Financial Analysis - Vinci & Bouygues

Thèmes abordés

Vinci, Bouygues, Finance, Financial Ratios, Investors, Dividends, Margin, Dupont de Nemours, Market, Working Capital, Risks, Sales, Profit, EBITDA, Financial Analysis, Investors Analysis

Résumé du document

The following report presents the financial statements of two leading French construction groups: Bouygues and Vinci. With the help of several economic and financial metrics, we will analyze and assess the companies' strengths and weaknesses and give an objective opinion to potential investors. The various sections involve Strategic Presentation, Margin Analysis, Working Capital Analysis, Risk Analysis, DuPont de Nemours Analysis and a Market Analysis.

Bouygues is a large industrial French group founded in 1952 by Francis Bouygues. The company focuses on two major activity sectors. On one hand, it is the leading player in the French market in the construction sector while simultaneously being a major European player in the media and telecommunications business.

Vinci, a French company created in 1899, has evolved over the century to emerge as a force to be reckoned with in the construction market as well as a major European player in concessions and associated services.

Extraits

[...] Following Vinci's investment in 2006, Bouygues is doing better during the next years. But we can claim that year after year Vinci is improving its return on assets whereas Bouygues has not been able to keep its performance improving and as a result its return on asset is decreasing over the years. The crisis seems to have affected Bouygues in a more important manner in comparison to Vinci. Nicolas LELORRAIN, Financial Analysis Page 34 Vinci & Bouygues Investors Analysis Bouygues 2008 Vinci 2009 Figure 32: Return on Assets Equity Turnover: Equity turnover is used to measure how well a company uses its stockholders' equity to generate revenues. [...]

[...] We can see that the gross profit margin of Vinci since 2005 is around two times more important than Bouygues. In fact, in 2009 Bouygues spend twice more to do the same level of revenues: Vinci is a service-­‐oriented company, which creates an important added value. Bouygues has different activities (construction, estate, media, telecommunication), which demand a higher usage of raw materials, labour and assets. Nicolas LELORRAIN, Financial Analysis Page 12 Vinci & Bouygues Investors Analysis Bouygues 2008 Vinci 2009 Figure Gross Profit Margin of sales) Operating Profit Margin By subtracting operating expenses, depreciation and amortization from a company's gross profit we get the operating income. [...]

[...] However we have to keep in mind that Vinci and Bouygues are not evolving in the same business sector. Vinci do not sell goods or equivalent whereas Bouygues with its media and telecommunication activities does. Therefore when Vinci and its concession business requires a lot of fixed assets, they do not have an important cost of good sold, whereas Bouygues needs less fixed assets and has a more important cost of good sold. It reminds us that we cannot evaluate the performance of a company by looking only at a portion of the financial statements. [...]

[...] Nevertheless we observe that Bouygues is doing better than Vinci, both company having the same equity evolution over the year, the explanation is coming from the difference in assets Third Step: The following step consists of the Return on Assets and the Equity Turnover Return on Assets: The return on assets is an indicator of how profitable a company is relative to its total assets. The return on assets values (See Table 33. on page 34) are given directly by Osiris Table 33: Return on Assets We can see (See Figure 32. on page 35) that in 2005, Vinci and Bouygues had the same return on assets. [...]

[...] on page 30) Vinci is doing better than Bouygues. And, as we have already said, Vinci's concessions business sector is not really affected by the crisis, whereas Bouygues's telecom and media businesses are directly suffering the crisis consequences. Nicolas LELORRAIN, Financial Analysis Page 29 Vinci & Bouygues Investors Analysis 1,600M€ 1,500M€ 1,400M€ 1,300M€ 1,200M€ 1,100M€ 1,000M€ 900M€ 800M€ Bouygues 2008 Vinci 2009 Figure 25: Net Income in Sales: The next elements are the sales (See Table 27. on page Table 27: Sales in 36,000M€ 34,000M€ 32,000M€ 30,000M€ 28,000M€ 26,000M€ 24,000M€ 22,000M€ 20,000M€ Bouygues 2008 Vinci 2009 Figure 26: Sales in Regarding those tendencies (See Figure 26. [...]