Bouygues SA

PAR:EN

Earnings Call Transcript

[Operator]

Welcome to the Bouygues Conference Call. [Operator Instructions] I would like now to introduce Mr. Pascal Grange, Deputy CEO and CFO of Bouygues. Thank you.

[Pascal Grangé, executive]

Good morning to all of you, and thank you for joining us to discuss Bouygues' First Quarter 2022 Results. With me in the room are Christian Lecoq, CFO of Bouygues Telecom; and Arnaud Godard, Head of Investor Relations. Following our presentation, we'll be answering your questions.

Let's start with Q1 highlights on Slide 4. Total group sales were up 6% in Q1 2022. The construction and services businesses demonstrated a good level of activity with the backlog up 4% and sales up 7%, driven by Colas. Bouygues Telecom experienced a good commercial performance, both in mobile and in fixed. And last, TF1 sales increased meaningfully.

Second, our 2 M&A projects are well on track and new milestones were completed. The Equans acquisition received all the required employee representative body's opinions. This condition precedent being met, the share purchase agreement should be signed soon. On the 8th of April, TF1 signed the agreement with Altice Media related to the sale of TFX channel. The completion of the sale is subject to obtaining clearance from the relevant authorities, the French Competition Authority and Arcom onto the effective merger between TF1 and M6.

Concerning the proposed merger between TF1 and M6, let me remind you that it is subject to regulatory authorizations. This process involving the French Competition Authority, ADLC, and the French Regulatory Authority for Audiovisual and Digital Communication, ARCOM, is ongoing. The ADLC was notified of the proposed merger on the 17th of February, 2022, and their decision is expected in October. Regarding the French market authority, AMF, in May, RTL, Bouygues and TF1 will submit their request for exemptions for the mandatory filing of the proposed public offering.

Let's now turn to the group's key figures on Slide 5. Before starting, I would like to remind you that like every year, due to the usual seasonality, Q1 earnings are not indicative of H1 and full year results. That being said, group sales of EUR 8.2 billion in the first quarter 2022 were up 6% year-on-year and up 3% like-for-like under constant exchange rates. All our business segments delivered growth compared to Q1 2021, except Bouygues Immobilier as forecasted. The growth was particularly strong at Colas and TF1 with the solid contribution from Colas up 19% and up 12% like-for-like on a constant exchange rate. And the good performance at TF1, up 10% and 7% like-for-like and at constant exchange rates.

Current operating loss was EUR 77 million in the first quarter of 2022, a stable level compared to the first quarter 2021. The operating loss was EUR 93 million. It included a negative EUR 16 million of noncurrent results that is not representative of our business. It is linked to the gain on the disposal of data centers at Bouygues Telecom and to charges related to our 2 ongoing M&A operations recorded at Bouygues Construction at TF1 and at the holding level. I would like to add that in the first quarter of 2021, the operating loss was EUR 21 million, including a positive EUR 56 million of noncurrent results mainly related to the sale of data centers at Bouygues Telecom. Net loss attributable to the group was EUR 131 million in Q1 2022. Alstom no longer contributes to our figure, while Q1 2021 included a positive contribution from Alstom of EUR 120 million.

Let's now turn to the review of operations. Let's begin with the backlog in the construction and services businesses on Slide 8. The overall backlog at end March 2022 was at the high level of EUR 34.6 billion and up 4% year-on-year. It included around EUR 700 million from Destia. The backlog was down 1% at constant exchange rates and excluding the main disposals and acquisitions. The increase in the backlog was driven by Colas including Destia. Colas achieved a good commercial performance in growth activities in France, the U.S. and Canada, and also the further developing trend at Colas Rail notably with the award of the contract for the first phase of Line 4 of the Cairo metro in Egypt.

