Welcome to the Alten conference on the turnover figures for the second half of 2022. Giving the floor to Bruno Benoliel, who is the Deputy CEO. Mr. Benoliel, you have the floor.
Thank you. Hello, everyone, and thank you for your presence to this conference for the results of the first half of 2022, excuse me. You've received the press release, and I am sure that you saw with the figures that the first half of 2022 did not show any change in relation to the end of last year. For a year now, the operations have shown sustained growth in spite of macroeconomic risky environments and the war in Ukraine.
Headquarters figures end of June 2022 is at EUR 1.825 billion, 31%+ compared to end of June 2021. It was at EUR 1.395 billion. In France, the operations progressed by 36% and 32% outside of France. With constant scope and forex, operations progressed significantly, progressing by 19.8%, which is a plus of 14.5% in France and 22.5% outside of France. Acquisitions have contributed to 30% of overall growth for this semester and representing 30% of our turnover figures. The forex effect contributed positively because of depreciation of euro compared to most currencies.
As of today, a little over 30% of turnover of the group is conducted outside of the Eurozone, and international represents now +67% of operations of the group. At the second semester, our turnover figure is EUR 931 million. This is a 30.74% increase compared to June 2021. On a similar scope is 30% growth, 18.9% in France and 21.5% outside of France. The activity rate is still high. It was 92.9% at the second quarter, above our normative rate of 92%. The consequence is, for the second semester, the activity rate of the group is 92.7%. Logically, the turnover was also high.
The two factors are usually connected. Activity rates that are high and turnovers that are high mean that the operations are doing very well. Our turnover rate is 28%. It is higher than what we would want it to be, of course, as you know, because our target turnover rate is 20%-22%. However, the engineers have been increased by 6,500 people, including 940 organically, 430 in France, and 1,290 outside of France. Acquisitions represented 3,060 engineers. As a consequence, while Alten had 2,000, 4,000 three...
42,300 people at the end of last year, including 30,000 engineers. We are now 46,600 people, including 30,660 engineers, including 8,800 in France and 32,500 outside of France. Activities per geographic zone. Before we look at them per sector in France, our progression was mostly due to civil aeronautics, representing a quarter of sales figures in France, increasing by 47%, and now has gone beyond the level before crisis. Progression is due to nuclear and energy infrastructure, representing altogether 10% of sales figures and growth above 20%. Automotive is 10% of sales figures, only increasing by 6%.
It was at zero the first quarter, and so growth accelerated in the second quarter. Growth was conducted mostly with the falling back on nearshore and offshore projects for car manufacturers in France, which is still under the pre-COVID levels in France. In Europe, outside of France, activities are undergoing growth, as you've seen in the slides that were distributed in most geographic zones, except for Scandinavia and Switzerland. In Iberia, our activity's increasing by 23%. All sectors are undergoing strong growth, in particular civil aeronautics, civil services, industry and telecom. In Germany, the picking up of activities that was seen at the first quarter was even more consistent than second quarter, and so increase of activities in Germany, increasing by 22.3% organically.
Aeronautics progressing by +30%, 16% of German sales figures, but still under the level that it was at the beginning of 2021. While automotive, that represents practically half of sales figures in Germany, progressing by 32% and has so really gone far beyond the pre-crisis levels. All other main activity sectors are also undergoing strong growth in Germany.
In Italy, growth is sort of consistent at +26% for the third consecutive years, with all sectors growing without exception. In Benelux, growth confirmed its acceleration seen at the end of 2021, at the beginning of 2022, reaching 17.1% at end of June 2022, thanks to the Netherlands, where the growth is practically at 60%, and activity is increasing strongly with electronic semiconductors, energy and industrial product lines. Belgium growing much more slowly. In the U.K., activity growing by 26%. This bounced back strongly in aeronautics, growing by +100% and representing a third of the sales figures, automotive increasing by +30%, 50% of sales figures, defense and electronics.
