Earnings Call: Q2 2021

Jul 28, 2020

Ladies and gentlemen, welcome to our Alton turnover conference for 2020. I'm going to give the floor to Mr. Bruno Benoliera, the Deputy CEO. Sir, you have the floor. Thank you very much. Thank you for participating in our meeting for the the results of the first half of the year for 2020. Things started off very well, but then the COVID crisis, of course, had a major impact on us. It started off in Europe and then started off in China, then it came to Europe in the beginning of the year. By mid March in Europe, it hit Europe, and then it hit Asia and The United States and other parts of the world. The crisis, which was much worse in 02/2008, led to a suspension and the stop of projects, massive ones in some areas, much more limited in other areas. Alton's turnover for the 2020 was at $1,000,000,002.04 €0 compared with 2019. It was €1,200,000,000 €240,000,000 In France, activity dropped off by 14%. Outside of France, it increased by 3.9. Acquisitions, 39,200,000,000.0 in terms of contributions contributed to 3% to our overall growth. Exchange effects led to an increase of 0.2% per the half of the year. It's constant scope and for constant exchange rates and activities. The activities dropped off by 7.2%, and it dropped off by 13.7% France and 2.2% outside of France. During the second half of the year or the second half of the year, the situation in France and in Europe led to the setup of several projects in several different sectors despite the fact that we set up partial unemployment and distance work. Getting out of lockdown was something which was still very strict, but does not make it possible for us to return to normal activities for a number of practical reasons and also because several customers who are impacted by the crisis had no visibility in terms of what their short term activities would be like. So in the second quarter, things dropped off by 15.2%, by 20.2% in France and 5.2% at the international level. At constant scope, the activity dropped off by 18.227.9% in France and 11% outside of France. Quite predictably, as I said back in April, our activity dropped off in the second second half of the year. It was at 77%, whereas it was at 90% for the previous year. This is something which Eldon has never seen before. This is the worst possible situation that we've ever been in, and it dropped off very strongly since the beginning of the year. During l two SGO twenty twenty, it's the was at 92%, whereas was 83.9% during the 91.9% during the last year. If we look at the context, it's, I think, worthwhile saying that in addition to what we did last year, we were able to improve at the international level. The 2020 was one thirty eight point nine working days compared with a much higher number for the previous year and one hundred and twenty five point nine compared with a much higher number last year as well. Overall, this year, we had an an additional working day and a half, I think, compared with 02/2019. Given the weak activity and everywhere where this is impossible, we have set up partial layoffs for our workers to try to mitigate the effect of the COVID on our workforce. We reached nearly 30% of layoffs during the first half of the year. And despite the fact that that we had continued to hire people until the February, 32,000 odd engineers at the February, another 500 compared with the previous year. We saw a strong drop off, and we also decided to freeze hiring at that point as well. The staff was brought down to 31,440 engineers out of a total of 36,500 associates, including the acquisitions done during the first quarter, whereas last year, we had 37,200 associates. And if I look if I forward through the acquisitions, engineering associates are at the 3,190 collaborators or a drop of 1,500 people, 785 in France, and 1,500 associates outside of France. Outside of France, the situation is very varied. If we look at our activity at the end of the month of June and if we look at it by geographical zones and we begin with France, we'll see that this represents 40 of our turnover. The activity was much lower than it was by 27%, as I said to you earlier, primarily due to automobile and aeronautics activities. For the first half of the year, we dropped that by 13%, a bit better than what we thought we would have seen back in April when we talked about a drop of 15%. Automobile, up by 14%. It dropped by 20% by 40% during the second half of the year. Aerospace Aeronautics, 24% of our turnover for France. It dropped by 18 for the half of the year and by nearly 40% over the second half of the Energy, and thanks to nuclear, 50% of our turnover. Naval and rail, also a drop down, but they're beginning to pick up and they are beginning to recover nicely for the main sectors activity. France is the country which is the most impacted upon by the COVID and our activities, primarily in heavy industry, followed by Germany and Sweden. The contribution of automobile and aeronautica also explains this situation to a large extent. We have had to stop and suspend a number of projects in France. We've also had to do this in ASD, automobile, and in tertiary, primarily for Amadeo. So we dropped we lost about a 100 consultants. For defense, are you need to come back very slowly, slowly, just like in auto and in aero, where they are beginning to come back slowly as well. At the international level, the activity was, heavily impacted by COVID, but much less so than in France. Overall, the activity dropped off by 2.2% at constant scope for the half of the year and 11% for the second half of the year to be compared with the second drop of Q2 of 27% in France. But the situation is still very different from one country and one geographical zone to the next. In North America, the activity grew by 7.5, and it's stable at the organic level as we foresaw back in April with a rise of 2.2% this half of the year despite a drop off of 13% during the second half of the year. In The United States, 85% of the North America zone activity dropped off by about 3%. It was marked by a strong drop in auto activities by 18% in The United States. Automobile had risen by 25% during the first half of the year, and it dropped by 30% during the second half of the year. In the tertiary sector, the drop was fairly gentle. All of the sectors were impacted upon, including aerospace in Canada and 50% of the North America zone. Activity rectified 15% by tertiary sectors, telecoms and aerospace. In Germany, the activity dropped off by 12%, but 16% organically, a bit better than the 20% which we foresaw back in April. The country was exposed at the automobile level. This was about 25% of the activity and aerospace, 30% of Germany's turnover. Let's say, we're hard hit by the sanitary crisis. The organic drop in Germany was 25% for the second half of the year second quarter of the year. And the activity dropped off by 24% in the automobile sector and 33% in t 220% in aeronautics. Only exception was aeronautics. 