Colas : Revenue and results at end-September 2017

Consolidated key figures as of September 30, 2017

(a) Including €5 M in non-current expenses incurred as at September 30, 2017 pertaining to pre-decommissioning work at the Dunkirk site, and €39 M as at September 30, 2016 mainly related to the discontinuation of the refined products business.

Revenue

As of September 30, 2017, the Colas Group's consolidated revenue amounted to €8.6 B, up 6% from revenue posted on September 30, 2016 (+6% at constant scope and exchange rates). Progress was made both in France and elsewhere around the world, confirming the improvements in business recorded during the first half-year 2017.

Roads

As of September 30, 2017, revenue for the Roads segment amounted to €7.1 B, up 7% from September 30, 2016 (+6% at constant scope and exchange rates):

• Revenue in Mainland France rose by 7%. All regional subsidiaries contributed to the increase, thus reflecting a market upswing following a period of stabilization observed in 2016;
• Sales in North America were down (-2% at constant scope and exchange rates), mainly due to adverse weather conditions at the beginning of the summer;
• Sales in Europe grew by 18% at constant scope and exchange rates. Activity in Northern Europe increased by 6% and revenue in central Europe jumped a sharp 42%, as work started up again on programs financed by the European Union;
• In the Rest of the World (international units, excluding Europe and North America), revenue was up 8% at constant scope and exchange rates. Growth was strong in Oceania (+ 21%) due to a sharp rise in sales of bituminous products in Australia.

Business is making headway in the United States and Oceania (Australia and New Caledonia), and is close to that recorded during the first nine months of 2015 in Northern Europe and in the Indian Ocean and Africa zone.

Specialized Activities

As of end-September 2017, revenue for Specialized Activities increased 4% (+6% at constant scope and exchange rates) compared to end-September 2016. The biggest increases were recorded in Networks (+26%) and Railways (+7%), whereas Waterproofing and Safety and Signaling remained stable.

Profitability

In the first nine months of 2017, current operating income amounted to € 179 M, compared to € 241 M in the first nine months of 2016, down € 62M.

In the 3 quarter, road subsidiaries saw their level of business and profit margins continue to improve in Mainland France and Europe. Conversely, the results in North America did not improve as expected, in particular due to adverse weather conditions. In addition, Railways continued to encounter difficulties and measures were rolled out to turn the situation around (replacement of managers, reorganization of activities in France, asset disposals).

Over the first nine months of 2017, non-current operating expenses amounted to €5 M, pertaining to pre-decommissioning work at the Dunkirk site, compared to non-current expenses of €39 M for the first nine months of 2016, mainly related to the discontinuation of the refined products business. As a result, operating income at September 30, 2017 amounted to € 174 M compared to € 202 M at September 30, 2016.

Income from associates and joint ventures totaled to €43 M compared to €40 M in the first nine months of 2016.

Net profit attributable to the Group in the first nine months of 2017 came to €160 M, compared to €167 M in the first nine months of 2016.

Financial situation

Net financial debt amounts to €270 M compared to €17 M at September 30, 2016. This change is due to a high level of investment and a deterioration in working capital requirements over the period, in line with the recovery in activity.

Work-on-hand

Work-on-hand at the end of September 2017 remains high at €7.7 B, up 7% compared to the end of September 2016. It is 8% higher at constant exchange rates. In Mainland France, work-on-hand is up 14% while the international and overseas units show a 2% increase.

Outlook

On the basis of currently available data, revenue at constant scope and exchange rates should increase compared to 2016.

Given the trends observed in the 3 quarter 2017 and the high level of work-on-hand, the roads segment should confirm the improvement of its operating profit in Mainland France and Europe in the 4 quarter. On the other hand, North America will only partially offset the difference observed at the end of September 2017 compared to the end of September 2016, and the impact of turnaround measures for Railways will not be felt until 2018.