In Scandinavia, our growth had bounced back in the first quarter, but slowed down in the second quarter to reach 5%, going more strongly in more historic sectors such as rail and road transportation. In Eastern Europe, there's a margin issue, just like in Switzerland, which is linked to market and activity constraints. In Eastern Europe, progression is still strong, with 40% thanks to Poland increasing by 50% over all sectors, and Romania representing 40% of the zone, where you see that activities are increasing by +5%, thanks to automotive and energy sectors. That was for Europe. Now moving on to North America. In the USA, +23% activities representing 40% of that zone.
In Canada, so representing 20% growth is higher at 30%, thanks to services and aeronautics sectors. In Asia-Pacific, a growth rate that progressed again in the second quarter to reach over 40% for the first half of the year in current constant figures. China increasing by 30%, thanks to automotive. India by 40%, thanks to services, semiconductors and automotive. Japan, 10% of the zone, +50%. Finally, Singapore, that we didn't talk about very much, but representing about 10% of Asia-Pacific and growing by +60%, thanks to finance, tertiary, so services and energy. Growth that is as strong this half of the year in all geographic zones.
If you analyze the activity now, if you take the different verticals, we can see that all the different sectors are growing, even though the rhythm of growth are a bit different. The automotive sector is still bouncing back. It is now representing 17% of the turnover with an organic growth of about 30%. It grows a bit more for the equipment part rather than for the manufacturing part. We have a bit of a lower activity for the Bombardier sector. For the aerospace, it's about a growth of over 55%, which is a great recovery, especially for the aeronautics. That is over 60%, driven especially thanks to Airbus. The recovery for the OEM is rather good, especially for Thales and so on.
In spatial sector, the growth is a bit more moderate, even though there is still growth at least. For now, everything that we were missing in 2020 is back on. For defense and security, we're at 5% of the turnover. The energy market is growing by 6% with different type of situation, depending on the different provider. For now, we are getting out of Russia, which represented 21% of the turnover. We're supposed to be going out of Russia by the end of 2022, so we should shrink when it comes to growth here. We also have a shortage in terms of engineers. Here, energy is basically driven thanks to the area of energy that is growing by 20%, especially thanks to renewable energy.
For life sciences, which represents 9% of our turnover, is growing by 10% in all sectors, whether it's pharmaceuticals or equipment. For the other industries in the same sector, we have a growth of about 5.4%. For telecoms, we have a growth over 3%. When it comes to media and electronics, we have a growth of over 30%, especially thanks to the different activities for e-commerce or semiconductors, for example. For tertiary services, which is 25% of the turnover, it is growing, especially in banks and insurance, with a growth over 17%, especially in North America and South Europe. To sum up, despite. If we take out telecoms
The automotive and rail and naval industry that represent less than 10% of the turnover. While Alten has about 90% of its activity that is made out of sectors in which we have a lot of growth. When it comes to external growth, we had acquired four companies on this first semester. Three companies were already announced in the previous publications. We've added one more company in Australia, specialized in project management. You can see this is a rather small company, and the idea here is to try and reinforce our presence in Australia. We have a lot of different affairs upcoming in different countries such as Romania, India, Germany, the U.S., and so on. For 2022, I'm sorry, I'm reading the presentation just as you are.
What I can tell you is that up to date, we don't see our activity slowing down. Maybe you'll say different things. We'll say different things in September once we'll publish the results, but for now, we're doing quite good. For the aeronautics and automotive sector, we can see that we are above the level we've had pre-crisis, so it's much better than we had anticipated. The context has changed. Organic growth for the second semester of 2022 will be much over 10%. I'm now going to give the floor to the participants to this meeting. If the moderator can now open the conference so that people can ask their question, that would be great.
Thank you, ladies and gentlemen. If you wish to ask a question, please type zero one on your phone.
We have a question from Emmanuel Parot, Gilbert Dupont. You now have the floor.
