Stronger Second Half Should Help Bouygues' Deleveraging

Bouygues is a conglomerate with disparate businesses. In its construction segment, it develops big infrastructure projects such as motorways, rails, power plants, and tunnels. Despite having small margins, the construction business is usually more resilient to the cycle as infrastructure spending tends to be less affected by recessions than residential construction. Bouygues’ cost structure is highly variable, so when difficult times come, the group can adjust its cost base rapidly, although this also prevents it from benefiting from operating leverage in times of high demand. Both Bouygues Construction and Immobilier (residential construction) have high exposure to France, as a significant portion of business comes from there. Through Equans, acquired in 2022, Bouygues gained exposure to attractive end markets like solar energy, nuclear energy, and data centers.