H1 20/21

Nov 10, 2020

Ladies and gentlemen, welcome to the Alstom Conference Call. I now hand over to Henri Poupart Lafarge. Sir, please go ahead. Thank you. Good afternoon, everybody. Welcome to our half year results conference call for the year ending March 2021. I will start by a few highlights, then I will go through market update, the business update, some update on the Bombardier transaction, and then I will hand over to Laurent, who will detail for us the financial results, and then we come back for the conclusion. And we will have time, of course, for the questions and answers. So as far as the highlights of the first half are concerned, as you know, some order intake has shifted to the second half of the year. And therefore, the level of order intake of the first half, even though it is quite sustained, is at a relatively low level as compared to a historical basis. But we are extremely comfortable with the second half, which helps us to confirm guidance of the book to bill above 1 for the year as we see very important pipeline of standards coming in the coming period. And also as we have announced quite recently a number of weeks, which are confirming our vision for the full year. That's for the full year, but for the midterm, we confirm as well very positive midterm outlook for our market. As we have seen, there are numerous stimulus packages, plan, governmental plans to relaunch the economies in general and in particular, health transportation and the green economy and sustainable economy. This has been confirmed and we have seen recently and we'll come back to that later on that the UNIFEST 2D has totally confirmed our vision of the market. Sales are down and have been down, of course, during the Q1 due to the lockdown, and we discussed that during in July, during our call in July. The very good news is that it has come back to a normal level as soon as the Q2, which means that we have been agile enough to restore our industrial supply chain quite rapidly after the lockdown. This has enabled us together with a good project execution, a sound project execution during the first half, was resilient adjusted EBIT with continuous improvement of the gross margin. So clearly, a good half year in terms of project execution, which has enabled us to, I would say, mitigate the impact of the COVID. The free cash flow has been impacted by the COVID, definitively. We have ramped up our rolling stock facilities, a number of inventories which are there. And we have had some delays in some of the deliveries due to this Q1 of difficulties in our supply chain. Bombardier transaction, major milestones have been reached. As you know, we have now almost all the regulatory approval as we are in a very good way to finalize this acquisition. And the closing is definitively confirmed for the Q1 of 2021. So in terms of market and before the market, sorry, I want just to highlight our sustainable policy and corporate social responsibility on different fronts, on this green supply chain and green production. We have inaugurated a new site in Morocco. And as we saw, that it is a good industrial strategy, where we are more and more investing in best cost countries, more and more putting some industrial capacity in the best cost countries. And this site is to assemble RMSs, cables, and we have installed a number of solar panels to the site. Hydrogen, we'll come back to that. Of course, hydrogen has taken a lot of momentum during the last period. And the fact that we have been pioneer in that technology is, of course, a great differentiator as compared to the rest of the industry, which is now moving in the same direction. Caring for people, I think we are not talking a lot about it, but I'm quite proud to say that The Wall Street Journal has ranked as top number 1 in human capital for the sustainable management, our top is the 100 top sustainable companies. We have worked, of course, after the COVID crisis on healthier solutions for transportation, ranging from antivirus materials, compact light doors and things like that to make sure that people and passengers are safe traveling within Aston products. So market update, Actually, nothing really new on this market. There is a strong confirmation of all the plans in favor of HELL as we had already discussed in July. Strong support from the European Union, gigantic number of EUR 672,000,000,000 of recovery plan Germany, close to EUR 90,000,000,000 of spending for Rail and a huge deployment not only of Helicop, the immense pipeline of tender in Rolling Stone, but there is also a huge program of deployment of signaling activity, which also gives a lot of momentum to the Bombardier acquisition, because Bombardier has the traditional legacy interlocking technology in Germany, which we don't have in that storm. In France, as you've seen, what we call the plan for launch with €4,700,000,000 directly directed to the operators. In India, a huge work on electrification of the network. A lot of momentum as well here on the