Yes. Hi, Bruno. I have a question regarding recruitment policy for the third quarter. We can see that the demand is rather high, but the context is a bit uncertain here. I wanted to know what it would be in terms of recruitment for the third quarter. I was also wondering for my second question. It's a bit more usual, but I had questions regarding the inflation. Is it going to impact the prices on the last call? If I remember correctly, you said that it was going to take a little time to make sure that the inflation wouldn't have an impact on prices, so you could compensate. I wanted to have your opinion on that point.
All right.
Regarding the recruitment policy that we have for now, well, we haven't really thought about it. For now, we're trying to maintain the turnover at an acceptable level. We haven't noticed or observed any spike in people quitting. The idea for now is to try and maintain that. We have the same number of offers, and the idea here is to try and slow down the turnover, but to try and recruit more so that we can fulfill the needs that we have. For now, we're not planning on slowing down the recruitment process because that would hurt our activity in Germany. If it's going to change, of course, we'll change our strategy as well.
For now, we would have been able to do more in terms of growth if we would have been able to recruit more. Unfortunately, we haven't been able to recruit as much as we needed, so our growth was limited. Now if you want to answer to the different call for tenders that we've received, especially in the U.S., well, we see that the projects are not going to shrink either. We are not going to change our recruitment strategy or recruitment process. When it comes to the inflation, well, unfortunately, this is increasing as well. We've tried to anticipate as much as we could. We're trying to anticipate wage raises.
Usually, we do this on the dates, on the anniversary date of a contract, but we're trying to do the pay raise now so that we can try and compensate that inflation. We know that there will be increase in salaries here. The issue that we have is that we have major differences in between the different countries, especially when we're acquiring companies from countries that usually have lower salaries. We are going to try and do our best to compensate, but we're going to do this on a case-by-case process. This year, the average salary is going to increase. Even though we've acquired company in countries that are still developing countries at the moment. Here we'll see that we'll have some stability, or at least, we'll see a decrease in the average pay.
For the first time in a very long time, you will see that all salaries are going to increase for a while in order to compensate. Of course, we've tried to make sure that this raise in salaries will be impacting the different prices and hours. Apart from the automotive sector in France and the Airbus account in which the pricing is, it's a bit more complicated. We've been able to compensate two thirds of the increase in salaries thanks to the increase in our pricing for our different accounts. What we can analyze here, we can try and see the ratio in between the price and salaries that, you know, take all of these factors into consideration.
We'll see that a bit more in the second semester because we do have increased campaigns that we'll implement. The idea here is to get a better gross margin.
It's really clear. Thank you very much.
Thank you. We have a question from Gregory Ramirez for Bryan, Garnier.
Hi, Bruno. I have a question regarding the fact that we are going to withdraw from Russia. You were talking of several million EUR in terms of turnover in Russia. If we're withdrawing from that country and we'll finalize that, if I understood properly, for the second semester, what should we expect in terms of the impact it will have on the turnover? Is it only a couple million EUR? Is it going to be really important?
I imagine that this will also have an impact on 2023, right? Even though we know that turnover has already decreased.
Well, we already lost half of our activity in Russia for now, compared to the first semester. Basically we'll be completely withdrawing from Russia on the, on the second semester of 2022. It won't really have an impact in terms of growth here. Of course, if we take into consideration all of the different factors, we know that everything was already divided by two by the end of June.
Okay. Well, thank you.
Thank you. We have another question from Aditya Bhave for Bank of America. It's your turn. Go ahead, sir.
Hi, Bruno Benoliel. This is Aditya Bhave from Bank of America. Thanks for taking my question. Two from me. You mentioned that second half of the year should exceed 10% organic growth. Can you maybe talk about some of the underlying assumptions within that? Is there any assumptions baked in around macro or what customers are saying? And second, given your comments on the wage inflation and price increases, I mean, should we still think about the full year margins as sort of being above the 10%? Or, you know, do you think you have a bit more visibility on margins now compared to maybe a few months ago?
Okay. If the participants don't mind, I'll try to answer in English.