Bouygues Construction's order intake was up 8% in Q1 year-on-year, driven by both international markets on the normal course of business. That backlog remained stable in Q1 2022 versus Q4 2021. At Bouygues Immobilier we noted a significant catch-up in building permit issuances in the residential property market compared to the first 3 months of 2021. However, we still have a low supply of units available, which is reflected in the reservations and the backlog. Conversely, clients in commercial activities are still in a wait-and-see mode. As a result, Bouygues Immobilier's backlog was down 13% year-on-year. Last, the share of backlog in international markets continue to increase, representing 65% of the backlog at Bouygues Construction and Colas, up 3% -- 3 points, sorry, year-on-year.

Let's now look at the construction activity's key figures on Slide 9. The construction and services businesses started the year on a positive note. Sales were up 7% year-on-year and 3% like-for-like at constant exchange rates. It is worth noting the good performance in international markets where sales were up 11%, thanks to the significant increase at Colas' international sales, which were up 35%, led by the Europe, Middle East and Africa regions, as well as the U.S. and Canada. Of note, Destia contributed EUR 109 million to Colas' sales in Q1. The increase in international sales also reflects the positive impact of foreign exchange rates. Current operating loss was EUR 208 million.

I would like to highlight 3 points on current profitability. First, Bouygues Construction's margin improved slightly, 2.8% versus 2.6% in Q1 2021. This was led by Bouygues Energy & Services, whose current operating margin reached 3% in Q1 2022. Second, the current operating result of Bouygues Immobilier reflects the low level of activity, notably in the commercial property market. Q1 2021 included a positive contribution of EUR 45 million in sales, mainly driven by a specific project named SUEZ. On third, Colas has a current operating loss in line with the usual low activity level in Q1, which was accentuated this year by the impact of foreign exchange rates.

You know that our construction and services businesses are committed to foster sustainable development and responsible behavior. You will find a few examples of those on Slide 10. Let me start with Bouygues Construction, a responsible and committed player in sustainable construction, which has been recognized and accredited by the Top Employers Institute, an independent international body, as the top employer of France for the sixth consecutive year and the top employer of Europe for the fourth year. Certification was also awarded to its entities in the United Kingdom, Switzerland, Poland and Czech Republic.

In Marseille, in Les Fabriques eco-district, the AL-FA project of Bouygues Immobilier will be entirely designed in low-carbon concrete. There will be low-carbon white concrete on the façade and low-carbon gray concrete for interior walls and infrastructure. Produced from recycled materials, low-carbon concrete reduces the carbon footprint by 30% to 70% compared to conventional concrete. The first wall in low-carbon white concrete was completed in Marseille in January 2022.

Finally, also in January 2022, Colas and Saipol signed an agreement to supply Colas' fleet of truck in France with Oleo100 renewable bio-based fuel that reduces greenhouse gas emissions by 60% compared to diesel fuel, and slashed fine-particle emissions by up to 80%. The initiative would cut the emission of carbon dioxide by nearly 46,000 tons in a year once the deployment is completed.

Turning to Slide 12. Let's talk briefly about TF1's results which were released at the end of April. First, released a good set of results. The sales increased 10% and 7% like-for-like and at constant exchange rate was driven by both business segments. First quarter advertising revenues were up 5% year-on-year at EUR 377 million, thanks to the gradual recovery of some business sectors that were still impacted by the pandemic in 2021. And furthermore, Newen Studios' revenues continued to expand internationally in the first 3 months, up 16%, bolstered in particular by the contributions of the studios acquired in Spain and Germany in 2021. Current operating profit showed a slight improvement, reaching EUR 60 million in the first quarter.

Cost of programs remain under control in the media segment during Q1 2022. However, Newen profitability was affected by a lower contribution of program deliveries in Q1 2022 due to the phasing of program deliveries on the strong basis of comparison related to a catch-up effect in program deliveries in Q1 2021. As a result, current operating margin was down 0.5 points to 10.6%.

Let's now move to Slide 13, which highlights TF1's actions for more sustainable behavior on gender equality. First, I would like to mention Ecofunding. This initiative was not specific to Q1 2022 as it was launched in July 2021. But the first campaign started on 1st January 2022. EcoFunding is the first environmental advertising form on the market, 100% financed by TF1. Advertising campaigns promoting a sustainable service with the criterion recommended by Ademe such as, for example, an energy level or reparability index will trigger a contribution to the Ecofunding program. This fund will be used to produce and distribute awareness campaigns on environmental levels and criteria recommended by Ademe.

