Bouygues Earnings: New Contracts in Strong Construction Segment Continue to Drive Performance

Bouygues’ EN third-quarter results exhibited continued strong demand in its construction business, with the backlog improving by 8% to EUR 29.8 billion. Shares are up 4.2% in early trading.

Construction and colas (cold asphalt) were once again the primary drivers, booking several sizable contracts, increasing backlog 12% and 8%, respectively. In construction, Bouygues booked the Anderson Road Quarry in Hong Kong contract (EUR 400 million value). In colas, rail backlog was up 34% due to the North-South Commuter Railway contract in Manila, worth around EUR 660 million. In contrast, Bouygues Immobilier’s backlog declined by 22% as the impact of higher interest rates continues to put downward pressure on volume. The construction division’s EBIT was EUR 506 million in the third quarter, aided by an increase of 120 basis points in the colas division. The group and business segments all confirmed 2023 guidance. We maintain our EUR 35 fair value estimate, with shares fairly valued currently.

Equans backlog, which includes Bouygues energies and services, remained flat at EUR 26 billion. The current EBIT amounted to EUR 377 million, with a margin of 2.7%, although the estimated backlog underlying margin indicates possible future improvements.

Telecommunications saw 6% growth in revenue, driven by commercial momentum from mobile and broadband customers, along with solid average revenue per user. Sales from services saw a 4% year-on-year rise. The telecom EBITDAaL margin rose to 32.6%, a year-on-year increase of 200 basis points, thanks to sales growth and cost-control measures.