Say that the organic growth will be much above 10% for H2. Of course, we have taken into account different assumptions regarding the economy evolution. When we mean above 10%, of course, it's not 10%. Could be 12%, could be 13%, could be 14% or 15%. 12% is unlikely to be achieved since the fact that we have an embedded growth for H2, so it should be above. It's difficult to know exactly because everyone is expecting a recession in H2. That, to be frank, we do not see at all today. But we have to be cautious. Reason why we said that, but you can consider that the growth in H2 should be comprising between, I think, 12.5% and 13%.
I mean, if the situation is deteriorating rapidly after summer, which is not our main assumption today, up to 15%, if the situation is, I mean, stabilizing or slightly declining in H2. Also taking into account that we have a comparison basis, which is less favorable, of course, in H2 than in H1, as Q1 2021 was weak because of the COVID crisis. Regarding our margins, of course, we have some view regarding the margin. H1 will be good, probably, that year much better than H2, because we have just two working day difference between H1 and H2, which is not enough to offset the vacation as people are on holidays.
I mean, not all, but most in many countries, during July or August. Also, we're gonna have an average wage, which will be higher in H2, compared with H1, as we are giving to our employees, wage increase at their anniversary date. For all these reasons, we expect H2 to be weaker than H1. H1 will be good, I mean, really good. Of course, we are very confident, except if there is a crash, of course, in H2. But again, this is not our assumption, we'll be above 10% as we said, comprising probably between 10-point-something and 10.5%, over 2022.
Okay, thanks. Just to confirm, your comment on above 10% margins was for the second half, right? Not for the full year, just for the second half should still be above 10%.
What I said is that the margin rate is good for H1 and for H2, we'll have a margin rate that would be less good than for H1 for the reasons that I explained. But that, however, should remain above 10%, and that overall for the full year, we'll have a margin rate except for any so very substantial modification of the world economics in the second half of the year, will be comprised between 10.2% and 10.5%. With the more optimistic or less optimistic assumptions, with that being the bracket.
Okay, thank you very much.
Next question from Elsa Benussi from Berenberg. You have the floor.
Thank you for taking my question. I have a question concerning Scandinavia that was a little bit more complicated in terms of growth, if I understand correctly. Could you just explain what you mean by a managerial issue as opposed to a market issue?
Actually, we're talking about operations here, where the market dynamics is crucial, but where the ability of management to drive its organization and go fetch customers and win over projects is also very crucial. We see for a country such as Italy and Southern Europe in general, where management is very good, including during the COVID crisis. Well, the group in that area maintained very high growth rates.
What I mean by this is that we have an underlying market in Scandinavia which is good in the automotive and heavy-duty road transportation, that's good, a little bit less in other means of transport. This is true for Switzerland as well, by the way. If management is not sufficiently high performing, well, necessarily our performances will not be as good. What I mean by this is that it's not necessarily the Scandinavian market that's not going well, it's maybe that we are not good enough in the Scandinavian market.
Okay, that was clear. Thank you.
Thank you. We have another question from Laurent Daure from Kepler Cheuvreux. You have the floor.
Hello, Bruno. I have several questions. First question, on headcount, which is sequentially increasing in organic figures for the second quarter between France and international. What's the dynamic here?
France is +125, and international +1,365.
This is a slightly higher rate than what I noticed. You're higher up in the bracket, I would say. This is a pace that you're going to pursue in the three to six next months, except for exceptional circumstances?
Of course, yes. If operations are going well enough.
Usually we do have a trough in Q3, obviously, because you have many departures in July, end of June, and it's just like at the end of December, as you know, and July and August are months that are lower in terms of recruitment because people are not there to hire, and so it picks up again in mid-September to the end of October. We have the seasonal trough in Q3. If operations are going well, usually speaking, we have a good Q4. We'll have less recruitment in Q3. That's most probably for certain than in the first two quarters. Potentially we'll go back to a recruitment level that's equal to Q2 and Q4.
Between offshore and onshore, so more acceleration on the offshore part, I'm assuming. Yeah.
Well, we recruited a lot in the first half, and we didn't only do offshore, far from it. We recruited a lot in other countries as well.
