H2 19/20

May 12, 2020

Ladies and gentlemen, welcome to the Alstom Analyst Call. Today's conference is being recorded. And now, I would like to hand over to Mr. Henri Poupart Lafarge. Sir, please go ahead. Hello. Good morning, everybody. Welcome to the Annual Results Conference Call from Aston. And welcome, everybody. I hope that all of you and your families are doing well during this specific period. So we'll go through the classical agenda. We'll start with the highlights of 2019 2020. We'll do a short market update. Of course, we will cover the COVID-nineteen crisis and what we did to adapt after to the crisis. Then we get back to our yearly results and the yearly announcements, and then we will conclude by a short update on Bombardier and the financial results. So to start with the 2019 2020 highlights, just to this is a year finishing, which has been a very good year. As you may recall, we have announced our new strategy, Astom in Motion, last June. And we can say that the 1st year is totally in line with our new strategy and as this new strategy has given the fruits that we were expecting. So first, in terms of commercial momentum, we have orders reaching close to €10,000,000,000 so book to bill greater than 1, particularly with large orders in Europe and Asia Pacific, we'll come back to that. The sales at 2% growth, in line with our expectations, actually slightly, slightly better if you take into account the negative impact of the COVID-nineteen and in line as well with the trends that we have described in the past with the ramp up of the rolling stock, but also a slowdown in systems, in particular, in Middle East. The EBIT margin has continued to grow at 7.7%, so in line with our objective of 9% of 2022, 2023, which by the way we confirm and because we have the necessary backlog to execute this margin. The cash flow was, I mean, finally, I would say, not as slow as we were anticipating. We have managed to thanks to notably the cash focus program, we have managed to mitigate the underlying trend. You remember that the increase of rolling stock activities and the decrease in system have a negative impact on our working cap. And despite that, we have managed to generate some cash flow at a higher level. So as I said, our storm in motion is now redeployed. And finally, of course, the crisis will have a significant impact on 2021. However, we are extremely confident on the midterm markets and on the midterm situation of Astom. And therefore, we confirm our 2022, 2023 objectives in terms of adjusted EBIT and in terms of free cash flow conversion. Of course, the sales growth would be slightly impacted by some tender details, which we will describe. So solid market fundamentals overall. So just to come back on the numbers I've just mentioned, 9 point and I will come back later on the details, €9,900,000,000 of orders, €8,200,000,000 of sales, 7.7% margin, a little bit north of €200,000,000 of cash, €443,000,000 net income, which is, I would say for the first time, totally plain vanilla net income without an extraordinary impact and the EPS, which is continuing to grow. So going to the next slide, on terms of market. Just to remind you that before the crisis just before the crisis in 2019, we had an extremely positive momentum. And that's important to remember because that's a trend which we believe will come back after the crisis. All operators have record years in 20 19, and this is on the back of all investment plans and all the movements, particularly in Europe, but elsewhere as well in in the world in favor of sustainable mobility. Public authorities have announced huge investment plans throughout the world, of course, including in Europe. The crisis in 2020, basically, we have, of course, very short term, as you know, a sharp drop of passenger traffic all across the world and in particular, in Europe, in the States, but all India, but all across the world. A lot of containment measures have been taken by the operators. Also short term, we have the oil crisis, which is an indirect consequence of the COVID-nineteen crisis, which will impact particularly the Middle East region. Having said that, all measures which are being taken to relaunch the economy, relaunching a green economy and all the mega projects, including what you see on the slide, the HS2 in the UK, are sustained. And HAC is going to assume the phone is just one example. Most of the operators in the world will be backed by their states. And actually, we have not seen any consolation of large orders to come. Of course, not large order in our backlog, but not also some large projects. We believe that there will be short term deferral of a number of tenders because of practical reasons and because of the fact that some of the projects are slower to mature. However, we believe that the resilience of the market mid term is extremely strong, and it's always very difficult to discuss about what will be the world after the crisis and everybody has its own idea. But I think there is a consensus to say that the sustainability and the transition of the mobility as well as the transition of the energy, by the way, is going to accelerate after the crisis. Of course, as you know, trend is the most appropriate mobility system to tackle these issues. So short term, the crisis basically the philosophy of our adaptation to the crisis is twofold. 