locomotives and our project of e locomotives is now putting us in an excellent position to benefit from this electrification effort, which will require a lot of substitution from diesel to electrical locomotives. And as you know, in the U. S, we have €60,000,000,000 funding for Rail. I have to say that Joe Biden election on that respect is also a good news. I've not seen the I've not put a picture, but we have a picture of him looking at our new very SP trend. Next. In terms of business, so order intake, as I said, euros 2,700,000,000 Some standard activities that have been shifted from H1 to H2 as as anticipated. But the good news is that it's confirmed for H2. So we have answered to a very large number of tenders, as I said. What has been won nevertheless, some trams announced system in Taipei confirming our strong leadership in Metro Systems because after Taipei, we have announced recently 2 turnkey in Metro Systems in Athens and in Toulouse, which really confirm our strong leadership there. Signaling importantly, signaling in France of Argos, As I said, signaling in Germany to come. So good mix of orders during the first half and some good prospects for this 1 half. It's again guidance of a book to bill level. Sales, similar story with Q2 being back to a normal level. If you look at our Q2 numbers, which are more, I would say, meaningful for a momentum perspective and a midterm perspective. Things are happening exactly as planned. We have a strong growth in rolling stock. As we know, we have I've announced it last year and the year before that there is a ramp up of rolling stock while system was going down exactly as planned as well, slowly in the Middle East. But with the new system orders Athens, in Toulouse, in Asia, we will have a system going back again positively. So that's very good news. Service continuing its nice growth and recovery of trend operations. It has been impacted during Q1 due to the lack of the trend operation, but the recovery is very good and signaling is there and growing on the Q2. Next one. Some update on our strategy at StorminMotion. Growth, a small acquisition, but extremely important for us and which is already bearing out of fruits, which is the acquisition of braking systems. So you know that braking systems are extremely important for the service business, service components. And this company is very much capable of providing some disks for brakes. And this will be this will equip a lot of our trains, so very nice acquisition. On the technology, of course, we have MAPFREA, which is progressing in Panama, hydrogen trend said a little bit everywhere, come back to that. And in terms of execution, a lot of milestones have been reached in Dubai, complete delivery of the metros, but locomotives in India are well delivered, trends in South Africa are well delivered, the regional trends in Italy are well delivered. Amtrak is ramping up, so very steady trends in Amtrak. So, actually, a good healthier in terms of delivery despite the COVID. Next? In terms of hydrogen, I was mentioning, so we have lots of hydrogen solutions now being tried all over Europe. It has started in Germany, as you know, but we have contracts in Italy, we have contracts in the UK. We are discussing some orders in France, we have some tiles in Netherlands, in Austria. So I mean, I see positively the fact that a number of our competitors are now announcing some development in hydrogen. I think that clearly proves that we were hiking in launching that in anticipation and gives us a significant advantage on the market, which will be there definitively. And as you know, most of the networks in Europe have announced that they will completely ban diesel technology in the coming years. As far as the Bombardier is concerned, so we're very well on track. As you know, we have signed the SPA in September. The proceeds are now expected up to EUR 5,300,000,000. All the guidance that we gave to you in the past are being confirmed. The balance sheet structure with a stronger investment rate has been confirmed. The clearance process is now well underway. The shareholder, as you know, have approved to a very, very large extent on the last AGM, the transaction. So we know the next steps are relatively straightforward. We have the closing Q1 of the next fiscal year calendar year, sorry, calendar year. And the right issue to finance the transaction between now and the first half of the next calendar Now I will hand over to Laurent for the financial results. Thank you, Henri. Good evening, everyone. So let's start with our P and L for our first half twenty twenty one with an adjusted EBIT, which proves to be resilient indeed at 7.5% and this despite the volume impact linked to the COVID-nineteen crisis. To go straight below adjusted EBIT, we had limited restructuring charge at €7,000,000 and also classified COVID-nineteen incremental and inefficiency costs for an amount of €68,000,000 We remind that we booked €24,000,000 back in March for around 2 weeks of