I had a second question regarding the withdrawal from Russia. In terms of restructuring, for example, is there anything specific that we have to expect or is it marginal?
No, it's going to be a marginal. It's going to be a non-recurring. If we decide to provision anything, but I mean, we are finalizing the details at the moment. That will be under EUR 50 million, whatever happens.
How many people were working there?
Well, at first there were 120 people, and now there are over 60 of us.
Are there any people that you can recycle outside of Russia? Does that mean that we have to let them go?
Well, it's a bit. The situation is quite complex because we have some clients, customers that are not Russian.
Most of our customers are actually European clients that are based in Russia. They are based there just because it's easier in their sector, especially when it comes to petrol, for example. Sometimes we have even consortiums that are Russian consortiums. Here, I mean, as you can see, the situation is a bit complex here, and we have different types of contracts that we have as well. The easiest thing that we can do for now is exactly, you know, when you're riding a bike, so you stop pedaling, and at some point it just stops by itself, right?
Well, what about the turnover then?
Well, the fact that we're withdrawing from Russia, it doesn't mean that we are going to terminate the different contracts because we need our customers, right?
There are big customers as well, so it's important for us to keep them, and we just can't let them go overnight. Again, they are not Russian customers here. What we can do, if we decide to withdraw from Russia, is to inform our clients and then to see what kind of solution we can find, alternative solutions. We can't just, you know, let them go overnight and just never speak to them again.
Can't you deliver that service in another geographical area?
No, it's on site, so it has to be in Russia. We're talking about different types of customers that we have, and we have a lot of consultants working on that.
Okay, thank you.
Last question regarding a sector that is usually the first one to suffer when we have macroeconomic issues. If we go deeper into details when it comes to the automotive sector, as of today, on this specific vertical here, and I'm thinking of specific customers as well, because we know that some customers are having a couple issues. I was wondering if the contracts would be deferred.
Absolutely not. This is why we have a difference in between the macroeconomics and what markets say and the reality in the field for now, and maybe this will change in September as well. For now, you know, figures are usually based on facts and so based on the past.
For now, we also have operational factors that are the indicators that we use to recruit and to try and anticipate what's going to happen, but also what's going to happen in terms of activity. Talking about the size of projects, the different consulting processes, the duration of the activity, and so on. I'm not going through the whole list of the different steering tools that we use, but for now, we don't have any specific alarm signal or any red flags. Maybe in September we'll say, you know, we'll say different things, but for now we're doing good. If you look at the numbers, the figures that we have in June, it's going great.
Regarding the different, you know, the past recessions that we've had, we've seen first a decrease in the attrition rate, and then it was increasing. Where are we at for now?
No, for now, no change.
Okay.
Yeah, this is also the reason why, and this is what I was trying to explain during the conference. This is why we've decided to anticipate the wage raises to make sure that we could contain that turnover. Because usually people are being raised at the end of the year. We're trying to, you know, anticipate that by a quarter or maybe those that should be raised in October, November; we're going to raise them in September to try and motivate the engineers as well to stay in.
Is it usually clients that, you know, come and take people that we have mainly?
Yes, mainly clients. It's not always the client, right? It's not always the client where engineers or project managers are working on a specific project. It can be other clients. But most often, yes, they're being hunted, and they usually leave us to go and work in the bigger industry.
All right. Well, it's very clear. Thank you so much, Bruno.
You're welcome, Laurent.
Thank you. We have another question from Derric Marcon , from Société Générale.
Hi, Bruno.
Hi there.
I have a couple questions. The first one is that I wanted you to be a bit more precise. When you're talking about the gross margin, were you talking about the margin that we have today?
I was talking about gross margin, and I'm talking about the direct gross margin that we have on projects.
Okay, perfect. Thank you. I was also trying to understand, in the scenario that you've mentioned. You're saying that. 'Cause you said you were going to compensate, and so I was wondering on what assumptions did you decide to base yourself off. In terms of percent of turnover. 'Cause you said earlier on that you thought that we would see a decrease by the end of 2020, 2021.