1 is to recognize that we have some difficulties to produce in a number of our sites in the world. But 2 at the same time that we have strong market in front of us. So there was no intention to limit the production, but on the contrary, we tried to keep our site as open as possible while, of course, preserving the safety of our employee, and we managed to work as much as we could. So we put, of course, a crisis sale. We closed temporarily all the sites to adapt the sites to the new sanitary situations, and we launched remote working. To be fair, there were more than 24,000 employees working from home with a lot of good successes of this work program. Basically, I would say at the peak of the crisis, we had 24,000 people working from home, 6000, 7000 people working on-site, in different sites and 6000, 7000 people who couldn't work. In terms of production, because it's true that even though only, I would say, 6,000, 7000 of people could not work, these are the people who are assembling the trains. So as you can see on the we have tried to illustrate graphically the level of activity. Of course, rolling stock was most impacted at the start because this is where the sites had to be closed, particularly, of course, in France, in Spain, in India, but in the U. S. As well. So in most at one point in time, at the peak, most of the sites were closed. We have recovered. System was also impacted because of the difficulty to work on sites. Service has declined, of course, with closure of depots, but more importantly, most of the long term maintenance projects we are paid by mileage. So when the trends are stopped, we are stopped working. And signaling has been impacted less, but has been impacted because of the installation. As you can see on the graph, we have started restart the manufacturing on all our sites worldwide, not to the nominal level yet as we speak, and we intend to come back to the nominal level beginning of 2. In terms of orders, I said no cancellation of orders in our backlog, some slowdown in tender activities. And again, no we don't believe that there would be any negative impact midterm with some pluses of stimulus package. In terms of own adaptations, our own adaptation, we recognize and we said it in the press release that this will have some impact on the financials of AxSpark this year. We have tried to mitigate and to weather this impact using holidays, part time work. We are going to reduce spending. We are going to take control of equipment, and we are going to take a number of internal measures in order to limit the impact of this underactivity. Just now coming back to, I would say, more classical agenda, outcome in motion. You may recall that the 3 pillars rose not only by geography, which we did during the last 2020, but also by enhancing our value proposals to our customers Innovate, definitely in favor of smart and green solutions sustainability, as I said, at the heart of our strategy and of course, efficiency to deliver our backlog and to increase our global site efficiency. Starting with growth. Orders, as mentioned, €9,900,000,000 Last year, of course, we had some jumbo projects, so still a little bit of decrease as compared to last year, but the book to bill, which is much greater than 1. As you can see, predominance of Europe this year, which has grown as compared to last year, while some regions, as expected, are more struggling, in particular, of course, Latin America, Asia, Latin America and Middle East Africa. Asia Pacific had a good year, particularly in Australia. In terms of activities, service has had a particularly good year with 3,300,000,000 orders. Some nice pictures of our projects. In Australia, as I said, a very good year in Australia, a lot of activity in Australia. Europe, a lot of regional trends. And by the way, I feel a lot of tenders going on, on regional trends. The market is buoyant in that respect following the traffic increase. Some metros in Barcelona, some service activities in the UK and metros in France as well as Marseille. In terms of sales, we have as expected, I would say, we have huge ramp up in rolling stock, in particular in Europe, but also with the ramp up of our mega projects in the U. S. And in South Africa. Some decrease in service, which is not in line with the long term trends, but due to some one off projects in the UK last year. Signalling, I will come back to that, a very good year of Signalling in line with our Assam In Motion strategy. And finally, not surprisingly, the end of the execution of the projects or the system project, particularly in the Middle East, whether we're