disruption. Impairment costs and others reached €26,000,000 including mainly positive one off such as reversal of asset impairments of €47,000,000 and the legal proceeding provision adjustment for €30,000,000 together with one off cost related to the Bombardier Transportation acquisition for an amount of €44,000,000 Finally, we have the usual Cascor mechanical reversal impact in our EBIT, which accounts for minus €24,000,000 So on all these basis, our EBIT reached 5.4 percent and our net income EUR 161,000,000 So moving to the EBIT range. As indicated, we reached this 7.5 percent LC EBIT from 7.7% last year. So what are the drivers on this adjusted EBIT? 1st, continuous improvement of the gross margin by 0.7%, benefiting 1st from, I have to say, solid project execution and as well improved mix in services and seniority. We have as well a reduction in absolute value in terms of saving and administrative costs, thanks to the cost mitigation measures we've been implementing and controlling, of course, our R and D investment and protecting, of course, our innovation capabilities. These growth factors leading to a negative 1.1%, which is volume related. And finally, we have a small positive contribution of Cascaux, our signaling activities in China, which is still benefiting from an excellent momentum. On backlog, we are pleased to see again this year, this half year continued improvement of our backlog average profitability, driven by the flawless execution and our competitiveness step up. If we look ahead for H2, we expect a further uplift of our adjusted EBIT driven by increased volume and the continued step up on our gross margin. Moving to free cash flow. As anticipated, we had a cash usage in H1 of around €250,000,000 driven first by, of course, an EBIT, which has been impacted by the volume and the COVID-nineteen specific cost. Depreciation and amortization amounting to €101,000,000 classical, I would say, contain CapEx at €54,000,000 And as expected, working capital increased by around €430,000,000 which is linked to a drift in cash in due to the sanitary situation, lower down payment level due to the shift of order intake from the first half to the second half. And finally, what we anticipated back in the Capital Market Day, anticipated inventory increase related to the ramp up of our large rolling stock project. We know Coradia Stream in Netherland, I'm tracking the U. S, Evoqua in India. Looking at H2, we firmly expect to be back to a strong cash generation, thanks to cash in acceleration from deliveries and as well down payment out of our very strong commercial order pipeline for the second half of the year. Moving to the liquidity position. We have end of September 2020 a strong liquidity position above €4,000,000,000 as you see, including 2 credit revolving facilities of €401,700,000,000 which are both fully undrawn. Our targets remain obviously to stay in a strong Baa2 rating. Henri, back to you for the conclusion. Thank you. Thank you, Laurent. So just as a conclusion, I would say that the results of the first half are totally in line with our expectations. We had of course, we have been impacted by the COVID, but the first half nevertheless that showed a very strong execution, which has allowed us to benefit from a good profitability of the execution of this backlog. And we have managed again to have our operations back to normal level in Q2, which frankly, I think it's a very nice achievement from the business and from the supply chain. We have been that gives us a lot of comfort to be positive for the full year. 1 on commercial outlook because of, again, the strong pipelines of orders across notably across Europe, but not only. The sales would be, I would say, at returning to their growth pattern after, again, Q1 distributed, but Q2 back to the normal situation and Q3 and Q4 should continue tomorrow. The sound reduction of the backlog should allow us to get to a margin between 7.7% to 8% for the full year. So good adjusted EBIT margin concerning the situation. And as importantly more importantly, to get to a breakeven to positive actually free cash flow generation. So we are, I think, well on track to integrate Bombardier colleagues. We are impatient and excited by this perspective. And I think Bombardier is taking some steps to control and to improve and to turn around their situation. And we confirm that we are extremely positive about this acquisition and looking forward to it. So thank you, ladies and gentlemen. I think now we can take some questions, if I may. Operator, thanks a lot. Our first question comes from Guy Pena at UBS. Hi, good evening. It's Guillermo Pena at UBS. I wanted to ask first a question maybe regarding the next year outlook. And I guess the European Union has named 2021 as the year of rail, and you are now targeting for book to bill above 1 this fiscal year. I was wondering, 1st, are you seeing any reactivation of existing projects? And second, maybe looking into 2020 one calendar, are you seeing the European Union