In Conclusion

While this year marks the retirement of several CFOs — Anthony Di Iorio of Deutsche Bank, Phil Hodkinson of HBOS and Paul Rayner of BAT, to name a few — no one is as well placed to help CFO Europe look back at the lessons of the past ten years as Olivier Poupart-Lafarge, the newly retired finance chief and deputy CEO of Bouygues. When the first issues of CFO Europe rolled off the press in May 1998, Poupart-Lafarge had already been finance chief and a board member of the French conglomerate for more than ten years.

By then, Poupart-Lafarge had achieved what countless CFOs, then and now, aspire to — he had expanded his role beyond traditional corporate finance, accounting and the like, earning himself a seat at Bouygues' strategy table. Having joined the firm in the 1970s, his big break came in 1981, when he was put in charge of the financial management of a four-year, $2 billion project to build Riyadh University in Saudi Arabia. Catching the attention of Francis Bouygues, the founder of what was then a burgeoning construction company, he was appointed CFO in 1984 and put forward for other major projects — including the acquisitions in 1986 of Screg (now Colas), one of the world's biggest road builders, and TF1, a French TV station which was privatised in 1987. As he recalls, it was the dealmaker role that always gave him "a real buzz," helping to keep him at the company for more than 40 years.

Of Crises and Conflicts
In 1998, dealmaking wasn't as high on executives' list of buzz factors, given the economic meltdowns in southeast Asia and other emerging markets and, closer to home, the fury of investors unimpressed with the loss-making telecoms business that Bouygues had launched a few years earlier. Also looming was a shareholder tussle with corporate raider Vincent Bolloré, which shook many outside observers' confidence in the management tactics of the Bouygues family, owners then of nearly 15% of the firm's shares and more than 20% of the voting rights.

Look at Bouygues today and you get a sense of déjà vu. In 2008, there's yet another economic downturn to contend with; investors still don't care much for its telecoms business; and questions persist over governance practices and the close friendships between Martin Bouygues — the firm's chairman and CEO since his father handed him the reins in 1989 — and businessman Franç Pinault, a Bouygues shareholder, as well as key figures in the French government, including President Nicolas Sarkozy.

Adding to the sense of history repeating itself, the cast of characters throughout the decade has remained largely the same. Martin Bouygues has maintained his father's loyal inner circle, which includes Poupart-Lafarge. It's the executives in this circle who have helped him double the size of the company over the past ten years, transforming it into a €30 billion global blue-chip conglomerate. Today, two-thirds of its revenue comes from construction, road building and real estate, and it also has a stake of around 30% in transport and energy firm Alstom and various other interests. (See "The Debutantes" for more on Alstom and its CFO, Henri Poupart-Lafarge, son of Bouygues's finance chief.)

Not only is Bouygues a lot larger, it's also a lot more Anglo-Saxon. According to Poupart-Lafarge, around 26% of its shareholder base at the end of 1997 comprised US or UK shareholders; by the end of last year, that had increased to nearly 40%. As at other European companies experiencing a similar change, says Poupart-Lafarge, "it's a trend that's had a major impact on our corporate governance and on our communications with the financial community." On the positive side, he cites the faster publication of Bouygues' financial statements (annual results, for example, are now announced in February, a month earlier than previously) and better governance, in terms of having a range of board-level committees focusing on ethics, remuneration and the like. On the negative side, there's "the excessive reaction to quarterly results" and the over-emphasis on short-term strategies.

Emerging Markets
The impact of these changes is all the more powerful when taken in the context of the declining role that banks and the French state now play in Bouygues' finances. While the amount of debt as a percentage of overall capital funding has always been around 40% over the years, syndicated bank loans comprised most of that debt in late 1997. Only 18% was raised by direct market issues, compared with 92% at the end of 2007. Meanwhile, the use of export credits backed by the French government has now largely been replaced by private project financing, making access to funding less politicised than in the past.

Poupart-Lafarge's success in steering the company through these changes will be high on the list of legacies that he leaves behind. But Philippe Marien, his former deputy who's now Bouygues' new CFO, won't be able to rely on his old boss's blueprint as much as he might wish. Poupart-Lafarge reckons that his successor will need to have a new investor strategy soon, focusing more on the east than the west. The reason? "European companies are becoming more and more 'emerging market' companies," says Poupart-Lafarge. "We are going to produce our products in low-cost countries, we are going to sell our products in low-cost countries and tomorrow our shareholders are going to be emerging market shareholders."

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