talking in Dubai, in Qatar or in Riyadh. So signaling, just a snapshot on signaling, a very good year of signaling with more than €1,700,000,000 order, which is a record high €1,500,000,000 of sales as well as a record high. With some key milestones achieved in Europe, notably Paris L'Oreal ETCS, which is the start of the conversion of the various speed lines in France to ERPMS, where we are also confirming our onboard successes. Some CVTCs across the world from Marseille to Cine, I would say. Threat and Mining, we have a number of, I would say, success in Threat and Mining. I have to say that Threat and Mining will be impacted by the COVID probably more sharply than other segments. Services, I think this is something where I think I said it last time during our strategy presentation that we were lagging behind. We have doubled the reviews. It's not at the level where it should be, but clearly, we have taken a good momentum in services. Innovation. We are well known and we are well known for our hydrogen trend, which we have launched in Germany 2 years ago, as you may recall, and which is working properly and we have now a number of commercial contracts. This year has been marked by the 1st contract in battery electric trains. You know that we believe that hydrogen train is the solution for, I would say, long haul or relatively long distances. Battery could be the solution for short distances. I'm talking, of course, about non electrified line. We have also developed a number of predictive tools for maintenance, for traffic analysis, and we have been the first one to deploy ERKMS Level 3. So we are continuing both in terms of digital and in terms of green innovation to progress towards our end objective. In terms of operations, we are continuing to work steadily. It's really a day to day work to improve the project management, to stabilize the footprint. As I said, AFSCOM 2020 was really the expansion of the footprint worldwide with a number of new sites. AFSCOM in motion, there will be a few year new sites as we are already covering the 5 continents, but more stabilization, more efficiency within the site. And also, we are continuing to allocate, I would say, engineering workload to India with now 24% of our full engineering of Exelon is being done in Bangalore, in our site in Bangalore. We are automating our sites, notably in Europe, with some welding robots everywhere and some very high capacity welding robots. And of course, we are digitalizing our systems. We have now one core model of SAP worldwide, which enables us. It's not the SAP, which is the most important part, enables us to have the full suite from engineering, manufacturing, quality on one system. And the EBIT has increased in line with our objectives. One snapshot on ESG, which is part of our strategy, increasingly part of our strategy. As I said, we are definitely at the heart of the sustainable mobility, and we need to be also exemplary in terms of decarbonization, in terms of caring for the people, and of course, creating a positive impact on society, and we have to develop our supply chain. We believe that interestingly, again, trend is covering these full aspects, but nevertheless, we should strive to improve each pillar. In terms of mobility solution, sustainable solution, we are developing green tractions, as I said, batteries, hydrogen, signaling system for better efficiency of the networks. In terms of rolling stock, we are decreasing the energy consumption while increasing the capacity. So of course, the energy per seat is decreased tremendously. And if you add a new signaling system, then you can increase a lot the capacity of the line. Just to take one example on Parillon, we are going to move from 13 trains per hour to 16 trains per hour, which is a 20%, 25% increase. The trains themselves will increase by more than 20% of their capacity, meaning that the full capacity of the line will increase by more than 40% 40% to 50% without touching the infrastructure. Of course, from an enterprise standpoint, this is, I would say, a very, very nice solution. Our own operations are decarbonized, and we have a goal of having 100% electricity from renewable sources by 2025 and we're implementing that over the years side by side. We have, of course, engaged ourselves in the fight against COVID-nineteen through donation of masks, through financial donations, through our sub foundation, which by the way, we are going to increase the budget from €1,500,000 to €1,900,000 for that and through 3 d printing. We've also worked with our supply chain in order to supply masks, for example, to our suppliers for them to restart earlier. The word on Bombardier transaction, nothing to say, to be fair. We are fully engaged in this transaction. We are working extremely well with Bombardier. We have engaged our discussions with the European Commission. We have engaged our discussions with our labor representatives at the European Works Forum. We have managed to secure the