Construction comeback sets Vinci on road to recovery

(Reuters) - France’s Vinci raised its 2021 outlook on Friday, saying sales and profit margins at its energy and construction businesses should exceed pre-pandemic levels after a strong start to the year.

FILE PHOTO: Vinci Chairman and Chief Executive Officer Xavier Huillard visits a construction site at the financial and business district of La Defense, in Courbevoie near Paris, January 16, 2019. REUTERS/Benoit Tessier

The group, which also operates motorways and airports, had warned in April that its 2021 earnings would not recover to the heights of 2019, though contracting revenue may come “very close”.

The company saw a ramp-up in its public works and civil engineering projects, benefiting from works linked to a 35 billion euro ($41.6 billion) extension of the Paris metro.

“Business levels and earnings at Vinci Energies and Vinci Construction were outstanding, exceeding levels seen in 2019,” said Chief Executive Xavier Huillard, stipulating that at a global level earnings would not recover this year, weighed down by low traffic in its airports and concessions businesses.

Despite returning to profit, Vinci’s half-year net result reached only half that of 2019, following a year of COVID-19 restrictions across Europe that disrupted construction and stunted traffic.

Huillard added that a gradual easing of travel curbs in May had led to a rapid recovery on Vinci’s motorways.

Vinci’s airports arm, however, booked a core loss of 250 million euros over the period as passenger numbers remained low, with June figures down 73% compared with 2019.

However, Vinci Airports President Nicolas Notebaert told reporters that this week represented the “first shudder” of recovery at Gatwick airport near London as restrictions ease.

England will allow fully vaccinated visitors from the European Union and United States to arrive without needing to quarantine from next week, although travellers will still need to be tested.

Vinci’s first-half core earnings beat analysts’ forecasts but remained well below 2019, while sales jumped 22% and surpassed their pre-pandemic levels.

The group also approved an interim dividend of 0.65 euros per share.

($1 = 0.8405 euros)

Reporting by Sarah Morland in Gdansk; Editing by Tomasz Janowski and David Holmes