[Article publié le mardi 12 avril 2022 à 7h32, mis à jour à 15h35 ]
Xavier Huillard, the emblematic CEO of Vinci comes be renewed for a new term at the general meeting of the group on Tuesday 12 April. A rather special mandate that goes against the company’s articles of association, which set the age limit for the position of general manager at 70 years and that of chairman at 75 years. In other words, in June, at the age of 68, Xavier Huillard will, according to the rules in force, be able to perform these functions until April 2025, the date of approval of the accounts for the fiscal year 2024, during which he will be 70 years old. . He may nevertheless remain chairman of the board of directors until he turns 75, ie until June 2029. A segregation of duties that even “happen sooner”, he said at the beginning of February during the presentation of the annual figures.
“It’s a bit weird to prolong it. We shouldn’t create psychodrama,” loose to La Tribune a good connoisseur of the company.
Be that as it may, for this next term, Xavier Huillard will face several challenges.
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1. Preparing for your succession
This is the biggest challenge he will have to face. Find a General Manager and join him in his duties by agreeing to let go of the operational levers of a group he has so masterfully led.
“The president and the general manager must choose each other. You must put yourself exclusively at the service of the new CEO and agree not to take anyone on the phone. This requires real generosity and a will to succeed,” he confided in mid-January.
The equation is indeed complex. Xavier Huillard knows something about it. In 2006, as CEO and heir to CEO Antoine Zaccharias before he wanted to oust him, he had to fight hard to reverse the trend, ousting his CEO, before taking control of the group in 2010.
“There are always talents available and if you tangle yourself, it’s dead”, he escaped three months ago. However, the priority seemed to be internal prospecting: “The craftsmanship, the balance sheet, the strategy, it has been acquired, but the most important asset remains the corporate culture. With someone who has lived inside for years, continuity is assured”, Vinci’s boss continued.
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2. Anticipate the exit of the French highways
Before partially letting go of the reins, Xavier Huillard must further prepare the group for the potential loss of its highway assets. The end of the main concessions is planned between 2032 (Escota), 2034 (Cofiroute) and 2036 (Autoroutes du Sud de la France).
During the group’s annual results in February, Vinci’s CEO made it a point to recall that, beyond these dates, at this point no one knows what will happen to these concessions. Not even the state. Different possibilities arise and may vary according to the results of the presidential elections: quickly renationalize by compensating the operators, continue until the end of the concession contracts, or even renegotiate the existing contracts. Marine Le Pen, who believes that privatization was a lost operation, is arguing for renationalization, even if it means 5 billion euros, while Emmanuel Macron seems inclined to continue the execution of contracts until their maturity.
In any case, Xavier Huillard seems very aware of the risk that this uncertainty entails for the group. If Vinci’s CEO has already tried his best to confirm that in the past “a dealership’s profitability is not measured as a normal business”the fact remains that the French motorways weigh heavily in the group’s activity.
While traffic almost returned to normal last year, they represented a turnover of more than 5.5 billion euros per year, or 11% of the 49.4 billion earned in 2021. The French motorways in particular offer unparalleled profitability within the group with an operating margin of more than 50%, enabling them to generate 60% of the group’s 4.7 billion euros in operating profit (Ebita) last year.
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3. Pursue international expansion in the motorway segment
In addition to the financial aspect, the motorways involve commitments spanning several decades that make it possible to balance the group’s activity in the short, medium and long term. Hence the need for Vinci to further develop its portfolio of long-term contracts. To do this, at the beginning of the year, Xavier Huillard recalled the pillars of his strategy to find concessions very similar to the French highways. For example, it aims to develop new public-private partnerships (PPPs) in the motorway sector outside France, led by Vinci Concessions.
This is particularly the case in Europe with a fifth contract signed in Germany for a period of 30 years and a first in the Czech Republic last year. With 4,000 km of roads in 16 countries, this international network is starting to become substantial, but the volume of incoming traffic is disproportionate to the French highways.
These are essentially holdings of around 50%, using an equity method in the accounts: together, the Highways, Railways and Stadium divisions of Vinci Concessions contribute barely more than EUR 300 million per year to the group’s revenues – 18 times less than Vinci Autoroutes – with an operating margin of 16%. A real change of scale is therefore necessary in hopes of compensating for the possible withdrawal of activities from the French motorways.
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4. Keep Vinci Airports as growth engine
This task seems to have essentially been transferred to Vinci Airports, whose development has been carried out in this direction for ten years. Despite a level of activity still largely characterized by the air transport crisis, less than half that of 2019, airports have established themselves as the second major center of long-term concessions in Vinci’s portfolio.
Before the crisis, Vinci Airports thus represented a turnover of 2.6 billion euros with an operating margin of almost 40%, close to highway standards. All with commitments spanning several decades (Portuguese airports), or even unlimited (London-Gatwick). Admittedly, the aviation crisis has undermined these results – a turnover of 1.2 billion for an operating loss of 206 million euros in 2021. The goal is to restore 60% of pre-crisis activity by 2022. But Vinci continues to bet on this activity in its strategy. The group has only integrated seven Brazilian airports, including Manaus, for thirty years.
If Xavier Huillard did not want to reveal his future goals at this time, Vinci would have to continue his development in this area. During the annual results, Vinci’s CEO suggested that Aéroports de Paris (ADP group), a coveted time in the framework of the privatization desired by the State, was no longer foreseen in the short or medium term, like other French airports.
The group must therefore focus on the international in the coming years. If operations are possible in North America, Latin America seems to be the most favorable playing field. Africa could also be interesting, but Xavier Huillard warns that the concession model on the continent remains underdeveloped, both for airports and highways.
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5. Apply your environmental strategy
Whether it’s airport and highway concessions, energy consultancy or construction, Vinci will be ambitious environmental strategy† Announced in January 2020, unveiled in June 2021, it was also on GM’s April 12 agenda.
“We want to take the time to go into detail about how we’re progressing and need to show the initiatives to lower our carbon footprint,” justifies Xavier Huillard.
Its ambition: achieve carbon neutrality by 2050, as stated in the 2019 Energy & Climate Act. The CAC 40 group is already increasing announcements in this direction. At the end of November, Vinci Autoroutes communicated at the end of November on the decarbonisation of 4,443 kilometers. In the same way that Vinci Immobilier announced his wish toachieve zero net space occupancy (ZAN) in 2030, ie twenty years before the date provided for by the “Climate & Resilience” Act of 2021.
“We calculated it: compliance with the COP21 obligations will be done under reasonable economic conditions. It will not be sunk capital. The environmental transition not only requires public money, but also generates economic performance. We feel capable of doing it “, the CEO of Vinci underlines.
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6. Take advantage of the Cobra IS . acquisition
The acquisition of Cobra IS, which was completed at the end of 2021, could also provide opportunities for long-term concessions, even if they do not currently exist in the portfolio of the group’s new Spanish subsidiary. Capable of joining larger projects than Vinci Energies, it specializes in design-build contracts in renewable energies (photovoltaics, wind energy) with a strong presence in Spain and Latin America. Vinci is studying the possibility of adding an operational component to this by establishing a joint venture with ACS, the former owner of Cobra IS. Vinci will own and fully integrate 51% of this new entity, unlike Cobra IS.
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In 2021, Vinci achieved a net profit of 2.597 billion euros (+109%) with a turnover (49.396 billion) an increase of 14% compared to 2020. Vinci Energies and Vinci Construction are achieving good results from the band. Their net profit increases by 553 and 571 million euros respectively. In contrast, Vinci Airports fell again in 2021 with a loss of 485 million euros, certainly less than in 2020 (523 million).