financing, the bridge facilities. So now we are waiting for the next step, which is to sign actually the share purchase agreement. Today, we are still in the MOU phase to have the approval of the deal during the Ascom AGM targeted October 2020 and to close the deal first half of twenty twenty one. Now I will move over the floor to Laurent, who will explain to us the financial results in 2020. Laurent? Thank you, Henri. Good morning, everyone. So let's start with our income statement for 2019 2020. So on the adjusted EBIT, we provide by 4%, up to €613,000,000 driven by volume and execution. Going straight below the adjusted EBIT, we had minus €18,000,000,000 for floating charges, mainly in Latin America and in Germany. We also classified the COVID-nineteen incremental and inefficiency costs for an amount of €24,000,000 Other items that you see reached €43,000,000 which includes the Cascaux mechanical reversal to EBIT at €38,000,000 minus €38,000,000 and minus €5,000,000 which includes the usual amortization of our intangible assets, some deal costs related to Bombardier acquisition, asset impairment and offset by positive impact from some legal proceeding outcome. As a reminder, last year, we booked on this specific line, same and deal cost for €74,000,000 On this basis, you see our EBIT steps up by 34% versus last year reaching 6.6% and our net income reached €466,000,000 Moving to adjusted EBIT. During this year, we listed our operational margin at 7.7% versus 7.5%. This increase was chiefly steered by the quality in our project execution and step up of our Health Promotion efficiency plan. Selling and administrative costs remained roughly stable at 7.2% and our net R and D reached 3.7% versus 3.6% last year, this in line with our objective to maintain a constant and sound R and D investment. 2019 2020 was a year of acceleration for our Avelia very high speed platform and also as well on the signaling solution, this in line with our strategy. On backlog, we are pleased to see this year again a continuous improvement of our backlog average profitability, this driven by our increased competitiveness and, as Henri explained, our positive order intake momentum. Moving to the region on the net income versus last year. Our EBIT stood at €545,000,000 up €137,000,000 versus last year. Financial items and results decreased by €12,000,000 consistent with the repayment of our bonds, include as well some subsidiary debt and hedging costs. We had income tax charge up by €46,000,000 corresponding to an effective tax rate of 25%, reminding that last year it was 22%. And this is very much in line with our target tax rate in the 25% to 30% range. Finally, on the share of net income from equity decreased by €93,000,000 which benefited last year from the GE joint venture specific item at €106,000,000 which we do not have this year. This year, the main contribution come from Casco €38,000,000 and TMH, which benefits from a good momentum in Russia, stable at €65,000,000 So all in, as a result, net income was €446,000,000 compared to €436,000,000 including this specific GV item. So to the free cash flow, we achieved €206,000,000 versus €150,000,000 last year, And we see this definitive as a positive given the working capital required for our major project ramp up and as well in the COVID context. Related to CapEx, transformational CapEx are behind us, And we stabilized at €195,000,000 which is 2.4% of sales with a clear focus on our site in Europe, India and in the U. S. As planned on the working capital, working capital impacted negatively our free cash flow by €249,000,000 as anticipated. And this, as you have seen, mainly during the first half of the year, with the expected ramp up of the major projects such as Praza in South Africa, Iloco in India and our core regional trains in Neserman, Italy and Germany. And this has been, I would say, offset in the second half by some level of cash collection and cash focused actions outcome. We'll come back on these subjects. Financial cash outstands at €95,000,000 minus €95,000,000 as a result of mechanical coupon payments and the net cost of hedging. Finally, dividend inflows were positive in 2019 2020, mainly from TMH and Cascaux and recorded in the line other item that you see on this slide. For reference last year, this line was impacted by change of consolidation of ITAZ and TMH capital gain elimination. So moving to the cash focus program. Our free cash flow performance demonstrates that this program is bringing tangible results. 1st of all, we embedded free cash flow generation, but as well specific local cash drivers targets in the objectives of 10,000 of our employees and our staff, and this to foster cash performance across the board. 