4% of turnover. Life sciences also dropped strongly 11%. All the other sectors are doing fairly well in aeronautics and automobile. The visibility for the same reasons, it was as low as in France and Scandinavia. Activity at the perimeter and a cost of perimeter change was much lower than initially expected in Finland, which represents 20% of the geographical zone and dropped by nearly 3%, primarily in the area of industrial goods, which represents 75% of the Finnish turnover in Sweden, which represents 80% of the Scandinavian area. As you know, the major sector is the automobile sector and the truck sector. This represents about 35% of the turnover. And this sector was also hard hit by the crisis. This split to the stoppage of a number of sectors in March, and the sectors dropped off by about 40%. Yeah. In the tertiary sector, 20% of turnover and 7% in telecoms, down 11% making up 10% of turnover. All of the other sectors are have increased in Scandinavia. Spain, despite the health crisis, which began earlier in the month of February and very strict confinement measures, some of these are still ongoing, activity went down only by 3%. This is essentially due to the defense and the spatial aerospace sectors representing 18% of the Spanish turnover, which is down by roughly 30%. It is also due to the auto sector, which is smaller for us, representing 5%, a downturn of 40%. And this can be found in a similar way across most countries in Europe and also in The US. In the defense, aerospace, and auto sectors, a lot of projects have been either suspended or halted altogether as in other geographic zone. Q2, this represents roughly 20% of the Spanish turnover, but in all other sectors, there is growth of 80%. Benelux, a downturn of 1.6%. In Belgium, activity has gone down by 6.3% as we anticipated, and it's actually due to the tertiary sector representing 15% of the Belgian turnover. In The Netherlands, there's been a downturn of 3% from semiconductors representing 7% a quarter of our Dutch turnover. In Asia Pacific, the perimeter continues to grow. The growth of the areas in this area is driven by China. China is down 13% because of the confinement measures between January and March. The situation has gone back to normal, especially as regards the figures for the auto sector. So figures still down, although we were expecting him to come back to a much more normal normal situation. In Italy, there has been remote working has been organized. The growth the growth fell 8% in Q2. And across the first half of the year, there's been an increase in activity of 11.3%, especially in auto, 2% growth. It is low, but it deserves being pointed out. 18% of turnover. Aerospace and defense ASD represent 25% sorry, 11.9% of turnover. In The UK, 34%, so another abrupt stop in the second in in Q2 as anticipated. In ASE, twenty three percent and twenty four percent respectively. Turnover is down 20%, all of this representing roughly 60% of turnover, down heavily in Q2 even though other sectors are increasing considerably. Considerably. The downturn here risks becoming structural. So by activity sector, like for like, as with our competitors, the auto and civil aerospace sectors have been very hard hit by the crisis. The other sectors are seeing a downturn at the except for rail, naval, and life sciences. In auto, 17.5% activity is down 25%. We're down that's for the first quarter down 40% in the second quarter. All of our customers are down between 1535% with the exception of one client in Germany and Tadler in The UK. Activity is picking up very gradually since the it's been doing so since the month of June, but we won't see the same levels as before the crisis and probably not in the auto sector before the 2021. Down still nine down 9.9 in the naval sector. And automotive, we're still waiting for activity to pick up in the middle of later this year. In aerospace, 14.3% of Altense turnover, down 15.6% in Q1 and down 38% in Q2. The health crisis has significantly impacted the airline sector has had knock on effects. Lots of deals have been put on standby, and we have very little information visibility as to what's going We are very far away from the pre crisis levels. There's a lot of activity on standby compared to the situation at the beginning of the year. The ranking of projects, in particular with Airbus, is still being worked out, but we still find that same number of projects will not be maintained both in civil engineering and other engineering. The levels post crisis levels down 30% compared to pre crisis levels is becoming outcome. We're looking at a return in around 2022, but growth in 2021 should be roughly 10% compared to the current situation. Defense and security activity representing roughly 5% of our overall turnover is down 4.4%, having been impacted in Q2 by projects being stopped. In this sector, things should pick up rather quickly. In Q2, we were down 13.5%, but budgets have not been cut significantly. Energy sector, 12%. This is down of our turnover down 11%. We've gone returned to growth, but this has been impacted by a fall in the cost of crude oil. Growth maintained at around 18%, thanks to EDF activities, and we believe this should be maintained or continue to grow. Life sciences, representing 8.2% of L10's turnover, has grown like for like, 10% in the first half of the year, even though it slowed down in Q2. This should pick up again and continue to increase in the current health situation. Other industries represent 5.5% of turnover, equipment goods construction and others down 15% in the second quarter, down 10% overall for the first half of the year. We're looking to see a bit of a bounce back. Telecom, around 10%, so it's 6.7% of turnover, down 8.7%. Networks and the modernization of network system growth here network. And a lot of demand here, thanks to things being migrated into the