Good afternoon, welcome to the Alten conference on the turnover for the third quarter 2020. I'm going to give the floor to Bruno Benoliel, the Deputy General Manager. Over to you.
Good afternoon, everybody. Thank you for attending the conference organized by Alten for the publication of our activity at the end of the third quarter 2020. Hopefully, you have received the press release that I just received by email. As we said last month when we published our semestrial accounts, the recovery after the lockdown in Europe is quite heterogeneous, but it's very weak. We cannot talk about any recovery, but it's very progressive. There's a lack of visibility in sectors like automotive and aeronautics sectors that are still strongly impacted. The activity at the third quarter was slightly higher than Q2, and we expected an improvement for the third quarter.
At the end of September, the turnover at the end of September is EUR 1,764.6. It's declining by 8.9% compared to end of September. It is declining. In France, the activity has declined by 18.2% and outside 1.6%. Acquisitions which have contributed up to EUR 54.4 million have made it possible to have a positive contribution to the overall contribution up to 2.5%. The exchange rate over the first nine months of the year has slightly penalized the activity by 0.15%. On like-for-like basis at constant scope and exchange rate, the activity is declining by 11.3%, 17.9% in France and 6.9% outside France. As I said, the end of the lockdown has not made it possible to resume normal activities, far from it, whatever the sectors are considered, and there's a lack of visibility for most of our customers.
At the third quarter, the activity declining by 18.4%, like in Q2, 27% in France, 12.4% at the international. On a like-for-like basis, the activity is declining by 19.4%. This year, we have forced employees to go on holidays, and therefore, they have done it. It accounts for one point of activity, meaning that, otherwise, our negative growth would have been undermined by more than one point, which does not change anything about the activity of the group. The activity rate has recovered, moving from 77% during Q2 at 84% during the third quarter, which is much under the 92% rate. At the end of September, it is 84% versus 91.8% last year at the same period of time. The furlough has been maintained when possible in many European countries, mostly France and Germany.
All geographical areas included, the staff, which was at 13% in furlough, has been reduced to 8% during the third quarter, mostly thanks to the fact that employees have gone on holidays. While our staff had continued to grow till the end of February, we were about 33,000 engineers. Since March, it has been reduced progressively. At the end of December, there were 32,750 engineers. At the end of September 2020, Alten has 34,000 employees, including 30,000 engineers. Outside acquisitions, the engineers would have been 29,600, which is 2,690 less people. At the international level, the situation is very different. We are going to start talking about France. The activity in France has been strongly penalized during the third quarter, -26 points, because of the automotive sector and the aeronautics sector.
In the automotive sector, which is 14% of the turnover, it has declined by 33% in France and 40% during the third quarter, which is slightly better than during the second quarter, which was -45%. The aeronautics, 22% declining by 30%, -50% in Q3, which is less than Q2. We'll see the same thing in Germany when we talk about it. Civil aeronautics is the only sector which is decreasing between Q2 and Q3. Energy in France, thanks to the nuclear industry, is doing well. Same thing for the rail and naval, life sciences, and telecommunications. The problem is mostly focused on the automotive and the aeronautics sector in France, but everywhere in the world. At the international level, the activity is also being affected by the crisis in a different way.
The activity is only declining by 6.2% in cumulated data and 14% during the third quarter as a consequence, where in some regions where the automotive and the aeronautics sector are very strong, the decline has been stronger. In North America, the U.S., which accounts for 85% of the North American sector, the automotive 19% of the turnover, oil and gas 15%, and even the tertiary finance, where we have consulting activities, 29%. They've been strongly impacted during Q2, -30%, and there was no recovery during the third quarter. We have -20% for the quarter. Canada is resisting better. 15% growth, thanks to the tertiary sector on more traditional activities in the banking sector, +20% for a sector which accounts for 45% of the turnover. Telecommunications, +30% of growth, it accounts for 20% of the turnover, and life sciences, +90%.
The sector accounts for 10% of the Canadian turnover. To the exception of the aeronautics, which accounts for 13% of the turnover, which is declining by 10%, all sectors are growing. In Germany, the activity has declined by 22%. This has increased during Q3, as you can see in the appendixes that have been sent to you. Hopefully, you have received that. The decline is 34% in the third quarter. The activity has not resumed in the automotive sector. It's still -35%. The sector of activity accounts for 45% of the activity of the country, the aeronautics has strongly declined since it was 40% during Q2, and now it's almost 60% at the third quarter, which is -30% in the year to date.