2nd battlefield is on the tender. This is where the cash performance is formed for our commercial team, and we clearly enjoyed this year an improved profile, thanks to specific targets that we have set on down payments, but as well on progress payment profile. We improved as well our cash collection cycle, resulting in the daysales outstanding reduction of 13%, which is a very positive achievement. On the operational side, we moved on testing and commissioning, reduction by 20% on pilot with success, together with the tight monitoring on project working capital. Last, we decreased our CapEx spending by 6% while we are managing rolling stock project ramp up. Overall, pleased to say that our cash focus is moving on successfully down to shop floors and on all key drivers. So moving to the liquidity status. We have as of end of March 2020 a stronger liquidity position amounting to €2,600,000 including a undrawn €4,000,000 RTF. In the context of C19, we decided in April to secure an additional €1,700,000 RTF, FCF aiming at stepping in for our usual €1,000,000,000 Commercial Paper program and providing us extra liquidity buffer. Concerning bonds, as we know, you have we have reimbursed our past expensive bonds, and this is a new one in October at record position of 0.25 percent fixed rate. So all in, group liquidity pro form a end of March is above €4,000,000,000 which is a very strong position. Our target remains in terms of rating, obviously, to stay in a strong Baa2 rating. Related to shareholder distribution this year and in the context of the current crisis, the Board of Directors will propose a suspension of dividends to the next shareholder meetings, which would take place on July 8. I now leave the floor to Henri for the conclusion. Thank you very much. Thank you, Laurent. Just as a conclusion, again, 'nineteen, 'twenty has been a year of totally in line with our upcoming motion strategic plan, both in terms of numbers, but as well in terms of action and evolution of the company and position of the company. The Bombardier transaction process as planned. I think there is no again, no particular element. We are in line with our objective there. The crisis COVID-nineteen crisis will impact negative in 2021. I mean, that's clear. But at the same time, the objective for 2022, 2023 are maintained, notably the 9% adjusted EBIT and the cash flow conversion with the annual growth rate being impacted mechanically. We and that would be the final final say. I think AstraZen is extremely well placed to weather the crisis, and we are proving that we can go through the crisis. Well, it's always important to enter into a short term crisis as such in very good position and we will help both financially and operationally and this is the case. So we are weathering the crisis, and we are extremely positive on our ability to capture opportunities whenever they come. And I can tell you that the tendering pipeline is still extremely buoyant, which is in line with the sustainable mobility condition. So thank you. Thank you, all of you. And now I think, operator, Julia, we can take the questions move to the question. Thanks. Of course. Thank you, We will now take our first question from Daniela Costa from Goldman Sachs. Please go ahead. Your line is open. Hi, good morning, everyone. Thanks for taking my question. Hope you're all well. I wanted to follow-up maybe a 2 part question, sorry, but on the growth and on the 5% average and understand a little bit better why did you have to change that? I understand that you see a slight deceleration on tendering activity, feasibility sales in the backlog? And also with, I guess, as you mentioned, Green Deal, Ford Railway package, European Commission saying 2021 is a year of rail. And how do you see sort of when will that stimulus hit if ever? Is that post your 2022 to 2023 horizon? Yes, that's my question. Thank you. Thank you, Daniela. Yes, we as you know, we have a very large backlog, more than €40,000,000,000 5 years of sales. Having said that, as you know, it's not 5 years and then nothing. It's the impact of our backlog on year 1 is quite the 90%. So 90% of the sales of year 1 are in the backlog, but then it moved to 60%, 40%. So in 2022, 2023, we of course, we need to record a number of orders in order to achieve our objective in 2022, 2023. And even though we believe that the market is still extremely buoyant, and I think, as I said, and your second question, the stimulus packages will eat very quickly in I think at the end of this financial year, we'll see. However, in the next 6 months, we'll have a short drop in tendering activities and therefore in orders. And this will have an impact, a diluted impact on the sales growth for year a little bit for year 1, more for year 2 and year 3. So that's why we need to put this small warning on our sales growth because all that is being averaged. It's not an order this year will have a mechanical impact in 2022, 2023. That is average over 2 to 3 years. But overall, in terms of annual growth, average annual growth, we have this slight impact about the tender delays. Thank you. We'll now take our next question from Akash Gupta from JPMorgan. Please go ahead. Yes. Hi, good morning, everybody. My question is more specific