VINCI - 2008 annual report

10
GROUP VINCI __ 2008 ANNUAL REPORT
STRATEGY AND OUTLOOK INCREASING THE RESILIENCE
OF OUR BUSINESS MODEL
Our strategy is to expand on
VINCI’s business model by maintaining
a balance between the
development of activities with
short business cycles and activities
with long cycles. This will ensure
both growth and resilience, while
creating value for shareholders.
Over time, we have based VINCI’s development
on an integrated concession-construction business
model. This model has generated growth,
making VINCI world leader in its sector, with
revenue multiplied by 1.7 and net profit multiplied
by 2.2 in four years. By diversifying the Group’s risk
profile, the model has also generated resilience,
giving VINCI the capacity to withstand economic
downturns.
Our strategy is to expand on this model in
all our target markets by aiming for balanced
growth of activities with short business cycles
and activities with long cycles.
BALANCED GROWTH OF ACTIVITIES WITH
SHORT BUSINESS CYCLES…
The growth strategy for activities with short
cycles – mainly design-build activities – is based
on three complementary levers:
> strengthen our networks in order to anchor
ourselves even more firmly in our local markets
and capture growth segments;
> acquire expertise enabling us to penetrate
technological niches that open up opportunities
in growth markets around the world. Recent
examples include the acquisition of Solétanche
Bachy in ground technology, ETF-Eurovia Travaux
Ferroviaires (formerly Vossloh Infrastructure
Services) in rail track laying and overhead line
installation, and Entrepose Contracting in oil
and gas infrastructure;
> strengthen our ability to manage complex
projects and assume the roles of client-side
project manager and main contractor. This will
enable us to meet the growing need for comprehensive
solutions to projects of ever increasing
size that require a high level of competence in
systems and closer co-ordination between our
business lines.
These three components can be combined
in a single market. In the United Kingdom, for
instance, we recently: acquired Nuvia (formerly
known as Nukem), a company specialising in
services in the nuclear sector; took over Taylor
Woodrow Construction, which gave VINCI
Construction UK critical mass in its market;
and signed a partnership agreement with
Balfour Beatty, one of the local market leaders,
with a view to developing a tailored full-service
response to the country’s EPR reactor construction
programme.
… AND ACTIVITIES WITH LONG BUSINESS
CYCLES
Activities with long business cycles generate
recurring sales and margins. The growth strategy
here applies naturally to the concessions division,
whose expertise as an operator of motorways,
airports, parking facilities and so on can
be extended beyond the scope of the concession
Urban development, together with transport and
energy infrastructure needs, will provide business
opportunities for VINCI over the long term.
contracts themselves and can be carried out
within the framework of service contracts
involving no capital investment. This strategy
also covers operation, maintenance and services
carried out under multi-year contracts in other
Group activities: facilities management in the
service sector, management of public lighting,
road maintenance and so on. In addition, we
are developing contracting activities for which
multiple orders are booked regularly over time,
giving them the same stability as activities with
a long business cycle. Examples include power
distribution in rural areas and water network
maintenance.
ORGANIC GROWTH
We are implementing this strategy mainly
through organic growth because we want to
limit financial investments payable in cash in
order to keep debt under control in the current
uncertain economic and financial climate.