The automotive and the aeronautics sector account for 60% of the German turnover, but their decline rate is so high that the German performance is an issue. The other sectors, energy, life sciences, tertiary finances, they are growing by 20%. In Scandinavia, the activity on a like-for-like basis is declining by 18%. In Finland, the activity is declining by 8% since the goods sector has declined as well. In Sweden, the activity has been reduced by 20% on a like-for-like basis. The automotive and the heavy vehicle sector is declining by more than 40%. The industry and telecommunication sectors, which accounts for 10% of the turnover, are declining by 14%. In Sweden, 50% of the turnover is declining. It's a strong decline, and it does not compensate for the growth experienced by other sectors of activity. In Spain, the activity has only declined by 4%.
All sectors are growing to the exception of the defense and security sectors. In Spain, Airbus Defence and Space are part of that sector. That's why it's -17%. It accounts for 20% of the turnover. The automotive sector, we're not very much present. It only accounts for 3% of the turnover, and the rate is what we see everywhere else, which is -40%. All the other sectors are strongly growing. In the Benelux, the activity is slightly declining, -3%. In Belgium, it's 6.5% because of the tertiary sector. In the Netherlands, the opposite. The activity is growing by 3% to the exception of electronics and semiconductors, which could seem to be surprising. They account for 25% of the turnover. All sectors are growing. In the Asia-Pacific, the scope has continued to grow.
The growth of the area is driven by India, where the local activity has continued to develop EUR 30 million of turnover for the local Indian market. It's a 10% growth, notably in the sectors of semiconductors, electronics, and the semi-tertiary sector. China, EUR 20 million of turnover at the end of September, is declining by 9% because of the automotive sector. The activity has recovered in China during the third quarter, including in the automotive sector and in a stronger manner than anywhere else. In Italy, the activity had slowed down 8%. In Q3, it has recovered. To the exception of telecommunications, all sectors are growing, including the automotive sector, which is growing by 5%. It accounts for 10% of the Italian turnover. In the U.K., a very dynamic strength till the first quarter has stopped brutally.
We have declined at -23%, and a sharp drop during the third quarter for the aeronautic and the automotive sectors. Same thing, they are strongly declining during Q2 and even more so during Q3, even though other sectors are growing. When we look at the activity per sector in a vertical manner, overall on a like-for-like basis, the automotive and the aeronautic sector are still the dark point, but the other sectors are declining, with the exception of the rail, the naval, and life sciences. Very briefly, one word on the sectors of activity that we are working in the automotive, 17.3% of turnover is declining by 28%, 36% on Q3, -40% in Q2. To the exception of here in Italy, all customers are declining, plus Daimler, which is stable.
The activity in the automotive sector should be resuming progressively, but we do not anticipate any real recovery before spring or summer 2021. The rail and naval, still growing 4.7% of the turnover. The crisis has slowed down the activity in Q2, but has resumed in Q3. The aerospace, 12.8% of the turnover, has declined by 38% with a strong decline during Q2, -38%, and it has been amplified -50% in Q3 at Airbus more particularly. This is the only sector which keeps declining between Q2 and Q3. Many projects have been canceled, and we have no visibility about when the activity is going to resume, but it will probably be a long time from now. We only have a decline for defense and security, which are declining by 7%. They've been impacted during the second quarter, which was at -13%.
The activity has slightly recovered in Q3. It should speed up because budgets have not been reduced. Energy, 12% of the turnover, growing by 7%. In energy, we have oil and gas, which had recovered. It accounts for 5.5% of turnover. It's been impacted by the crude oil price. It is declining by 10% in Q3. The nuclear industry is growing by 16% with nice prospects. Energy equipment progressing by 7%. In life sciences, 8.6% of the turnover. The growth is 8%. The pharmaceutical industry is growing. Also medical equipment, not so much. We believe that the health environment is going to lead to a recovery. Other industries, they account for 5.6% of turnover. They're all declining. We thought they would resume and recover quicker. Telecommunications are slightly declining, -2.5%. The activity is resuming. The 5G should sustain the activity in 2021.