towards what should we expect for FY 2021 or the next financial year. I know it's maybe a bit early, but I think if we can look at the current stage of how what is happening in the industry, then most of your customers are having very little sales and they are running out of cash and we see headlines every day that one of the rail operator is looking for state bailout. So I want to understand how should we think your sales in the next 12 to 18 months on that backdrop where basically your customers need bailout and some of them may need to reduce spending as part of bailout package? Thank you. I think we have not seen today any impact from the customers. So there is no request from the customers to delay contract. On the contrary, we are working on the customer to see how we can accelerate the deliveries of our projects to catch up the delays which have been, I would say, experienced during the crisis. So I read what you read and there are number of customers, of course, large number of customers that have been directly impacted by a loss of revenues. But in terms of project delivery, they need the trends. So I don't see we have not seen any direct impact of that. For the moment, the full impact is in the question of production, as I showed on the slide. We have an impact on our production. And because we are running full speed, it's not quite impossible to catch up what has been lost. We try to do that to some extent, but it will not be possible to fully catch up. But if we don't catch up, it's not because of the customer, it's because of our inability to double the production line just for 6 months. For example, we have a production line for 1 train, impossible to do a second production line just to catch up 1 or 2 months of production. Thank you. Our next question comes from Gael Debre from Deutsche Bank. Please go ahead. Yes. Thanks. Good morning, everybody. Can I ask about the cash flow situation? I was I mean, first of all, what's the true underlying operational cash flow performance in the full year, if you could perhaps quantify the impact of IFRS 16, the impact happening at the level of tenders with happening at the level of tenders with a better financing profile being secured right now. Is there some kind of industry push for these better financing terms? Or is it really Alstom specific? Thank you. I think I will we leave the floor maybe to Laurent to answer to this question. We are pushing a lot on the payment terms. So I guess we are it's not as specific, but as some clearly and as some battle as well. But Florent, maybe you can take the question. Yes. Good morning, Gael. Thanks for your question. So just complementing on the tender, I mean, there is no industry standard into it. This is something that we have been tailoring within Alstom in terms of guidelines toward our commercial team to respect certain payment profile, both in terms of down payment and for that profile. And this is something which is negotiated on a cake by cake basis with our customers. So this is a stronger focus and stronger tight monitoring and target on the payment profile. This is what we have been implementing in cash focus. So to your first question, Gael, IFRS 16 impact is €84,000,000 in our notes and in the slide as well. And we didn't have any factoring in the second half, nor in the full year of 2019 2020? Thank you. There was no receivables being derecognized in the full year? Because I thought there was in H1. No, absolutely. Yes, there was in H1, that's correct. But as I said, it was a one off. So we did not have it was repaid in H2, and there is nothing left in the full year 2019 2020. Thank you. We'll now take our next question from Simeon Tonneson from Jefferies. I've got a question on the service performance. You probably have heard one of your key European competitors talking about very, very strong service business in the last quarter. And looking at your business, which I think was down year over year, do you think it's a timing issue? Or do you see anything else? Because in theory, one would expect that both of your businesses are impacted by, let's say, less rolling stock running and therefore, less mileage, etcetera. They talked a lot about digital services being a very key driver for performance. So I have to ask kind of whether you think technology might be different in the performance here. So yes, any color on service in the quarter, but also maybe how you see this in the first half of your fiscal twenty twenty one? Thank you. Thank you for the questions. No, in terms of number, for us, it's totally related to the end of renovation projects in the U. S. So the underlying service activity is still very strong and you've seen the order intake in services at EUR 3,300,000,000 huge. Yes, digital services play a stronger part. When you talk about digital services, we can talk about predictive maintenance on classical or laptop. We talk also about signaling activities. And on this one, as I mentioned, we were lagging