Second, in March, TF1 presented the second Expertes à la Une session, which brings together women experts from, for example, the health, medical research, justice, police, artificial intelligence and entrepreneurship sectors. The program's goal is to increase the proportion of women experts in news programs on TF1 and LCI. The representation of women experts in TF1 news programs, 1 p.m., 8 p.m. and during weekend news was 44% in 2021.

To conclude, TF1 Slide 14, I will be briefly brief as TF1's team already commented on 2022 outlook. At end March, TF1 considers that it was not economically impacted by the consequences of the war between Russia and Ukraine. However, the development of the conflict could have an impact on the European economy and therefore on its activity.

I'll now leave the floor to Christian Lecoq for Bouygues Telecom's performance.

[Christian Lecoq, executive]

Thank you, Pascal, and good morning, everyone. Starting with Slide 16, you can see that commercial performance in mobile was solid in the first quarter. At end March 2022, Bouygues Telecom had 14.9 million mobile plan customers, excluding MtoM. Commercial activities remained dynamic during the quarter as Bouygues Telecom won 97,000 new customers in Q1. You can see on the right side of that slide that Bouygues Telecom is on track to reach its Ambition 2026 target to reach 4 million additional mobile customers, excluding MtoM, as we already gained 2.7 million customers since the beginning of 2021, including those of BtoB.

Now let us turn our attention to our fixed customer base on Slide 17. As you can see, we had 4.5 million fixed customers at end-March 2022, including net adds of 52,000 over the first quarter. FTTH continued to experience strong growth with 172,000 net adds during the first quarter. With a total of 2.5 million subscribers, FTTH customers represented 55% of our fixed customer base compared to 42% 1 year ago. Having achieved almost 1/3 of our Ambition 2026 target since January 2021, we are also on track to deliver our 2026 goal of 3 million additional FTTH customers.

Let's have a look at key figures on Slide 18. First, we achieved a good performance both in volume and in value over the past 12 months, leading to a 6% growth in sales billed to customers. Mobile ABPU, now including BTBD and restated for roaming impact was up EUR 0.3 year-on-year at EUR 19.7, and fixed ABPU was up EUR 0.3 year-on-year at EUR 28.6. This good performance was partially offset by the decrease in incoming sales, leading to a 3% increase in cell phone services. Indeed, as you know, cell phone services including incoming voice calls and text messages billed to other operators, which by nature do not contribute to EBITDA after leases because [indiscernible] costs. In Q1 2022, incoming sales were down 24% due to a lower incoming traffic and to a decrease in regulated call termination rates. As such, EBITDA after leases, which, I repeat, is not impacted by the change to incoming sales grew by 7% in Q1 2022, in line with our annual guidance and reached EUR 354 million. Consequently, margin improved compared to last year, which is consistent with our goal to positively increase it.

The current operating profit of EUR 87 million was better than in Q1 2021. Operating profit stood at EUR 92 million and takes into account a noncurrent income of EUR 5 million, mainly due to the gain on the disposal of data centers. Please note that Q1 2021 noncurrent income stood at EUR 60 million, also mainly related to the disposal of data centers. Last, you can notice that gross CapEx reached EUR 508 million in Q1 2022, a higher level than in Q1 in 2021. In order to secure the deployment and the strengthening of our 4G, 5G and fiber networks and in the context of tight market, we accelerated a portion of our annual growth CapEx program in the first quarter. This has no impact on our 2022 CapEx guidance of EUR 1.5 billion. Divestments decreased by EUR 94 million over the period due to lower data center disposals.

Looking at Slide 19, just a few words on some of our sustainable initiatives and innovation announced or launched in Q1 2022 in order to better satisfy the requirements of our customers. Among them, we launched Réparation Express, which is an in-store mobile repair service open to everyone. We also introduced source, the first responsible and inclusive mobile plan. source is a no-commitment plan that promotes digital sobriety EUR 10 for 10 gigabytes. source offers customers the unique possibility of converting their unused gigabyte into financial support for associations, thanks to our partner Lilo.