The electronics and multimedia activity is still declining by 15% because of the fact that projects at Amadeus have been halted. We had many consultants there. Finance, treasury account for 20% of the turnover. It's a slight decline, -3%, because of the retail and services activity. The banking and finance insurance business is resisting quite well. Hopefully, I've given you a comprehensive overview of our activity at the end of September. I've tried to be very concise because I think you have another conference behind. A few words about the external growth. We have had other acquisitions at the international level with a German company specialized in engineering consultancy, working mostly in the automotive sector, but also with some references. The turnover is EUR 19 million, and we've taken 10%, and the option is to increase by 2023.
We have transferred two companies that were not strategic, one in China in the automotive sector because we thought that the activity was not promising. It was a EUR 6 million turnover company and 160 consultants. A French company specialized in an activity that we had developed for a few telecommunication operators. We found a partner, and we've transferred the activity to that partner, and if we need to do, we will subcontract if necessary. It was an EUR 8 million turnover company with 300 technicians. In some sectors, we don't have any visibility. Hopefully, the second wave will not slow down the recovery. In June, we had anticipated a decrease rate that would be similar to the second quarter. It's been confirmed during the third quarter, and in fact, it should be the same thing for the last quarter.
We believe, as far as prospects are concerned, that the turnover should decline by 13% in 2020. If I may, I'm going to give the floor to participants so they can ask questions.
If you have a question, please dial zero and then one. Zero, one on your keyboard. We're going to wait so people can ask questions. There are no questions at this stage. If you have any questions, please dial zero and one. One question from Alexandre Plot from CIC Market Solutions.
Good afternoon. Can you hear me?
Yes, very well.
Yes. Good afternoon, Bruno. In fact, I have two questions. I would like to come back to the decrease of the growth. I heard 36% of decline in the automotive sector and 28% for the aeronautics at the group level. We're talking about the negative growth.
In terms of cumulative data, the automotive sector is -28%, and the aeronautics is -28% as well at the group level. That was the first question. Second question, regarding the difficulties in Germany. You said that in the automotive sector and the aeronautics, you were not seeing any recovery before summer 2021. Do you think that's something that could be spread to other regions than France, in regions less exposed to those automotive sectors, for example, like a recovery in Italy that would be slower as well? How do you see the two first quarters of 2021? Are you talking about the automotive sector in particular, or generally speaking?
For the automotive sector. The possibility to see Italy being affected and, in a more general way, how the German situation could spread over other regions.
Well, what we think, that in Germany, the sector of activity has been strongly affected because they were strongly dependent on the automotive sector and the aeronautics sector. We should not think in terms of geographical area, but rather in terms of sectors of activity. In fact, what we see that there is a correlation of one between countries with the strongest decrease, with an exception, which is Italy, where the automotive sector is not doing so bad. I have no explanations for that. I don't know why at CSA we're still growing. There's still a high level of activity. We are working on the same sectors where we are working somewhere else, and the budgets have been reduced.
To the exception of FCA, which is a positive exception, all the other automotive accounts, with the exception of Daimler, are declining, but in the same order of magnitude, 30%-40% over the past few quarters. As long as the automotive sector is not recovering in Germany, but we have started some type of diversification, but we are on smaller sectors, even if there will be other developments that we have not looked for yet because we had a strong demand in the automotive sector. In Germany, those are two big sectors that are being affected. As long as the automotive sector does not recover, we are not going to see any positive growth rates in Germany. Otherwise, we'll have to wait till the end of next year, then we'll benefit from base effect.
What we're looking at, we're looking at the sequential growth from one quarter to the other in order to be able to identify the change of the curve. We haven't seen anything like that so far in the automotive sector.
One last question about acquisitions. I did not hear. You said something about the German company. Are you talking about another acquisition in Germany?
I wanted to talk about a German company. It's a company where we only hold 70%. The turnover is EUR 19 million for 2020. The EBIT is higher than five, which is very good for Germany. About 200 consultants are working for that company.
You're still the flagship of the group?
Yes, absolutely.
That's it. Thank you.
Thank you. Have a nice evening.
