Eiffage (OTC) ((EFGSY)) has held its Q4 earnings call. Read on for the main highlights of the call.
Eiffage’s recent earnings call painted a picture of robust performance for 2024, marked by significant growth in revenue and order intake. The positive sentiment was driven by major contract acquisitions and a strong showing from the Energy Systems division. However, the introduction of a new motorway tax and challenges in the real estate market presented some headwinds, impacting overall profitability.
Strong Revenue and Order Intake
2024 was a standout year for Eiffage, with a 7.3% increase in revenue. This growth was bolstered by a 7.5% rise in the construction sector and a 6.5% increase in concessions. The company’s order book also saw an impressive 11% growth over the record levels at the end of 2023, showcasing the company’s strong market position.
Major Contract Acquisitions
Eiffage secured several significant contracts in 2024, including the EPR 2 nuclear reactors and the Greater Paris express Line 15 East. These acquisitions have considerably enhanced the company’s order book visibility across Europe, positioning Eiffage for continued success in the coming years.
Energy Systems Growth
The Energy Systems division of Eiffage demonstrated remarkable organic growth of 9.7% in 2024. With revenue expected to reach €8 billion and an operating margin of 6% in 2025, this division is a key driver of the company’s overall performance.
Dividend Increase
Reflecting its strong financial performance, Eiffage’s Board has recommended a dividend of €4.7 per share, marking a 15% increase from the previous year. The company also announced a future payout policy of 45% of net income group share, highlighting its commitment to returning value to shareholders.
Impact of New Motorway Tax
The introduction of a new motorway tax has significantly impacted Eiffage’s operating profit, reducing it by €123 million. This development has affected the overall profitability of the concessions segment, posing a challenge for the company.
Real Estate Market Challenges
Eiffage faced hurdles in the real estate market, which impacted the construction division’s revenue and margins. Economic uncertainty and political instability have affected housing demand, posing challenges for the company’s growth in this sector.
Increased Corporate Tax Rate
The effective corporate tax rate for Eiffage increased to 29.4% from 26.7% in the previous year. This rise was partly due to the nondeductibility of the motorway tax, further impacting the company’s profitability.
Forward-Looking Guidance
Looking ahead, Eiffage has provided guidance for its fiscal year 2024 performance, with expectations of continued revenue growth. The company anticipates business and operating income growth in both concessions and construction for 2025. Despite the challenges posed by the new motorway tax, Eiffage generated a record free cash flow of €2.6 billion, supported by a favorable working capital requirement.
In summary, Eiffage’s earnings call highlighted a year of robust growth and strategic acquisitions, despite facing some challenges. The overall sentiment was positive, with strong performances in key divisions and a promising outlook for future growth. The company’s commitment to shareholder returns through increased dividends further underscores its strong financial health.