We also integrated a sustainable development approach into the new version of the Bbox 4K TV decoder. For example, it is now 95% made from recycled plastic, halogen-free plastic parts, 10% lighter. And with this texture, we're designing to reduce scratches and to extend the book life span and promote reuse. Last, we were the first operator to announce WiFi 6E in France. The launch occurred on 25th of April and part of strategy to always offer the best WiFi to our customers. Let me remind you that Bouygues Telecom was #1 in WiFi performance in France according to the nPerf survey published in March 2022.

Turning to Slide 20. I simply remind you of our unchanged target for the full year.

And now, Pascal, I give you the floor back.

[Pascal Grangé, executive]

Thank you, Christian. I would like to briefly comment on the financial statements on Slide 22. We have already discussed first quarter revenues and current operating results at the beginning of this call. Other operating income and expenses were negative at EUR 16 million in the first quarter. This amount includes noncurrent income of EUR 5 million at Bouygues Telecom, as Christian already explained, noncurrent charges of EUR 5 million at Bouygues Construction, EUR 3 million at TF1 and EUR 13 million at Bouygues Susanne Andersson level. These noncurrent charges are all related to the 2 ongoing M&A projects.

As a reminder, in Q1 2021, the other operating income and expenses were positive at EUR 56 million. This amount included a noncurrent income of EUR 60 million at Bouygues Telecom, mainly related to the sale of data centers and noncurrent charges of EUR 4 million at Bouygues Immobilier related to some adaptation measures. Concerning the share of net profit of joint ventures and associates level, I am just reminding you that while we included contribution from Alstom in Q1 2021, Alstom no longer contributes to our figure.

We will now turn our attention to the group financial structure. Moving to Slide 23. Net debt was EUR 2.1 billion at the end of March 2022. The usual seasonal impacts mainly explain the change in net debt between end-December 2021 and end-March 2022. Compared to end-March last year, net debt was down EUR 532 million, a significant reduction, and net gearing decreased by 6 points from 22% to 16%. As such, the group still relies on a particularly strong financial position. Aside from the change in operations end-March 2022 net debt position was positively affected by the interest rate swap mark-to-market that I will explain to you on the next slide. Finally, please note that credit agency ratings have remained unchanged.

Let's now turn to Slide 24 to describe the net debt evolution between end-December 2021 and end-March 2022. You can observe that the net debt increased by almost EUR 1.2 billion since the end of last year. This change is mostly explained by the following 3 items: first, an outflow of EUR 1.5 billion from operation, up EUR 365 million year-on-year that I will explain on the next slide. Second, an outflow of EUR 63 million linked to share buybacks. And third, the positive impact of EUR 400 million of swap mark-to-market related to future bond issuances.

Let me provide a more detailed explanation on the swap effects. Considering the real estate bond refinancing due in 2023 and the bond loan refinancing through bond issuance for the Equans acquisition, we decided to hedge against interest rate fluctuations through interest rate swaps. Those interest rate swaps were contracted in July 2021 and mainly between November 2021 and January 2022, after the Equans sale option signing.

The mark-to-market valuation as of 31st of March 2022 was EUR 439 million compared to EUR 39 million at end-December 2021. This value was recognized as an asset in the balance sheet within financial instruments hedging up debt with shareholders' equity as a counterpart. The deferred tax liability was also recognized as a counterpart of shareholders' equity in order to take into account the associated taxes that will be paid upon exercise of each swap.

The swap mark-to-market, and therefore its effect on net debt changes over time depending on euro interest rate fluctuation on financial markets. Once the underlying financing is in place, Bouygues SA will cash in the fair value of the swaps and pay the associated taxes. Please note that on the 11th of May, the fair value of these swaps amounted to around EUR 780 million.