behind and we are growing extremely fast on signaling services. So I agree. Now on the short term, there is an impact of COVID and it's maybe true, if I had to have a slight differential with the competitor you are mentioning, probably in some in Germany, trends have run a little bit more than in Western Europe. So you may have a slight different impact on the very short term. But overall, I fully agree with my comment that service is going extremely strong. Thank you. Our next question comes from Alexander Virgo from Bank of America. Please go ahead. Good morning, Oren. Good morning, Oren. Very thanks very much for taking my questions. Just I wanted to touch a little bit on cash conversion in 2020. And you touched a little bit on tendering. You touched a little bit on COVID impact. I guess my question was really, you had a stronger than expected cash conversion, I think, in 20 nineteen-twenty twenty. So how do we think about the lower tendering, the prepayment balance, etcetera, in 2021 as a function of COVID, I suppose? So just trying to understand the trajectory. I guess you've guided in the past that the 1st couple of years of AIM would be a little bit weaker in conversion before we get up to that 80% target. I think this year came in a bit better. So I'm just thinking, does 2021 come in a bit worse because of the virus? Thank you. Laurent, you take it. Yes. Good morning, Alexandre. Thanks for your question. So the cash 2021 will be a complex equation in the framework of the COVID-nineteen impact. So the trend that we've been describing remains, I. E, the working capital will continue to ramp up. We'll have headwinds related to our project, rolling stock ramp up as we had in 'nineteen, 'twenty. So that is one fundamental trend will remain. On the CapEx, we'll be prioritizing and monitoring that carefully for sure. The other part of the equation will be, of course, the tender development and dynamics. As Henri said, the pipeline is buoyant. We may expect, however, some shift. So that could be a key part of the equation of cash. So all in, in H1, we probably will have some headwind altogether and recovery in H2, while the tenders and the deliveries will be accelerating and getting to a full steam status. Difficult to say more at this stage, Alexandre. Alexandre. We'll now take our next question from Guillermo from UBS. Please go ahead. Guillermo Peneer from UBS. I wanted to ask a question on the outlook for working capital expansion. I think in the past, you guided to obviously an expansion in this fiscal year, but just ended. But now thinking about the fiscal year 'twenty one, do you still have the same prognosis as to the working capital increase that is needed given the impact actually from COVID? And that's the first question. Yes, I'll take it as a follow-up of the previous one. So as I said, yes, there will be still a working capital headwind in 2021 related to the ramp up of our rolling salt projects. So the fundamentals did not change. On the positive side, as you have seen, cash focus positive actions is kicking in, in 'nineteen, 'twenty and will kick in, in 'twenty, 'twenty one to offset a part of it. So I would say the fundamental evolution of the working cap for 2021 is unchanged versus our Capital Market Day. The only impact we may have indeed is a rephrasing of the deliveries with, of course, a deceleration in the first quarters or the first few months and an acceleration in the second half. Okay. Our next question comes from Jonathan Mounsey from Exane BNP Paribas. Please go ahead. Hi, thanks for letting me ask a question. I wanted to talk about the Bombardier Transportation news in Q1. So I think CDPQ injected some extra capital into Bombardier Transportation. I just wonder, does that change anything in terms of the deal from your point of view following that cash injection? And sort of as part of that, the fact that Bombardier Transportation needed a cash injection in Q1, I mean, what does that mean for the order intake of Bombardier going forward? I would have thought that customers would be very nervous giving significant orders to a company that was needing to have money pumped into it as recently as a month or 2 ago. And if the order intake then does disappointed Bombardier over the coming 12 months. How does that change your attitude towards the deal as obviously it would change the outlook for the business just as you inherited? Thank you. So thank you. On Bombardier, to be straight, the injection of cash from CDPQ does not change at all the deal. And by the way, this was a short term injection to allow Bombardier to stabilize, improve its liquidity position and it may not be there when something will be done. We have not seen I mean, there is a commercial momentum of Bombardier. They have recorded some orders recently. So I have not seen any impact of what you are seeing. So as I said during the presentation, we are fully engaged in the transaction. We are still extremely we are very positive and