Sorry. I understand your question, but we can see that we observe impacts a bit everywhere, especially when it comes to the margin. I'm talking about gross margin, I'm talking about the one that directly based on the project.
Compared to 2021, we have a use rate that is much better, so this is going to compensate this loss in terms of gross margin linked to the fundamentals. We have FX impacts as well that are based on. We've got mixed factors coming from the geographical area and some from other types of indicators as well that make the margin vary. We have a gross margin that is made of the margin that directly comes from the project, but also composed of different types of elements that we need to be able to achieve those projects. We have a lot of billings at the moment because we have a lot of people working on site. We have the different tools that we use as well. We have different types of technical structures in place.
We have a skills center and expertise center as well. All of this is part of the gross margin, but it does not evolve based on the turnover. This is also, you know, this is also used as a buffer basically. As opposed to that, our SG&A are going to be superior. When it comes to sales and recruitment, and so everything that we need for the activity, I would say that we had communication fees that had to decline over time in 2021, but we have now more expenses when it comes to recruitment. We'll get back to the same levels of SG&A that we've had in the past. Those are normative SG&As, and sometimes it's going to be a bit superior, especially because of the growth that we have.
Once we've seen all of that, and we just mix all this up, because the equation is not that simple. Once we've mixed this up, we have different assumptions, especially regarding the use rate. Take a use rate that is a bit inferior to the first semester, but it's not degraded either. We took the scope factor, the different country factor as well, try and see what's going to happen in the second half of the year. I'm not going to give you figures for now for H1. Compared to last year, we have 1.7 working day less. We are going to have a gap in between H1 and H2 that will be around one point. We'll have a one-point gap in between the two semesters.
Unless we are going through a really rough phase in the second semester. I don't want to be always optimistic, but I'm not pessimistic for the second semester. That's for sure, because the third quarter has now started and we don't see anything slowing down, which would mean that we would have to go through a very rough situation on the fourth quarter. As I told you, we are going to be above 10%, that's for sure. Maybe we'll be able to reach 10.5%. For now, this is what we are expecting. Depending on our forecast, I might say otherwise in September, but for now this is where we're at. We're quite confident in the future.
When you say 10.5%.
Are you basing yourself on H1?
Well, H1 will be superior to H2.
Didn't you say in the call that H2 would necessarily be above 10%?
Yes, H2 will be at 10%. I was talking about growth in terms of the 10%. I said we would be way above 10% growth and that in H2.
In terms of the EBIT margin, did you say that?
Yes, it would be way above 10%, but H2 will be at 10% indeed or above.
Okay, my second question had to do with the net staff increase in France. I know that there's the offshore nearshore effect in France. But is this figure something that you projected, and how would you qualify something that surprised you happily or unhappily?
Do you have any idea about the departures, the turnover at the end of June, the attrition rate?
For the time being, I don't have any visibility for people leaving the company at the end of June, but for France, Q2, we believed that in net figures we would have a higher progression. We have a certain number of sectors, including nuclear, not to name it, where we are under what we need. For France, we have a departure rate that is high, and so we are affected by the hiring momentum that's very complicated in France for the time being.
You had a turnover rate that was very high last year as well. What changed?
Well, nothing changed except that we...
The momentum was about the same, but for Q2, we recruited not as many people as we wanted to recruit, and we lost a few more people than we hoped. Overall, in net figures, it's a discrepancy of 200 people, but at the scale of France, it's not that considerable either. The fact is that it is disappointing.
If I may, one last question. For several years now on work packages, you had an increase of your productivity levels, and so is this a trend that's ongoing or do you think that it's maybe slowing down? How does it play into this new environment with business levels that are more standard? Is it one basis points that we're gaining every year, or could it be higher than that?
What are the zones where you have more to gain? Is it more international? Is it spread out more evenly?