Turning to the breakdown of operations for the first quarter 2022 on Slide 25, you can observe. First, net cash flow, including lease expenses remained stable compared to last year. It was driven by Bouygues Telecom and TF1 but offset by Colas and Bouygues Immobilier. Second, net CapEx was up EUR 231 million, largely due to higher gross CapEx and lower disposals at Bouygues Telecom level. As you know, the phasing of CapEx is not linear over the course of the year. And third, you can see on the chart that working capital requirement related to operating activities and other increased by EUR 128 million compared to the same period of last year. I would like to remind you that the management of working capital related to operations by business segments was remarkable both in 2020 and 2021, leading to a cumulative improvement of around EUR 700 million. Therefore, we started 2022 with an optimized working capital requirement with an increase in activity at the beginning of 2022. This incremental change in the working capital requirement is typical, notably for first quarter.

Let's now conclude this presentation on Slide 27. As a reminder, the 2022 group outlook is the following. In 2022, the group is expecting a further increase in sales and current operating profit versus 2021. After SBTi endorsement of Colas' greenhouse gas emission reduction targets in 2021, the other business segments are now aiming to receive SBTi endorsement of their decarbonization plans. The group remains very vigilant regarding the indirect consequences of the conflict between Russia and Ukraine. This outlook is subject to no further major deterioration of the current macroeconomic and geopolitical situation.

This concludes our presentation. Thank you for your attention. Operator, please open the floor for questions.

[Operator]

[Operator Instructions] The first question comes from the line of Nicolas Cote-Colisson.

[Nicolas Cote-Colisson, analyst]

2 questions, please. The first one is on the construction, and especially on the macro environment. It's maybe early stage, but have you noticed some delays in the decision-making on the client side? What are you seeing? And maybe if you can provide some color on the business operation, that would be appreciated. And my second question is on telecoms. If you could give us some more color on the market share dynamics in fixed broadband. I was wondering if you are gaining shares in a specific area and how is it working on the more rural side of France.

[Pascal Grangé, executive]

Concerning your first question, to date we don't have any significant movement regarding the delays. The decision-making process is still ongoing. We don't have any important delay for any award or things like that. And as far as delays concerning deliveries, we are still in a good situation, no important delay concerning our projects or the -- for our projects.

[Christian Lecoq, executive]

Yes. Hi, Nicolas, about your question on telecommunication. We are increasing our number of clients in the world mainly for 2 reasons. The first one is that our FTTH footprint is higher and higher due to the development of FTTH network in this part of France. And second point, our market share is -- we are increasing our market share in this part of France also. So today, our market share is down at half our average level, I would say. So our goal is to continue to increase this market share, thanks to the development of our technical footprint and thanks to the development of our commercial footprint.

[Operator]

Next question comes from the line of Mathieu Robilliard calling from Barclays.

[Mathieu Robilliard, analyst]

I have 2 questions, please. First on construction on Energy & Services. I may have missed that during the presentation. But if you could give a little bit more granularity as to how that business progressed and notably on the margin. I don't know if you can share any number. And then with regards to mobile, we see that service revenues have slowed. You made it quite clear that it's due to lower incoming calls, traffic and MTR cuts. That's not something we've seen when one of your competitor reported. So maybe if you could give a little bit more granularity in terms of the build ARPU trajectory compared to previous quarters to get a sense that growth is still there and solid.

[Christian Lecoq, executive]

So I will answer on the telecommunication part of your questions. So first point, I remind you that we report ABPU, average bill per customer. And so this ABPU does not include any incoming revenue. So the trajectory of ABPU will remain the same despite any change in incoming revenue. What we saw in Q1 about incoming revenue is 2 things: First, as expected, lower mobile termination rate than last year, first point. And second point, a higher decrease in traffic than we expected at the beginning of the year. But this is quite limited, and we didn't change our guidance for service revenue for the full year.

[Pascal Grangé, executive]

As far as your question concerning Energy & Services, in terms of turnover, the turnover of Bouygues Energy & Services have slightly increased during the first quarter compared to first quarter last year, let's say, approximately 3%. And the margin has also increased from 2.2% in the first quarter of 2021 to 3% this quarter. That doesn't mean that it will decrease on the same extent during the whole year, but we are in line with our plan to increase gradually margin for Bouygues Energy & Services. And mind you that we aim to obtain a midterm period, our target is 5%.