Next question from Gregory Ramirez.
Yes, good afternoon. Bruno, I had a question regarding the cost management.
We have more negative growth than what was expected. Of course, the activity rate is starting again. Furlough, you said that people were taking their holidays. Could you please tell us about what could be anticipated in terms of % of the payroll that is on a furlough? How can we tackle with 2021 with almost no visibility and the trend, from what I understand, being slower during the first semester than what was expected?
As far as cost management is concerned, we do reduce as much as possible, even if for the premises, we have some commitments on longer periods of time than the ones that we need to adjust. Furlough, we still have furlough employment, and it will continue in 2021 in France, in Germany, and in the U.K. I don't know if we're going to continue in Spain because we don't have many people left.
Q3, we have 8% of furlough activity and 5%-6% at the group level for Q4. This is the result of the resumption of activities. People are getting out of the furlough and also attrition of the staff. Since we have less employees, we have less furlough. Proportionally, our structural cost, everything that is downstream, the gross margin are higher. We have very, very low visibility during the first semester of 2021. There's no need to do the better calculations, but we've given some recommendations to reduce costs. We are revisiting and looking at transformation projects, but the lack of turnover is the reason why results are strongly penalized, because we're losing in terms of margin and the inter-contract rates are bearing upon the group. We have a reduction of the inter-contract rates.
It is a progressive one, but when we look at the end of the year, it's quite encouraging. We will have three hard points left, one in Germany, in the north. Three painful points because the Airbus activity has collapsed, of course, in Toulouse. Hopefully, we'll come back to the standard inter-contract rates at the beginning of 2021. In France, the Nice region with Amadeus and in Nantes with Airbus. It's very much focused. In a surprising manner, people are still resigning. Progressively, we see the headcount being reduced in those areas which are complicated areas to manage. At this stage, there's not much left to say about 2021 because we have almost no visibility, and we haven't started any simulation yet. The good news, if I understand, in Toulouse, the good news is to find new projects for consultants.
Yes, we've managed to find new projects to the exception of the aeronautics sector, but there is a reduction of the inter-contract rate, which is due to the fact that some people are resigning. Since the beginning of the year, we've lost 1,450 people in France on a like-for-like basis. It's huge. It's almost 10% of the headcount of the engineers since the beginning of the year.
Thank you, Bruno.
Thank you.
Next question from Stéphane Fraenkel from Exane BNP Paribas.
Yes. Good evening, Bruno. I had two questions. The first one is about the acquisition strategy. I think you've mentioned that you wanted to add 1,500 engineers by the end of the year in the acquisitions. We've seen that there was an acquisition in Germany. Do you still intend to add acquisitions for adding up to 1,500 people by the end of the year?
Yes, we still have the same objective in terms of headcount. We have acquired a little company in Germany. There are other companies where we've signed LOIs, and we are in the due diligence stage. It doesn't mean that they will be acquired necessarily, but I'm hoping that we'll manage to keep that objective. The companies that are in the due diligence stage, one of them has more than 1,000 employees. I cannot talk about it because we're still in the LOI, but hopefully we will close that deal, and if we do, we'll close by the end of the year. 1,500, 1,200,
does that include the people who are going to leave with the transfers, or is it a net figure?
It's a net figure.
Okay. Second question about the fourth quarter.
You said there was no visibility for 2021, are you waiting for an improvement during the fourth quarter? With the new health trends in France and the rest of the world, do you think it's going to bring a little decline, maybe not for the turnover in Q3, but as far as the forecasts for Q4 are concerned?
For the last two weeks, we've seen an increase of the number of bids and consulting processes, not only in France, but a little bit everywhere, in all sectors to the exception of the automotive and the aeronautics sectors. It's quite encouraging since it is confirming the fact that at the last quarter, we should start seeing the activity recover, and we should see an increase of the activity.
We don't know what will be the new health measures, and we don't know whether they are going to have an impact on the activity or not. A great share of our commercial activity today is still done by video conference. Many customers don't want to have any physical meetings. If we don't go back to strict lockdowns, we should be able to continue our activity if customers are still there, and if they don't anticipate any reduction of their own activities. Today we do see customers with different budgets, and they decide to use their budget in a very partial way. When we negotiate the RFQs, people have no visibility about the budget in 2021. We do manage on a daily basis.