Productivity on projects is an ongoing challenge, I would say, because on projects you have to gain in terms of efficiency, on management of premises, on the makeup of the staffing of the teams, et cetera. We're improving year by year. We're going to gain in terms of project productivity in this current year compared to the previous years. We're going to continue making increases in the years to come. But we're not going to gain so 100%. But as you said, it's around the range that you mentioned. It's about 20 basis points from one year to the next.
It's not spectacular, but when you look four years back, we did improve our project management significantly.
Thank you, Bruno.
You're welcome, Derric.
Thank you. We don't have any questions for the time being. Ladies and gentlemen, for your reminder, if you want to ask a question on the phone, you have to dial zero one on your keyboard. Hello. We have a question coming in from Mr. Marcon.
You have the floor. Yes, sorry, I forgot one. You said between -70 to -80 basis points on direct margins. What's the price hypothesis, that's price assumption that you took for 2022 to calculate this? The price effect, you said something about the prices, and you're not reaping all the benefits for 2022 in this respect.
Is this a positive effect in 2022 that you're going to still take advantage of in 2023? Are you going to take advantage of the efforts that you're making now in 2023 as well?
Okay, the way we work is a bottom-up approach, and we are not taking assumptions of price increases just like that or salary increase assumptions either. The fact is that there's a process in which from a snapshot of the situation to date, which is a mix of remuneration and financial sales prices, because in sales prices you have the financial and commercial sales prices that are not necessarily the same for projects. All companies have operations projections, and calculate ultimately a gross margin on these projects that take into consideration the embedded elements.
We have six months of embedded operations. When you see what happened over the first 6 months, there is necessarily what's going to happen in the six following months. Putting aside the utilization rate issues, et cetera. A big part of the business for H2 is already engaged. This could have an effect quite peripherally on the remuneration to price mix. We don't say we reduce the prices by such, and we're going to look at what happens. We have an increase of average prices per types of offerings, and when we have price increases on work packages, the translation into the gross margin is not the same as in technical assistance projects or materials, for instance.
This is the way it works. From there, to answer the second part of your question, the prices that increase this current year are going to have an effect next year, but the remuneration rate has increased as well. In reality, if the result of our price or remuneration negotiations, and again, we haven't managed to put through price increases everywhere, even though we did put a few through and for significant customers. If the end result is a degradation, well, this degradation of the gross margin is going to be embedded for 2023. For this to be improved in 2023, we'll have to manage to put through price increases additionally.
This should be done because some customers are a little bit reluctant the first year, but end up having to face reality because otherwise they have trouble finding resources. From there, the question that was going to be going to come about next year is what's going to happen for remuneration. If activity slows down, there's gonna be less sales figures, less hires and less momentum. Customers are very, you know, touchy on prices, but on remuneration, they aren't quite as sensitive. In terms of slowing down of activities could be almost so something that we wish for to cool down this momentum.
If we manage to put through price increases in 2023, and we have remuneration increases as well, it will bring back gross margins to where it was in 2021. Let me remind you that in 2021 we have 11 basis points that I reminded you at the time that it wasn't standard over a full year, because we had an increase of gross margins with fundamentals that improved because we had a few price improvements. Not generally, but we did have price increases at the end of last year, and especially quite rarely for certain customers when there was a salary freeze in 2021. Then salaries started increasing again as of H2 Q3 of 2021.
At the beginning of the year, it was, you know, COVID was in full swing and, the time was not for salary increases. Going back to gross margin levels that are more consistent to our standard gross margin levels, and so we do have a mix effect. It's not the price remuneration effect, if I may. There's the JO effect.
No. Are you talking about the Olympic Games or there's a misunderstanding here?
We do measure this, and we weed out the different factors to have as clean of figures as possible.
Thank you for your answer, Bruno.
Thank you, Derric. Thank you.
We don't have any more questions. Okay, we can bring this conference to a close.
Thanks to all for participating and for listening to this conference of results. End of June 2022 by Alten, and we'll have the next publication on the twenty-second or before opening on the twenty-first. Let's meet again end of September. Have a very good summer.
Thank you, ladies and gentlemen. Thank you for your participation. You can now log out.