crowd into the cloud. Media down 8% with Amadeus and their request for software. We've had to let go of around a 100 technicians and consultants. And without a return of activity in the aeronautics sector, this will be difficult. And semiconductors, again, that we hope to have an increase here tertiary sector roughly 3020% retail and services and public sector banking and finance have continued to grow an increase of 6%. So that is the overall panorama by activity sector. For the 2020, we have continued our growth activities by sector. Agreements that were signed at the 2019 have been put on hold. We wanted to have greater visibility about 2020, but we have finalized the acquisition of two companies in Asia who have been very lightly impacted, 400 consultants. It's a Japanese company with 400 IT consultants and with project teams in most of them based in China. Software development and IT, 18,000,000 in turnover. The profitability is not very high. We hope to improve that. And it's also a Korean company with 300 consultants with 21,000,000 in turnover, specialized in software development, CAE, and PLM. So there are also a number of other companies that we are looking at at the moment. Difficult to set the price because, obviously, 2020 is turning out to be a little bit of an inconclusive year, but this should be finalized by the end of the year. So in terms of outlook for 2020, there will probably be more external growth to come. In terms of activities, specifically internal or organic activities for Alton, even though almost all of our engineers can work remotely if the context allows, the global impact of the pandemic and the crisis does not create conditions for and return to ordinary levels of activity. Strict consignment measures means that number of clients have either closed down their sites or suspended all their activities during this period. We have number of projects that are going to be scaled down or stopped altogether. Air Transport and Associated Services along with civil aeronautics have been very strongly hit and will be strongly hit over the midterm. Our clients are seeing significant falls, cash flow problems in the mid to short term, and a number of other sectors have decided to limit many of their projects specifically in engineering. We're currently looking at inventories to see which are the priority projects, which ones are going to be continued, and some of them are simply going to be halted for budgetary and cash flow reasons. Other clients in other sectors are not doing so badly, and they have indicated that they are going to look to reduce their budgets in light of the economic crisis that is probably to come. A number of our major clients, specifically in the sectors that I've already mentioned. June and July saw things pick back up a little bit, but things are not going to really pick up until Q3 and Q4. Some sectors are going to have to start from zero, and others are going to continue to drop off. So we need to have a very prudent outlook for the second half of the year. I think there's going to be a drop in the number of contracts. I think that what we can say with certain caveats because we don't know the situation because our customers don't know their situation, their what their budgets are going to be like, what their financial situation is going to be like. Therefore, it's difficult to really see anything with any certainty. But I think that what we can say is that with what we have seen at the June and seeing how many projects stopped at the end of the half of the year and the number of paid off time for Q3, which is higher than what we saw in earlier years. So you guys have a certain number during the summer, especially the corrected margin. Is going to lead us to a relatively unfavorable situation. And so I think we're going to see a a drop in activity for the second half of the year, which is going to be very similar to what we saw in the first half of the year for 2020. That's going to lead us to a drop of activity of about 12% with constant scope and change. We'll go back over these figures, of course, when we have our meeting in September. So we'll have, I think, more recent information to provide you with at that point. But for the time being, what we've seen from the situation is that the situation is far from being terribly rosy. I'd like to now give the floor to any participants because I imagine that many of you have questions, and I'll be happy to take any questions that you might have. Ladies and gentlemen, if you have any questions, please dial 0101 on your phone keypad. We have a question from Laurent Dore. Good afternoon. Laurent. To try to understand what's going on better in q two. At the June, you say that things are beginning to pick up. I think we need to look at that in more detail. And I'd like to talk about the second half of the year. Some things are very difficult, but I think there are also a number of things, a number of positive points. What do we what can we expect? Which what what what can we expect in in telecoms? In terms of costs, I imagine that there are any consequences. Are prices going to be guaranteed through until the end of the year? And what kind of measures do we have in terms of restructuring? What kinds of measures are you thinking of taking in order to keep the margins at an acceptable level? Okay. I'll try to answer that question as it was put to me. The utilization level was a bit lower than 70%, lower than what we saw for Q2 at the June. We are up to 80% 81%. And so that wasn't a very strong uptick. We expect an increase in the rate between 8789% at the end of t four. There are two ways to do that, and they're not extremely exclusive. The first is the most virtuous, which is to increase the number of projects and try to increase our activity. The second possibility is to is to reduce our our our cost and to reduce our headcount. We've been able to improve things primarily by by reducing our headcount so far. We've dropped about 20% in terms of we've dropped down to below turn 20% turnover. And we've also been able to increase our activity, which means that we've been able to increase the number of projects that have been undertaken. Now I'd like to move on to the third part of the question because that'll make it possible for me to bring this all together. We thought, and this is what we saw, fact, in back in April, we were perhaps a bit naive back at that