meeting their commitment on the railway industry despite the fact that the network operators are going through difficult times? Thank you. Yes. Absolutely. I mean, what we see clearly, and this is a very good surprise, if I may say, very good news of the last period that all the tenders which were on the pipeline and which have been postponed for a few months are now totally I mean rejuvenated, if I may say, totally launched and totally pushed by the different operators, which means that yes, we have a very good order momentum. And we see as well some very large order next year coming. Some of them were forecasted and others are triggered by the newer packages coming from the different countries, like the signaling in Germany, which has been accelerated a lot due to that. We have the number of activities in Italy that we are pursuing, which are related to that as well. So we have a lot of activities, which are related to the plant, but they will come only next year. What will come during the second half are clearly orders intake or order pipeline, which was estimated a few months ago, which has just been pushed and now we are waiting for the we are waiting for the answers to these standards. Thank you. The next question comes from Gal Debre at Deutsche Bank. Thanks very much. Can I get a follow-up on this? Perhaps on a more cautious side of things, I mean, in your discussions with rail operators, I understand that some of the large ticket items that had been decided before will probably go through. But do you see some of your clients starting to get a bit more concerned about the development of work from home on the rail passenger traffic in the longer term? I mean, if everyone decides to stay one day per week at home, I mean, that would mechanically imply a 20% reduction in the commuting patterns going forward, at least compared to the pre COVID situation. So that's question number 1. And then question number 2 is about the good growth in services this quarter, plus 8%. How do I reconcile this with the fact that some rate operators have apparently taken the decision to reduce the number of trends expected to run, especially during the winter period? Thanks very much. Yes. So to your first point, actually, the cities have been have done some analysis on the traffic generated by a commuter. And it's actually relatively low. So only 20% of the traffic, for example, in Paris is related to people going to work. And this is happening mostly at peak period. And if there is a slight decrease or decrease during this peak period, this will not decrease the need for transportation for the cars themselves. So I don't expect any major change on that perspective. What is true nevertheless is that it has a financial model for the main line. This is where there are some discussions on business trips rather than working from home. People are maybe concerned and some operators may be concerned of 2 year business trips, not because it will have a huge impact on the traffic, but because these business trips are usually the most lucrative ones, if I may say. On the other hand, we could say that people which are now working away from their office may use this mainline trains to come, for example, to Paris or to London once, twice, 3 times a week. So that no, there is not a huge, I would say, concern on by our operator, by our customers on this issue. On service, I would say it's a little bit the same answer because you have seen the passenger traffic going back again slowly. It's true. But in terms of number of trends, and we are talking about Q2, we had in Q2 normalized level of activity in service. The number of trends which we are running were quasi equivalent to the normal level. So we have our own growth and we are growing in service year after year. But in addition, we had no real impact of the fact that passenger traffic was, for example, at 60% or 70% or 80%. Actually even if passenger traffic was at 60%, they were 100% of the trains. Trends. The next question comes from Daniela Costa at Goldman Sachs. Thank you. I'll keep to one then and then I'll go back in the queue. But I wanted to ask you about the hydrogen. You had a couple of wins and I wonder how sort of how real, how many tenders are there in the industry, whether you're seeing a real pickup on this, if you could give us a little bit on the latest and what to expect going forward? Thank you. No. Thank you. Today, it will not be massive in terms of order intake this year. We have some wins in Germany as we've seen. Boost, at that moment, in Italy and in the UK, these are more prototypes. And we see the 1st commercial tender in France that we are finalizing. There is one in Spain. There is one in Italy that's going on. But these are tenders which are coming. These are not yet orders. Again, the orders that we did get in these countries are more prototype at that stage. So it will come mostly next year. It will not be massive numbers. I would expect it to become massive numbers mostly in 3, 4 years