Bouygues Earnings: Backlog in Construction Up 9%; Group Operating Profit Increase Driven by Equans

Bouygues’ EN second-quarter results demonstrated strong demand in its construction business, with the backlog improving by 9% to EUR 30.8 billion (10% at constant exchange rates). Notably, the civil works’ backlog surged by 13%, primarily fueled by a 29% increase in international building projects. Colas, the road division, experienced an 11% backlog increase, driven by remarkable 21% growth in rail projects and, to a lesser extent, a 5% rise in road projects. In contrast, Bouygues Immobilier’s backlog declined by 21%, primarily due to reduced residential property reservations resulting from the impact of sharply higher interest rates. The construction division’s EBIT was negative EUR 7 million, reflecting the seasonal nature of Colas’ activities, and should recover in the second half. The group and business segments all confirmed 2023 guidance. We maintain our EUR 35 fair value estimate, with shares fairly valued currently.

Equans, which includes Bouygues energies and services, achieved 2% growth in its backlog, reaching EUR 26.4 billion. The current EBIT amounted to EUR 243 million, with a margin of 2.7%, showcasing the initial positive impact of the Perform plan.

The telecommunications business experienced a 6% increase in sales billed to customers, driven by strong commercial momentum arising from the robust mobile and fixed-line bases, along with solid average billing per user. Sales from services saw a 4% year-on-year rise, although they were somewhat constrained by a decline in sales from incoming traffic. Notably, the telecom EBITDAaL margin was 31.5%, a year-on-year increase of 210 basis points, attributable to sales growth and effective cost-control measures.