point. But we had very good activity in terms of the second quarter. We thought that people will be looking much more closely at the projects and their budgets, especially in the two sectors of which were the most affected, aeronautics and then auto. That's not, in fact, what happened. And there are a number of projects which have started back up again, unfortunately, but the sales activity still remains fairly flat. Interviews not done face to face. Are some customers in some sectors who have not still, like, come back to work, and they're still doing their work at distance. They're having video conferences and things of that nature. And a number of technical consultants are still looking at their budgets. They're trying to figure out what they what they're doing, and so it's very difficult for us to know what they're going to do and what they're going to be doing in q four. Some clients have kept their production sites open, but they haven't kept production at the same levels as before the crisis hit. So what we've done today is to make a decision. Well, I'm not sure if this will be a case when we come back after summer. But what we're going to do is to try to maintain our headcount for the time being. We're going to try to continue to benefit from subsidies from the government, primarily here in France, in order to try to offset things as much as possible. In terms of our strategy, there are two ways to look at it. Either we can say that we're going to do do we have an a thousand people more than we need, in which case, it makes no point to have people working on a part time basis, or we can come up with a a some some kind of layoff plan. But this, of course, is going to have a cost, and and and the consequences are usually very heavy. And it and the situation is going to depend on what country and but it can take as long as nine months if you take the the French case, for example. Now we're currently talking with the authorities in France to try to receive some kind of assistance from the government as was the case for the aeronautics sector. And this will make it possible for us to not lay anybody off. Now once again, that's because we're going to have to have a higher subsidy subsidies from the state at 35, 36% as it was back in June. That's why you're gonna have to have it for several months as well. We're going to also have we might build these projects to use new technologies, so that might be a possibility that might make it possible for us and to keep the costs low for these sorts of things. This, of course, is going to have an effect on our margins. But in any event, in terms of cash, it's going to be lower. But it's going to also make it possible for us to maintain expertise within the company. And so we're trying to determine what solution is the best adapted to our situation, but we don't yet have all the information necessary to make that decision for the time being. And the hypothesis that we have been looking at at least from now until the end of the year is gonna be we haven't budgeted for We're going to try to keep people at work even if we have to keep them on partial layoffs, even we have to furlough them. And there are some sectors where where the situation is much better than the others, life sciences, for example, banking, insurance, and some industries as well. Customers have anticipated they anticipated the crisis, and they have reduced their budgets. And they did that once again by reducing their expenses. So even if there are sectors which have continued to grow, you might have to just be the case, but there's nuclear, for example, which has continued to grow. Nuclear always includes several different projects. These projects can't be stopped overnight. They can perhaps be downscaled a bit, but this is a sector which shows that how things can be done. There's also the banking sector. This is not all based on precise information we've gotten from our from our clients, where they say they want to reduce their budget by 20%, but we know that there are going to be a number of scenarios which are gonna be very similar to this. We know that there are going to be customers who are going to either retain their their their headcount or perhaps leave a few people off. But that basically is this kind of situation that we're in now. And so that's why we decided to adopt a cautious outlook. Solutions. I have a question about the things which you have put in place in order to deal with the crisis. I'd like to talk I'd like to hear a bit more about exactly what's been set up. Are certain number of costs that we're going to have to bear. Certain number of transactions are also transactions related to partial layoffs. All of the costs related to partial layoffs or or or furloughs, additional costs that Alton is having to bear because the fact is that the state is not covering all of the workers' benefits. First thing we'd add to ourselves is whether this is recurrent or not. What we want to do is to lead this in the gross margin. We're not usually confronted with pandemics on a regular basis, and so we're going to put this we're not going to put this in a recurring cost. We do have a number of other costs related to sanitary reasons, protect individual protective equipment, for example. This is something which should be very expensive according to the site that you're talking about. I don't have a list, but a number of different sites, of course, that need to have this kind of equipment. And this is it costs, I think, something like €4,000,000, at least in France. So I have another question. So that that that's quite a high figure So two other questions? Activity. Can we have a bit more information about that? And then also a point on the acquisitions. The two companies which we have acquired in this year, the first was consolidated on the April 1. And the second, if everything works out as it's supposed to, should be consolidated on the July 1. The the first one is the communications? Yes. For seasonality and the the margins? Our initial scenario is that there would be many more people who are leaving right away in a more organized manner given the level of activity. And especially, we thought that we would have a much clearer idea much more quickly of the projects of our customers. Now let me correct what I said earlier. When I said there'd be no partial layoffs in France, what I mean is that we're not gonna be doing that for the time