see on slide 23. Bookstelecom achieved a 5% growth in sales bills to customers year-on-year. Sales from services were up 4% compared to the 9 months of 2023. Total sales were stable year-on-year, affected by the decrease in other sales, down 13% year-on-year, which mainly consists of handsets, accessories, and built-to-suit sales. EBITDA after leases increased by 55 million euros compared to nine months to enter in history and reached 1,506 million euros thanks to the combined effect of growth in sales based to customers and the sustained efforts on cost control. OPEX continued to increase due to strong growth in the FTTH customer base. The current operating profit from activities of €603 million was €18 million higher than in the nine months of 2023, reflecting the growth in EBITDA services mitigated by the increase in DNA over the period. Please note that in Q3, we reviewed some depreciation periods of certain assets leading to a positive one-off effect in Q3 2024 for an amount slightly below 20 million euros. This effect won't recur in Q4. Plus, you can notice that gross capex reached 1,084 million euros in 9 months 2024, which is in line with our full year outlook. Moving to slide 24, we are confirming our 2024 targets that are an increase in sales bills to customers, an EBD after lease of about 2 billion euros, and a gross capex of around 1.5 billion euros excluding frequencies. Turning to slide 25, let me add a few words on Lapos Telecom's transaction. In its press release, dated 29 May 2024, Books Telecom stated that it had been informed by FFR and La Poste of divergences between them concerning the terms and conditions of the transaction provided for in the exclusivity agreement. Signed by Books Telecom with La Poste Group for the acquisition of La Poste Telecom. Bouygues Telecom was informed that these divergences have been resolved on 4 November 2024. In addition, as the necessary administrative authorizations have been obtained and SFR has waived its preemption rights, the parties have agreed to complete the transaction before the end of the year. Bouygues Telecom will adapt its guidance to factor in the acquisition of La Poste Telecom in the month following completion of the transaction at the latter. And now Pascal, I'll give you back the floor.