from now when will come the time of the full replacement of the diesel fleet. Because if they want to have the replacement of the diesel fleet by 2,030, 2005, it means that order should start to flow 2023, 2024. The next question comes from James Moore at Redburn. Yes. Hi, everybody. Thanks for taking my question. If it's just one, I wondered if we could talk about the timing of the rights issue, Henri. You've obviously not said anything. I wonder if you could talk just how you're thinking about that and what the different factors could be to change the timing? Well, I don't have any there is no nothing yet to say that the market conditions. Today, we have as I said, we have cost most of the orders of pass over most of the orders for the completion of the transaction. So we are totally sure of our sales on this transaction. So it's really a question of good market condition to make sure that our shareholders can participate in the best conditions as possible. There is no preconceived idea. The next question comes from Akash Gupta at JPMorgan. Thank you. Hi, Ori and Laurent. My first question or my only question is on if you can talk about how much of this rolling stock demand in pipeline is driven by replacement versus capacity expansion or greenfield demand? And then maybe is it fair to think that your customer may have a bigger incentive to replace the trains and orders quickly given the savings they will achieve by replacing old inefficient trains with more efficient new trains? Thank you. Yes. Most of them I mean, it's both replacement and capacity expansion. So what we see is that we see a wave of double deckers coming in Austria, in Spain, in Germany. And these are replacing single decked trains. So there is a capacity constraints on the lines. And now the operators, they have to accelerate the replacement, not only for energy saving and not only because of the quality of the trend, the availability, partially because of that, but also and mainly because their need to increase the capacity of the different lines. So it's the if you talk about regional trends, it's very interesting to see how double decker are taking the first I mean, the priority in the investment in the operators. The next question comes from William Mackey at Kepler Cheuvreux. Good evening, Laurie, Laurent, everybody. Thank you. My question is a broad question about emerging market conditions and situation. Could you update us with your thoughts on China and its relevance to crossing the hurdle, the regulatory hurdle for approval in China and also the conditions? And then when we stick with emerging markets, perhaps your thoughts on how India is coping with the COVID situation and when you'll be up to full speed there? And then lastly, in emerging markets, Russia, would you share any thoughts on your holdings in Transmesh TMH or Transmesh Holdings and how core that is to Alstom? Thank you. So yes, on China, first on the regulatory approval, so we are still waiting for the Chinese regulatory approval. Things are progressing normally. I would say that there is no I don't expect any major difficulties there. I think we are discussing with the Chinese authorities. So things are so far so good, I would say, as far as the Bombardier transaction. In terms of market, China has rebounded. Clearly, there have been a slowdown during some trials, but they were earlier in the COVID crisis. There was a small slowdown in urban. We can see that, for example, from our business of signaling in urban. But this has a this is coming back, and the market is coming back at its historical level. Though as you know, we are less exposed to this market. We are more exposed to the urban signaling or the traction equipment. India is in the same case, they are launching huge investment plans. True to say that they have been very much impacted by the COVID. Some of our metros like Mumbai, Lansky are little bit delayed because of that. But in the main, all the tender activities, and as I said, for example, on a lot of locomotive tenders, some suburban trend tenders, some regional trend tenders as well. So the tendering activity is going nicely. And I think that they are coping quite well with the situation, managing to sustain their economy and sustain their operation despite the impact of the COVID. So I would say in India, here as well, I would say that the situation is, if I may say, quasi normal situation. In Russia, with TMH, so it's a good question. The Russian market is quite sustained. There was a huge boom of locomotives and metros recently, so it may slow down a little bit in the coming years, but at a relatively high level. As I said in the past, TMH is very good in financial investment. We had a very nice dividend flow of dividend from TMH. We have not done as much as we could have done. We are benefiting from the relatively low labor rate in Russia. We are supplying, sourcing some to think some components from Russia. I hope that in the future, we could do more in terms of technology, which