being. But we had two in other countries. There was one there's one which is underway in Sweden. And because Scania, Volvo trucks, Volvo cars, there are number of projects which have been definitively stopped and which are never gonna start up again. And so that means that there are a number of people who are not going to be working anymore. And there's also been an impact in The UK as well because for aeronautics and automobile, we've had a number of projects which have been also definitively stopped. So that's going to be in recurring. This is not going to lead to very high sums. So it it doesn't give certain millions and millions of people or thousands and thousands of people either. Seasonality in terms of the margin. As through RSE as compared compared with with RS RS one. One, I think that we're going to be looking again at what kind of resources we have and what kind of resources are necessary to deal with the activity in a much more rapid manner. And we will look at the consequences of less fewer contracts and part time work. It does seem that there will be less current costs that we will see in terms of the decisions that are being taken. So at the moment, we have a fairly good view of what the margin will be, probably just possibly just over 5%, maybe even closer to 6%. And it will be lower than S2 to the second half of the year. Thank you very much for these answers. I will now hand over to any others. If you have any further questions, please dial 01 if you have any further questions. That's dial 01 on your handset. From Societe Generale, there was a question. Hello. Thank you for these questions. I have three. Firstly, on furlough part time working, have you negotiated the agreement covering the period from July to the September? Has that been finalized or is that still being discussed? And will this be the same as the one put in place for April to June? The second question, I don't know if you want me to ask all of the questions first. Yes. Please go ahead. I will do what the politicians do. I will make a note of your questions, then I'll answer all of them together. So okay. The second question then relates to the mechanisms for the Social Security payment, the national insurance payments, how that is going to work and sort of anticipating what you're going to say for September. Do you foresee a gap between customer payments and a PSO that will be in a less strong position than what you foresaw at the in June. Okay. Firstly, on part time work and furlough schemes, we submitted this. There will be a check later on. We have an agreement taking us through to the September for France and wherever this has been possible, in fact, and for all of the companies in the group, including Alten SA, which is the biggest company in the group. This is already in place, and this is very good. The rate of indemnities for this, you know, in fact, this has been reduced 60% of the growth. This has been scaled down. So residual costs are increasing 10% higher, an increase of 10% there, residual And this means that we have are forced to maintain 75% of the the growth cost. We will also have to submit another plan in order to have this prolong this will be have to be done by the September because it goes by period of three months. There is a 36% indemnity So, obviously, the costs there are even more significant at that point. There's no reason we shouldn't get this compensation measures because, obviously, a lot of people are are facing unprecedented situations. In terms of taxes and costs and everything else, we haven't delayed any payment. We have paid all of our National Insurance contributions and taxes as planned because given the cash flow situation, I didn't want to delay any of our obligations. There was no reason to increase cash availability when it's not really bringing us anything back at the moment. And clients, as regards to the stage, I mean, a different position, they are requesting extensions in their deadlines. So this will not I don't think we've seen in terms of impact in the first half of the year. But in the second half of the year, I think there will be payment delays which are going to significantly increase. We will have exceptional conditions that we're faced with in all all aspects. This could increase significantly the consolidation terms and the number of days. And, obviously, customers who today have postponed a lot of payments. This will this will be an impact on 2020, but not recurrent. If I can just add a further question about So the partial unemployment when you took that 13%, is that an average for T2, or is that where we are at the June? But, yes, that's an average for q two. And can you give us the figure for the June? And just so that I understand your reasoning, what is this figure going to be at the September? September? And and if we extend this partial unemployment furlough scheme well, for obvious reasons, I I would prefer not to give any detailed figures in in in this regard. The number of people in partial unemployment schemes is going down. The 13% that I mentioned is obviously an average for q two. This is to give you an idea that this it's not that we haven't given any information It is falling, but this is an average for q two across the whole group. This is not just for France. It is rather high in France. But do you agree that by the September, you're looking not to have 101010% in the prolonged situation. Yes. Absolutely. In September, there will be fewer people in partial unemployment furlough schemes than there are at the moment. I cannot tell you exactly what proportions this will be, but there will be fewer staff. I just wanted to have an order of magnitude 5%, 10%, 1% residual. There's clearly not going to be 1% residual between auto and aerospace. They're looking at thousands because if you're looking at more than 2,000, I don't think we will be done with partial employment by the end of the next quarter. Okay. Thank you. Well, when I have to say, when I mentioned the margins for Q2, I was taking into account the fall in terms of straight state contributions and state assistance, state funding for these employment protection plans. Very good. Okay. Next question from Stefan Bienfietaiba. Yes. Hello. Good evening, Bruno. I have a question about the customers in sectors with we're continuing to see a very low activity. How do you see their market share evolving? Will a project going to be relaunched