[Operator]

The next question comes from the line of Jakob Bluestone from Credit Suisse.

[Jakob Bluestone, analyst]

I had 2 questions, please. Firstly, just coming back to the telecom service revenues. As you mentioned, you didn't change the guidance. I was just hoping can you maybe explain why you didn't, given this change in termination rates, which presumably will impact later quarters, but also the change in incoming traffic? Are you basically saying that you think it's just a sort of a Q1 thing and they won't recur in the later quarters? So there's just a bit of volatility. So just sort of help us understand a little bit why you see this as something that won't continue to be a drag in coming quarters? And then just maybe just secondly, can you maybe give a little bit of an update on just what your thinking is around the various inflationary pressures, again particularly on your telecoms business, specifically on energy for this year, maybe next year and later?

[Christian Lecoq, executive]

About [indiscernible] MTR cuts that we had at the beginning of the year will have an impact for the full year, but it was already included in our guidance. Regarding traffic, incoming traffic, we expect that the decrease we had in Q1 will not be the same during the next quarter. That's why we decided to not change our guidance, which I repeat is near 5% in terms of increase of revenue for the full year.

So we will see what will be the -- what the next quarters will be. But for the moment, we do not change the guidance. I also remind you that anyway incoming revenue do not have any impact on our EBITDA. The change on traffic, the previous figures, the change in MTR and traffic, the impact on Q1 EBITDA was minus EUR 1 million. So you see it's near 0. So no impact on EBITDA coming from either MTR cuts or incoming traffic change.

About energy costs, energy costs represents around 2% of our total OpEx. And we have secured the price of our energy costs until the end of 2024. So we are at a very low level compared to the current level of energy costs because we stepped up to the price near EUR 50 per megawatt hour compared to now price which I think is at about EUR 150 per megawatt hour. So we are at a fixed price in 2022, 2023 and 2024.

[Jakob Bluestone, analyst]

And on labor, do you see any inflationary pressures there?

[Christian Lecoq, executive]

On labor, no big pressure for the moment for Bouygues Telecom, a big part of our employees are, I will say, [Foreign Language]. I don't know the English word for that, but…

[Unknown Executive]

Managers.

[Christian Lecoq, executive]

Managers. And so they are less impacted by inflation for, I will say, basic purchases. And so it's not the same thing as other business probably [indiscernible].

[Operator]

The next question comes from the line of Nawar Cristini calling from Morgan Stanley.

[Nawar Cristini, analyst]

I have 2 questions, please. Firstly, on telecom on -- in terms of the pricing environment, it will be interesting to discuss how your NPS scores have been evolving recently. And what are you seeing that it can give you a good platform to push price increases which are potentially higher than what you had in your initial plans given the current inflationary environment?

And then I had also a question about FTTH and impact from inflation. And actually, it could be interesting to have your view on the topic, both as user of services on the telecom side in terms of FTTH installment, but also as a contractor, given that I believe you are also rolling out or involved in FTTH deployment as a contractor as well.

So we hear from some operators that prices, FTTH rollout prices are fixed for a certain period. So it will be interesting to hear as a contractor for how long these FTTH contracts in general are fixed prices? And then the part of Bouygues Telecom, it would be interesting to understand the inflation risk in terms of FTTH installments because you are less involved in the government, of course, but more in terms of connections and installments, it's a large part of your CapEx. How hedged are these FTTH installment against inflation?

So to summarize, unfortunately it's a long question, but just to try to understand the inflation impact on FTTH contract generally, both as a contractor, how these contracts are hedged against inflation and also on our Bouygues Telecom on the installation side how hedged are those installations against inflation. Hope it makes sense.

[Christian Lecoq, executive]

Welcome. So I think that the first part on your question was on mobile commercial performance. Q1 2022 was quite calmer, quite soft and quiet with very low level of promotions. So no big deal. We have been able to continue to increase our view. We are very happy with our performance in Q1. So no big news, and we are very happy with the fact that the commercial situation is more and more stabilized compared to a few years ago.