is not totally the case today. So we have good relations with TMH, but it's true that it's not intense relationship at that moment from a professional standpoint. The next question comes from Alfred Glaser at ODDO. Yes, good evening. I wondered if you could give us some update on Bombardier Transportation since you have renegotiated the acquisition price and then you disclosed that actually there will be a little bit of net debt in Bombardier Transportation when you take over the company. Could you tell us where exactly the company stands now in terms of execution? And how do you view the margin improvement potential from this starting point? No. Clearly, the Q3 results of Bombardier were totally in line with our expectations. So after Q2, as you know, there were some discussions, but Q3 were benign. They've reached a number of milestones in their execution. Still some orders to come, definitively, I'm not neglecting that. But in the main, it's going in the right direction. Basically, their portfolio of project is maturing, and they are not taking on board too many complex projects. So it helps them to progressively overcome some of their engineering difficulties. They get to a negotiation, partial negotiation. So that's they still have this backlog of difficult contract and low margin contract. And I'm not changing the word on what I was saying in the past regarding the full guidance on Bombardier and their margin, the backlog and so forth. But Q3 was totally in line with our expectation. And in terms of cash as well, in line with our expectation. So nothing to be added as compared to what we say when we have renegotiated the price. The next question comes from Katie Self at Morgan Stanley. Hi, good afternoon. Thanks for taking my question. I just had one on the additional compensation in relation to the deal that was mentioned and approved at the EGM. Can you give us any detail on that? Who does it cover? What are the relevant KPIs or criteria that need to be met? Timeline, any details would be great. Yes. Thank you for the question. It's me to clarify. I was personally against any kind of bonus related just to the acquisition. I don't think that this is relevant from a shareholder perspective. So what I've asked is that we have some shares, some LTIs, so some performance shares, which will be at 4 years. So after 4 years, which I think is a good direction to verify and justify the turnaround of the company. And we need to define the indicator precisely, but there will be some external indicators, which will show the success of this integration, the success of this acquisition as well as internal indicators such as synergy development, turnaround of the Bombardier project and so forth. So it's not something which is sort of for rewarding the acquisition itself. It's something which will reward the good execution of the integration. And it's only a bit triggered, of course, if the share price is reflecting such a good integration. The next question comes from Iris Zhang at Credit Suisse. Great. Thank you for taking my question. I've got one on the free cash flow because if we are looking for breakeven for the full year, then this would imply quite some good cash generation in the second half. And you've mentioned that it is going to be driven by the down payment and also the delivery of projects. I wonder could you give some additional color maybe on how much visibility you have answered this? For example, which are the large projects that you plan to deliver in the second half and how much reduction of inventory that you are expecting from that? Yes. Thanks for the question. Maybe I'll ask Laurent to take this one for more details on the balance sheet. Sure. Good evening, Yuri. Thanks for your question. So to give you some colors on the drivers for the cash for the H2, number 1, we will have more volume, more sales, more EBIT driven by the acceleration of the activities as we indicated. So that's revenue 1. 2nd, we of course will be delivering the trends that we have been, I would say, building up in the first half and that has been shifted to the right due to the COVID crisis. So there is an element into this, which is related to the progress milestones. And here we can put in terms of key drivers, the EloCo in India, Traza in South Africa, ICNG in terms of continued development, Regulus contract in France or TGV as well in France, just to quote a number of our key contracts. Finally, we will have, as I say, down payment coming from the large order intake and in the market, which is very positive, which will as well support overall a positive working a with very positive results, just to quote 20% cycle time reduction, which has been achieved as expected and as communicated back in our last CMD. So that's very positive subjects. Thank you. Your next question comes from Guillermo Peigneux at UBS. Thank you for taking my second question. It's Guillermo from UBS again. I was thinking about your 80% free cash flow conversion target long term or