in the second half of this year, the beginning of next year? Can we see an increase in market share here in terms of our competitors? How are things going? Are we going to be seeing losses in market share in this regard? Are you referring to to major accounts or to customers in activity sectors that represent a significant proportion of our activity? Well, just both of these, are there opportunities if our customers are looking to reduce the number of suppliers? For example, can we increase our market share and customer base? Well, there are a number of customers in a number of countries and or a number of sectors who are going to look to reduce their panel because if they try to avoid outsourcing given that, you know, they're going to maintain the number of reference to suppliers. That doesn't make sense. So there's probably going to be a a concentration a reduction in the range of suppliers that initially does seem favorable to us in a number of sectors, a number of customers. However, there is also an opposing risk, and I'm thinking specifically the auto client where the panel could be even more con significantly restrained and the number of service providers could be reduced, I don't know, three instead of six, and and there will be significant cuts there here. There is risk that we may not be ranked to tier one, or we could even go down to tier two or specifically where the margins are lower than average. So there are a few risks outstanding, but obviously where we have a strong market position because we are leaders or because we are in sectors that I'm sure you will be aware of, is small scale actors that are going to be hardest hit by this rather than ourselves. And is this something that we will start seeing this year already or next year? I think this will be for the rankings for 2021. Okay. Noted. Thank you. Thank you very much. Next question, Regine Tatjepoint. You have the floor. Good evening, Bruno. I have a couple of questions. First, on prices, you said that in this period of end of lockdown, do you have a little bit more visibility in the auto and aero sectors? And I think if I heard you correctly, you spoke about attrition of around 20% in q two. How do you explain that this rate is not a little bit sharper? Have you not analyzed the what happens to engineers that leave you and where they're going? Yes. In terms of prices, customers have asked for tariffs to be reduced. And so either this has led to discounts with customers where their activity is taken tumbled significantly, this is not an exception. So the only mechanism that can be put in place because even though there have been request for tariffs to be reduced, the only mechanism that can be put in place here have been incentive mechanisms. So discounts based on targets and conditional targets and conditional targets based on turnover and sales. So for 2020, we will see what the impact of this is in rankings in 2021, but they we have not acted on any price reductions. And then the attrition, any resignations, we will see the impact of this in q three. Q two the resignations here, you know, we were notified of this several months earlier, so there is a there is a a lag to be taken into account. And here, once again, customers or companies in other sectors. We don't have much detail about these departures in Q2, but it's pretty much the same pattern. So attrition, obviously, has fallen in June, but we'd have to look at the resignations for q two to see what this is going to lead to in terms of impacts in Q3. Jean Marcie. Thank you very much. Jean Petit from BASF. Good evening. My question has to do with aeronautics with the panels. Could you talk to us a bit more about what's going on in that sector? Exactly what the situation is like and whether or not that can mitigate the global R and D loss. Can you also go back over the activity rate? Because I'm not sure that I noted it down correctly. 77.5% was the activity rate for t two. And we anticipated 78%, so we weren't very far off. Now for the panels, for aeronautics, for for for making it through the panel smaller, I suppose, there are a number of things we might decide to put off until later. Referencing, we might put off until later because it costs a great deal in terms of effort and in terms of work, and there's a great deal of management that has to be done. And there's also a great deal that has to done in terms of RFI. And our major customers in aeronautics are in the process of reorganizing themselves. So the rumors that things are going to be offset a bit. The referencing in an event that that should have been launched before 2021, we're dealing with triannual referencing, and we're we're coming up to the time when we need to do that, but we might decide to put it off. Alton, in an event, is one of the largest players. I don't think that we're faced with any particular risks. There might be some tier twos that are not quite as used and which are going to have an impact on the purchases of tier one. So everyone's going to lose a fairly large part of their activity. But I don't think that that any of the major players are going to be leaving. I don't think there's going to be any major changes in what's going on. Nothing that we won't be able to handle. Nothing no major projects that are going to be stopped in any event. And then just a follow-up for Aeronautics. We saw the French government support plan. Is this having any kind of effect on you? And I'm thinking in particular of the fact that Airbus, for example, has decided to reduce its social plan. Is there going to be any kind of a reinternalization for this particular sector, do you think? I don't really think so. The projects that we lost were not lost because they were reinternalized. The the projects were suspended because Airbus is having cash problems and because they need to balance things. And so I don't think it's gonna have a major impact, especially since I don't know how the how much the plan is reduced in in France. But but I think that if we look at everybody, I don't think that it's going to concern an extraordinarily large number of people. But we've done reverse engineering, and we've, you know, tried to transfer the knowledge to the teams working at the internal level. One last question then. And concerning the trend to offshore offshore things. Things, We hear from time to time that this might be a solution for the major purchasers to reduce