On FTTH, first, as you said, about rollout of FTTH infrastructure, I remind you that we are not rolling out any FTTH infrastructures. We are in a rental position through 2 JVs we put in place called SDAIF and CityFast. And these JVs are buying the tranches of 5% to access these infrastructures to [indiscernible] public initiative network. So we are not impacted by any inflation on the cost to roll out FTTH infrastructures.

About FTTH connections, you're right, it is a point, but today, we do not have any impact on -- due to inflation. The cost to, I would say, to connect subscribers is around EUR 200 per subscriber. But we are reimbursed when our client is churning. We are reimbursed by certain amounts of this cost. So this impact, first, is quite limited in our P&L. And the second point is that the percentage of wages in this EUR 200 is around, I would say, 1/3. So the impact of inflation on wages will be quite limited if there is any in the future. But today it is not the case.

[Nawar Cristini, analyst]

I appreciate effectively on the Bouygues Telecom side there are no deployments. So the question was specifically on installation. And do you have a bit more on the, I think, Bouygues Energy & Services, who's involved in this type of projects, do you have any color to add about how these contracts are structured in terms of pricing? What does that take or not?

[Pascal Grangé, executive]

So inflation is concerned in the Bouygues Construction business result. Globally, we have hundreds of thousand contracts, and they are different. And so it's quite difficult to have a very global view on that. What I can say in a nutshell is that first we have 3 different mechanism in order to mitigate this kind of risk. It could be inflation, it could [indiscernible].

First of all, we can transfer to our customers, to our client the inflation risk, and we have many contracts with some [indiscernible] formulas. We have also contracts which are [indiscernible]. So that's the first mechanism. We know perfectly that these mechanisms are never perfect, but never mitigate, at least in a certain extent the risk.

The second mechanism we have is a mechanism where we transfer the risk to the supply chain. You know that for some contracts we have long-term contracts with our supplier or we contract at the beginning of work with suppliers or subcontractors at the fixed price. So we still have a mitigation mechanism there.

And thirdly, in all our sites we have some contingency provisions for unpredictable events, and it could include obviously increasing prices. All these mechanisms are not perfect. It's very difficult to forecast what could be the different scenarios in the future. But to date, we have no important impact in the net result of Bouygues Energy & Services and Bouygues Construction and other activities of construction.

At the end, we still have -- the price increase is very important. We claim -- we negotiate with our customers. And we also claim [indiscernible] claims in certain circumstances. So to date at the end of March, no important impact in our results for the future. We are monitoring these things very closely. We start -- we don't -- we try, sorry, we try to limit some firm price contracts, and we're going to monitor that very closely.

[Operator]

[Operator Instructions] The next question comes from the line of Virginie Rousseau calling from ODDO.

[Virginie Rousseau, analyst]

I have an additional question regarding Bouygues Immobilier, please. You mentioned that volume of billing permit is higher in Q1. Could you update us a bit on the environment and explain why this volume is higher. Is the environment better globally in France? Is it linked to a region specifically? Do you gain market share? Or is it global?

[Pascal Grangé, executive]

No, we are increasing because the basis of comparison was fairly low and the basis of comparison was very low because, as you remind, in the Immobilier business in France there are very specific period just before local elections. And just before local elections, public authorities are quite reluctant to authorize, to provide [indiscernible] permits. And after then, we had a period -- you know that the local election has been delayed due to the COVID, and after COVID we had a quite significant number of new teams at the local authority level and they have to decide what projects they want in their municipalities. And then we had to adapt our project to their requirements. So it takes quite a long time to go there. But the current level is more normal than it was previously. So it's really a basis of comparison issue. This is quite global in France.

[Operator]

The next question comes from the line of Nicolas Mora calling from Morgan Stanley.

[Nicolas Mora, analyst]

I'll just focus quickly on contracting. So first on construction. Can you give us a little bit of color on the -- especially on the order intake because you haven't booked any large projects. And maybe you can talk about the pipeline you have. But the underlying kind of run-of-the-mill contract and order intake has been quite good. Where do you see this trend coming? Is it public money? Is it sales, let's say, sticky private money? Number one.

