Bouygues Q1 2025: A Turnaround in Concrete and Copper

In an era of economic uncertainty and geopolitical volatility, Bouygues has delivered a Q1 2025 report card that defies market headwinds. With record construction backlogs, accelerating margin improvements in its Equans division, and a fortress balance sheet, the French conglomerate is emerging as a rare defensive growth story. For investors seeking stability amid turmoil, Bouygues’ execution of its strategic plans offers a compelling entry point.

The Backlog Advantage: Revenue Visibility Cemented

At the heart of Bouygues’ resilience is its construction backlog, now a staggering €34.2 billion—a 12% year-on-year jump. This figure isn’t just a number; it’s a pipeline of revenue visibility stretching years into the future. Key drivers include:
- Colas: Securing major rail contracts in Morocco (€250M) and the UK (€380M), highlighting its prowess in transport infrastructure.
- Bouygues Construction: Securing €100M+ projects in France, the UK, and Cyprus, with international exposure (19% YoY growth outside Europe) diluting regional risks.

The geographic diversification is critical. While France’s domestic markets grew 9%, Asia-Pacific and Middle East wins—though not detailed—suggest Bouygues is capitalizing on global infrastructure spending. For investors, this backlog is a “cash machine” with low execution risk, as these projects are already contracted.

Equans’ Margin Miracle: The Perform Plan in Action

Bouygues’ services division, Equans, is executing its Perform plan with surgical precision. COPA (Current Operating Profit from Activities) surged to €177M, a 31% YoY jump, while margins hit 3.8%—up 0.9 points year-on-year. This progress is no accident:

• Cost Discipline: Streamlining operations and digitizing maintenance workflows.
• Growth Investments: Scaling energy efficiency and digital services, which command higher margins than legacy infrastructure.

The long-term target of a 5% COPA margin by 2027 is within reach, especially as the division’s backlog (€26.4B) remains stable. With order intake of €5.2B in Q1, Equans is primed to outperform its 2025 guidance of “margin close to 4%.”

Liquidity: A Shield Against Volatility

Bouygues’ balance sheet is its unsung hero. With €14.8B in liquidity (cash + undrawn credit facilities) and net gearing at 50%—down from 55% a year ago—the group is financially agile. Even after €1.2B in acquisitions (e.g., La Poste Telecom), its average bond maturity of 7.4 years and low coupon rates (3.01%) buy time in a high-rate environment.

Crucially, the French tax surcharge (€42M in Q1) is a known cost, with a full-year estimate of €100M—fully accounted for in guidance. Meanwhile, the net debt-to-EBITDA ratio (not provided but implied by metrics) is likely manageable, given the group’s scale.

Why Act Now? Catalysts for Near-Term Gains

1. Backlog Conversion: The €34.2B backlog will drive steady revenue growth through 2027+, even in a slowdown.
2. Equans Margin Expansion: Every 0.5% improvement in margins adds ~€50M to annual profits.
3. Dividend Stability: With TF1 Group prioritizing dividends and Bouygues Telecom’s EBITDA stabilization, payout ratios are sustainable.

Risks, but Mitigated

• Residential Construction Slump: Bouygues Immobilier’s 11% backlog drop in France is a headwind, but its 18% international backlog growth offsets this.
• Macroeconomic Downturn: The group’s diversification (construction, telecom, media) buffers against sector-specific shocks.

Conclusion: A Rare Multibagger in a Bear Market

Bouygues isn’t just surviving—it’s thriving. Its structural advantages—locked-in revenue, margin accretion in Equans, and fortress liquidity—position it to outperform in both recovery and recession. With shares trading at 12x forward P/E (vs. sector averages of 15x), there’s room for re-rating.

Investment thesis: Buy Bouygues for its operational resilience and margin-driven upside, with a target price of €55/share by end-2025 (up from €48 today). The catalysts are too compelling to ignore.

The time to act is now—before the market catches up to Bouygues’ transformation.