their budgets in terms of engineering and things of that nature. Are is there any kind of investment plan that you're looking at? We've heard the same rumors. But for the time being, this isn't anything which is having an impact on the ground. When you offshore things, you have to know what you're offshoring and the number of activities which cannot be sent out of the country, which cannot be offshored. Design, three d part design. Those kinds of things can be offshore, but there are other things which cannot be offshore. It also depends on the size of the project, and it depends on how industrializable, between quotation marks, of the projects that you wish offshore. In IT, for example, you can offshore things very easily because it's the kind of thing which depends a great deal on knowledge and and experience. And so it depends on the kind of projects. You can even neutralize a number of customer a number of teams that work on different customers. It's it's nothing which is particularly complicated in terms of design. And so what I'm trying to say is that you wanna offshore things, you need to be able to offshore major projects because it has to be something which makes sense in terms of the cost. You're have to manage a pilot. There's gonna be a front office and a back office. All this is going to have to be managed. There are also reworking costs, which occur very often, and they can be as high as 30%. This is going to make the cost of the project higher. So it might make sense to offshore things, but you have to ensure that your project has a certain critical size. You have to make sure that the project is adapted to being offshore. I think that offshore is going to increase in a number of our activities. But over the short term, there are no particular projects where Alton has decided to to transfer our base to an offshore site. For example, we have no new projects or no other projects which are handled in Toulouse or Hamburg or Seville, which are gonna be transferred to to Bangalore, for example. Nothing like that. But at the same time, we're also going to look at all this in the light of productivity. So we have to look once again at the nature of the project, and we have to give some thought to whether or we're going to increase the amount of offshore projects that we will have in the future. We have another question from Hermione from Societe Generale. You have the floor, sir. I just have a follow-up question. When you talk about the carmakers, and you said between 15 between between 1535% aside from Chrysler. You talked about Daimler, for example, and Dettta. Can can you talk about the the off the the percentages of off 35 and off 15%? We wanted to show an exception here, Daimler in Germany and Dettta in The UK did not drop off to the same levels as other carmakers. They dropped off, but they dropped off much less than other carmakers. So they're negative, but they're between zero and minus 15. They're off between zero and minus five is the answer. Second question, can you talk to us about what was set to by the supervisors and engineering and the panel which was redefined or which can be noted in an event in the tier one supply. As far as I know, no major no definitive decision has been taken. We have a new engineering supervisor. The DG stepped in in July. So there are going to be a number of presentations which will be made at the end of the summer, I think. And Renaud asked us to take into account their desire to try to reduce engineering costs to the same level that it is at PSA. I can't give you the exact figures because they're confidential. But and it also depends on the kind of services that are being provided, but they want us to reduce So this is going to lead to a number of to an increase in number of services at the onshore and offshore. So we're going to come up with a a plan which will present to the working teams, which they will take a closer look at they come back to work after the summer. But I think Renault is very clear. I'm not sure if they're going to do this, but they said that they wanted to reduce their panel. Now that doesn't mean that those who are not in tier one are going to leave definitively. They might move to tier two. A bit better to be tier one, but, I mean, moving to tier two is not the end of the world either. So this hasn't been actually acted yet. No. The final decision hasn't really been There are going to be a number of presentations which will be made. The new engineering supervisor for PSA is going to be there as well. It's gonna be the same thing at PSA. More than likely, I would say. And this is going to be done at the September or the October. And not everybody has the same capabilities either in terms of engineering. So let's admit that they reduced by three, for example, that there are former tier ones who become tier two concerning their activity and activities in in which they're they're very capable. So they're not gonna be tier one. This is one of the possibilities, basically. And for Germany, a follow-up question. Given the difficulties that the major act European actors have had in the German market, and also the fact that domestic actors are suffering quite a deal, are we going to look at change in the market? Are we going to look at what we're doing in in, you know, like, in in in the future? Or is everybody just going to wait for things blow over, basically? I think that everybody's basically going to hunker down, you know, and they're going to wait for things to pass. I don't know if that's really credible, but I think that we can probably expect investments to pick back up before the end of the year in Germany. Germany has a lot of Airbus. They have a lot of of the the surrounding activities as well. And there's also the automobile sector to take into account. If it's possible, I think do we need to accelerate things? We've talked about accelerating the the transformation process for a long time. If that's possible, then we need to do that. But I don't see any major decisions that have been made on the market as it is today which are going to have a major impact on the situation. And in terms of investments taking back off before the 2020, you think that that's something which is actually going to happen? You said that you don't think that there'll be any recovery for automotive before 2021, but you think that Germany might take off faster than the rest of the rest of