Number two, on Colas. I mean, do you still feel comfortable with your kind of logo guidance on revenue increase for the year. I mean Q1, obviously is, seasonally is a weak quarter, but performance was very strong. Does it give you confidence you can pretty easily, especially at the top line level, grow close to double digits for the year?

And last one, on Colas again, just on the order intake. I mean what's driving the strength -- order intake and revenue. What's driving the strength in North America? Is it -- is there a bit of weather impact? Is it just public money flowing through? And finally, the underlying basically activity level picking up, plus a bit of trading most likely linked to the Bitumen price. That would be all.

[Pascal Grangé, executive]

Okay. Starting with Bouygues Construction. For -- on the sales side, we have been quite strong in Energy & Services in the first quarter and stable in building and civil works. In Q1 2022, the level of order intake is higher than Q1. But let's say that a quarter is not necessarily very relevant for such -- for good construction activities in particular. So the pipe is correct. Obviously, some projects could be more difficult to close probably in the tourism sector, but not significant to at Bouygues Construction level.

And so we don't see -- to date, we don't see a movement saying that the decision will be delayed and so on, it could occur because as budget will increase probably some customer, we have the question how they finance the extra cost of their project. But to date, it's not significant. For Colas, obviously we had an increase, which is related to the perimeter effect. And you know that we have acquired end of last year a subsidiary in Finland. So you see this has an impact.

And for North America, you are right, probably there is an inflation impact and there is probably a demand which is strong. And you know that they have an important stimulus plan. And for instance, in the U.S., certainly it will start to -- it starts to impact our figures. Now we don't guide for the year at the last level, so I won't give any figure today. Let's say, that we have some -- the situation is -- we are confident that the situation is still --- is quite uncertain generally speaking. So we have to be vigilant. Did I answer to all your questions?

[Nicolas Mora, analyst]

Yes, very good. And just on the margins, so we are trending towards the 4%, feel confident that's kind of a -- we should be kind of in the middle of the 3.3% to 4% by the end of the year, there's no points of extra vigilance or a bit worried about inflation or the business is well hedged as it has been historically?

[Christian Lecoq, executive]

We have some hedging mechanism but we don't know if this mechanism are 100% efficient. So we have still to have to be prudent. We don't guide for this year at Bouygues at Colas level. Probably it will be impacted on certain items, let's say, energy, let's say, [indiscernible] and so on. We have this mitigation mechanism. We are still -- to date, there is no reason to imagine something different that we have guided at Bouygues level, I mean at Bouygues level, but we don't give any specific guidance for any activity for this year, which is in a certain extent quite uncertain. You know that scenarios [indiscernible] concerning inflation, for instance, our global growth in the economy are very different from one to the other. We have to be agile. That's all I can say. We are vigilant in order to [indiscernible].

[Nicolas Mora, analyst]

Okay. And if I may, a last one on Equans. Is there room to be a bit more specific on the actual closing of the deal? Are we still talking -- I mean there's no real mention of new dates, but can you precise the second half…

[Pascal Grangé, executive]

There are 2 steps for Equans. First, we have to go to signing and then we have to go to closing. We think that [indiscernible] we will sign very, very soon because there is no specific reason not to sign today. And for closing, we need to have some authorization. You know that we need to have some foreign investment authorization from U.K., U.S. and this authorization has been obtained. And we have some clearance from the antitrust authorities, certain that we will obtain. But we still have some to obtain, for instance, the Europe clearance. And as you know, it's not so easy to predict how long it will take. But as there is no major issue, we are still expecting to close during summer.

[Operator]

Mr. Grange, there are no more questions at this time.

[Pascal Grangé, executive]

No more questions. So thank you for your -- thank you for your attention. Thank you for joining us today. We will be announcing our first half 2022 sales and earnings sooner than previous year, on 2nd of August, 2022. Should you have any questions, please contact our Investor Relations team. Their contact information is on the press release on our website. Thank you for your attention.

[Operator]

Thank you for joining today's call. You may now disconnect from the line.