medium term? And then obviously, the Bombardier potential acquisition and obviously, the closing of the deal is still pending and so on. But I wanted to ask that, is it philosophically fair to assume that 80% conversion ratio will stay even if you acquire Bombardier, which has been suffering from frickin stock conversion? Thank you. Yes, Guillermo, on thank you for the question. We will, of course, update all our guidance, and we'll probably do that a few months after the full integration, considering the new Bombardier scope is the new side of the company, but this target obviously should be sustained. There is no reason why the biggest mortgage would be different. On the contrary, I would say that the fact that we will have a larger scale will decrease the amount of volatility of our cash flow because, of course, we will have it on a much larger number of projects where the volatility should decrease. The next question comes from James Moore at Redburn. Oh, yeah. Thanks for taking the follow-up. I wondered if I could ask 2. On Prasa, Eloco and Amtrak, would it be possible to say how many have now delivered? And secondly, on the rail operators, coming back to that topic, it's a conceptual question really. I mean, if you look at the top 20 rail operators in the world for the last decade, they've collectively lost negative free cash flow every single year. And then they're underwritten by governments that subsidize their CapEx. But the degree of free cash burn this year has gone to record levels. When we see all of these separate government stimuli to drive incremental investment, do you think there's a possibility that some of that government money just goes in to fill the COVID hole for day to day activities? Or do you think that on top of the incremental investments, governments are going to fill the day to day hole? Thank you for the question. So on the first question, I don't want to enter it, I think it's called exactly on where we stand there, but I want to tell you that the projects are progressing normally. Just to give you an order of magnitude and by coincidence, it's roughly the same number. We are around 40 trains being delivered in Prada, 42, I think, locomotives as well. And for Amtrak, on the contrary, Amtrak, they are just starting to pop up. So we are producing we are as you know, we have just tested the trend number 12, and we're producing the trend number 34. So this project is it will be a very short it will be a fast track project, if I may say. And we are ramping up, but we are trend number 3 and 4. But for Prasad and for Ilopo, we are around 40 for each of the projects. The locomotives will be produced at close to 80 to 100 per year. So it's going to be a very fast production. Your question on high operators is a good one. What we have seen so far is that the first priority of the states has been actually to provide liquidity to the different operators in different forms. In the UK, it has been up to the point of nationalizing again the franchises. In France, some debt from F and S, for example, have been taken by the government. In Germany, we want also to take some debt of the Japan. In the U. S, we had some packages. So the first priority was to ensure that the operators could continue to operate. And therefore they provide a lot of liquidity to the operators. Then the second priority are the investments. They're not necessarily a link between the two because in a number of countries, the operators are actually not our customers. If you take in Germany, in some instances, it's Deutsche Bank, but in most instances, it's the PTA. These are the regions. In France, the regions are also acquiring the trend or the states directly. So it depends on the region country by country. But in most cities, it's not the operators. These are directly cities which are really acquiring the reflux. So it's not exactly the same financing, the same funding. What is true is that they need to most of the operators need to renegotiate with the public authorities. Their contracts. They usually have a kind of concession or depends on the scheme, but they have a kind of concession in order to sustain their business. But I don't see a kind trade off between liquidity on one hand and investment on the other hand. It appears there are no further questions at this time. Mr. Paul Lafarge, I'd like to turn the conference back to you for any additional or closing remarks. No, thank you, operator. Thank you a lot for all for your attention tonight. Again, as a conclusion, I think we are very pleased with this first half considering the environment in which we are. I think the company has well performed, and we are very positive on the coming market. So I think that we continue to implement our strategy and again looking forward to welcoming our colleagues from Bombardier to be a very, very nice addition to our portfolio. So thanks a lot. Thanks to all of you and talk to you very soon. Bye bye. This conference is now over. Thank you for your participation.