Europe. That's what we're hearing. That's what we're hearing from the people who are on the ground, from the supervisors who are the ground in the South Of Germany. They provide us with a number of hypotheses of the activity taking back off during the fourth quarter. It's not gonna be anything earth shaking either. I'm a bit skeptical, to be honest with you. In the car sector, you you you can put car and aeronautics in the same bag. Aeronautics, it depends completely on airlines and on air traffic picking back up. So today, there are a number of hypotheses in terms of traffic picking back up, We can imagine that's going to happen in civil in the civil air sector in 2023, I would say. And then there are a number of projects concerning generation airplanes. I'm not sure that they have the the means to invest the billions in a hydro airplane. But there are a number of architecture studies which are underway in order to begin at the subject. And I think that's probably gonna begin moving more quickly in the beginning next year. In the auto sector, even if there are bicycles everywhere, we are still going to need to try to comply with the European regulations about reducing emissions. We don't know if these are going to be be maintained in the future. There are more and more hybrid cars, but we're beginning to to read. This is what I was saying earlier in a in an event. Is it even if there's a great deal of technology, which is being used right now for electrical cars and hybrid cars, that's not the same technology which should be used in the future. It's still very expensive. It's still very it pollutes a great deal. So I think they're I mean, we're gonna need to look at the technology. We're not going to be moving away from the completely, but we have to be looking at hybrid and hydrogen based for vehicles urban vehicles. So, clearly, there are investment needs which are very real. I'm not even talking about driverless self driving cars or anything like that for the moment. The question is really one of revenue. I mean, if there is a need for colossal investments, auto manufacturers are not going to be investing vast amounts of their turnover in research and development, 7%, at the most. And it will depend, you know, without taking into account all of the bonuses are there, the transition towards hybrid could be a factor for an uptick in the auto sector much earlier. So we're talking about the beginning of twenty twenty one, not tomorrow morning. But as regards the aero aerospace, aeronautics sector, we have to be rather significantly more cautious, I would say. Thank you very much. We have a final question from Matthew. You have the floor. Good evening, Bruno. I just have a quick question to try and better understand what you were saying about an increase in activity. Are you looking to transfer engineers from one sector to another? And more generally, is there a kind of mobility in terms of skills and talent across sectors or across the geographical zones? So if you have engineers in Toulouse with their stock there, can you move them elsewhere? Is this one of the leaders that you're looking at to try and increase their activity levels? Well, yes. Indeed, there is potential for staff mobility on both of the areas that you mentioned. The first in terms of skills skill sets. So people who were working on projects with Amadeus, they could well be moved into the tertiary sectors or banking insurance, retail, or possibly even soft projects. Auto sector is perhaps not a great example, but why not life sciences and certain types of projects, for example. So skills, mobility, lots of people with softer skills onboarded in real time and in development could relatively swiftly be shifted over to other sectors. This is rather more difficult for those who are only motor or only mechanics. But especially for Alten, where a lot of our know how is historically and statistically linked to high activity rates, this relates to mobility and skills internally to the group with compensation system linked to the management hierarchy. So they're not limited. You know, anyone can contact them. They're not limited to the business unit in which they are to which they are affiliated in any particular time. But the the the limit for this is obviously demand. In order for this to function to operate, there has to be demand for this work and mobility. So for geographical regions that are relatively close to one another, this is possible. But if you're looking at further a field, for example, between Toulouse and Paris or between Aix En Provence, the South Of France and Paris closer to the North. So if, you know, looking at sending people to Lille far in the North, then it's very difficult. So there are issues with the work contract. As a services company, we have to go where our clients are. That's a fact. But a lot of people are refusing to be moved in this way to because, you know, they they live in places. It's not necessarily that they have a they own a house and have a family and kids, whatever. They just don't necessarily want to move. So in terms of geographic mobility from the South to the North, the success in this area is relatively low. Right. But if I could follow this through, is this a significant lever or is this purely anecdotal? It's not significant, I would say. I don't think it's anecdotal either. It's not a significant lever, I wouldn't say. It's sort of in between the two. Obviously, management levers that are being activated to optimize all of our contracts, which is a part of it, but depending on which direction the mobility is going, I would not describe it as significant. Okay. Thank you very much. That's clear. Thank you very much. There are no further questions for the moment. If you have further questions, please dial 01 on your dial pad. I cannot see any questions waiting. This is the final call for any further questions. Please dial 01. You may have the floor for the conclusion. Thank you. Thank you very much for taking part in this teleconference. I know that the holidays are just around the corner, so enjoy the holidays. And I can tell you that our meeting for the half yearly results will be on the September 22, and that this will be a remote meeting given the current situation. So thank you all very much. Have a wonderful evening. See you all soon. Thank you very much, ladies and gentlemen. Thank you for your attention. The conference has now ended.