optimistic on the midterm future, on the resilience of the market. So the strategic rationale is still there. So we are totally committed to the demand. Thank you. Our next question comes from Alfred Glaser from ODDO. Please go ahead. Your line is open. Yes, good morning. I just wanted to get back on the business outlook for the new fiscal year. Could you give us a sense of how the business is evolving in rolling stock compared to service, compared to signaling in terms of activity reduction due to the crisis environment? So it's difficult to give you some precise numbers on the different activity. Rolling stock has been the one the most impacted because of the difficulty to produce strength. Distributors were not only coming from our own sites, as you can imagine, but from the full supply chain, I mean, you need to have all the parts in order to produce your trend. So even if only 20% of your supply chain is missing, then you cannot produce the trend. So in fact, it was the most impacted. I would say system was 2nd, but overall for the year, projects like Dubai, if they were a little bit delayed by the crisis at the end of the day, they will be completed during the year, so it will not change. And then service and then signaling. So in this order, service has been impacted, but we recover soon. So that's the color. Thank you. Our next question comes from William Mackey from Kepler Cheuvreux. Please go ahead. Your line is open. Good morning, gentlemen. Thank you for the time. My question would relate to how you're phrasing the situation. I mean, you've very much framed everything here as a supply side issue rather than a demand side issue over the next 12 months and beyond. And I wanted to go back to the Slide 12, where you have provided an indicative view of the production system across the group and how it is performing. So against that backdrop, could you walk through how you see the production system today and how quickly it will catch relevant countries, particularly South Africa and India? And against the comment that you made earlier that you expect to be back to normal levels of production by this fiscal Q2? Thank you very much. Thank you. I think you said it very well. I mean, our crisis is a supply crisis and not a demand crisis. That's how we see it here and how we see our customers. And this is, by the way, I think, in line as well with the comments of our competitors. So I think this is how the market sees it. Yes, if you go back to the slide, you see the shape of the curve, which illustrates the shape of the production on our sites, on our production sites. So basically, the situation today is that all our sites worldwide have reopened. We are not at full speed on all the sites. The last ones to reopen, as you have rightly said it, were in India, in South Africa as well as in Kazakhstan, by the way. And we will when you say catch up, as I said, I want to be also fully transparent. We will go back to a normal activity, as I said, during the month of June. However, we are not going to catch up the sales, which would have been lost during this period. We are going to try to do it on some occasions and on some sites. But at that stage, we have no plan to fully recover the sales which will have been lost. As you may recall, Alstom was full speed and the production of Alstom was full speed. So it's quite impossible to accelerate even more than what we are anticipating. So with the as you said, South Africa is starting again. India is starting again. We need to have a specific operation in India to start, which we did get. So we are starting again. And things are going smoothly. We are also adapting the sites to minimize the loss of productivity because we need take some sanitary measures, which could impact the productivity. So that will be back, as I said, in June. Thank you. We have no further questions. And I'll turn the call back to the speakers for any additional or closing remarks. So thank you very much for your attendance, for your attention. I think the last question was the concluding question. We are facing supply crisis, which we are weathering within Epsilon. And I think it's fair to recognize that a lot of agility was there. I've not mentioned some extraordinary things that we have done just for the anecdote, but I think it illustrates the full thing. As you know, we are testing our new various speed train in the U. S. As we are introducing the various speed in the U. S. And this test has been conducted from the home, from Le Creusot in France, where the people could test it remotely from their home, which shows the agility that Afton can have during this crisis to adapt itself and we're, as you have seen, extremely confident on the future and on the resilience of our market on the back of sustainability transition. So thank you a lot. I'm sorry that we will not meet in person this year, but we'll have new opportunities in the future. Thanks a lot. Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.