We're lucky enough to be in a business whereby the decision-taking at the customers are quite quick, and so we can assess very quickly how the activity is going to evolve. You said that over the past two weeks, well, you were seeing in fact, you're closing deals, basically.
Okay. Very clear. Thank you, Bruno.
Last question from Laurent Daure from Pierre Chevallier.
Thank you. Good evening, Bruno. There's one technical point between the acquisitions and the transfers. Are we going to have some consolidations? Everything was taken from the Q3. Second point. The policy in terms of headcount, could you please remind us of the number of engineers that you've lost during the third quarter? For the next six months, do you intend to see a reduction of the headcount? Or is it going to be reversed at one point?
The last point, are you starting to be able to compare with the second quarter of next year and to come back to an organic growth during the second quarter of 2021? Or is it too early to decide?
Answering the third question first, and it will give you some answers for the fourth question. Regarding the headcount, indeed, we've lost. In fact, we've gained during the first quarter of 2020, 115 people, which is not much in light of the size of the group, but we were in a positive trend. We're talking about the number of engineers because we only talk about engineers. They're the only ones to work. Q2, second quarter, we've lost 1,500 people, 620 in France, and the rest of it at the international level.
We've lost again 1,285 people during the third quarter, 720 in France, and 565 at the international level. We are going to lose again in the fourth quarter, necessarily. A net figure. For the second quarter 2021 to be higher than the second quarter of 2020, in view of the negative growth, we will have to have a growth that is going to offset the negative growth during two consecutive quarters. My feeling is that we're now going to reverse the negative organic growth during the second quarter of next year, unless we have a resumption of activity as early as the first quarter of 2021. We compensate at the end of the first quarter for the losses that we would have experienced during the last two quarters.
The problem is that since our inter-contract rate is very high, we're losing mostly engineers who are not working, and it is relieving the cost base, but it is not affecting the turnover. We need to look at the use rates and look at the equivalent of full-time equivalent that is being invoiced. I think that before the second quarter of 2021, and if the curve is being reversed, I don't think that we are going to move to a positive growth. The question about the headcount. Will the headcount continue to decline? It might be surprising to you, we have started to hire again. Of course, it is not being reflected in the figures because more people are leaving than coming in. We had stopped any recruitments.
Since there are new projects in sectors of activities that I have mentioned, where the activity has resumed, when we don't find the skills, we need to recruit. We have approved new recruitments specific to projects, and we do anticipate that we will continue to have a loss of the headcount till the end of the first quarter of 2021. The recruitment process is starting again. This is echoing my last comment. Since we do have significant pockets with high inter-contract rates, if people resign, or if they agree to leave, it's better to let the headcount being reduced. As far as the acquisitions and the transfers are concerned, the first company that was a Japanese-Chinese company because the front office is in Japan with 400 consultants. We have consolidated it starting April the 1st, 2020.
The acquisition was done at the beginning of the year. We did acquire a company in Korea that was not long ago. The turnover is EUR 21 million. They do software development. We have not consolidated yet. Hopefully, we'll be able to consolidate it starting January the 1st, their tools and their skills in terms of management are under development. The company that we have acquired, the activity, because it was an asset deal with a front office in the U.S. and a development base in Ukraine. That was a small company, EUR 7.5 million of turnover last year, they have reduced their activity because of the crisis. We have consolidated it on October the 1st, which is not usual. Usually, we do it the first month of a given quarter, it was an asset deal, we had no choice.
The German company that we just acquired will not be consolidated before January the 1st, 2021. The companies that we have transferred, the Chinese company, we did transfer it on July the 1st, 2020. The French company, we did transfer it on October the 1st, 2020. We took it out.
Okay. Thank you, Bruno.
You're welcome. Have a nice evening.
No further questions at this stage. If you have a question, please dial zero and one. No further questions. Any questions, please dial zero and one on your keyboard. Okay. No more questions.
Thank you very much. Thank you to all of you for attending that conference call. If you have any more questions, feel free to send me an email, and I will answer it.
I wish you a very nice evening, and we will meet again in January for the publication of the yearly accounts. Have a nice evening. Thank you. Bye-bye.