Hello everybody. Very happy to co-present with Bruno Benoliel and Cyril Malargé the presentation of this half year results for the year 2026. As usual, in a very precise way, we will convey to you a vision of what happens on the market, in particular as regards Alten. As regards the results, as you could see in the announce, the revenue that we know is at EUR 2.01 billion, which means almost double for the whole year and even better than that. The organic growth is of 1.6%, but in fact 1.2% because of the M&A, which was a little bit less performant for the start of the year. So 1.6% as an absolute value is not really a matter to celebrate, because apart from the different crisis, we have an average of 8% -1 0% organic growth before.
I hope it's just symbolic, showing that we are on our way to reach a positive organic growth. International and France. France is driven by aeronautics and defense activities with Airbus. They have enabled to be performant within this organic growth, even if the other sectors are very well-performing, energy, automotive, because we have been doing what had to be done, in particular to offshore in the low-cost countries. As regards the results themselves, the revenue is . Sorry. You have muted your microphone. You have muted your microphone, sorry. So 8.9%, compared with the 7.3% of revenue at June 2025. Compared with that's the revenue for France, and I hope we will have a global year around 10% operational results. 8.9%.
This improvement, compared with the first half year 2025, is linked to very performing control of sales, HR and administration as well as the potential gross margin, which was quite stable and is also due to an excellent management of our project as well as the cross contract and other contracts. The gearing is good as usual at 14%. As regards the headcount.
[Non-English content]. If you look at December, things were a little difficult, but we caught back up. I can say, things have improved since the end of June. This is a growth dynamic, which I don't think we should get carried away with, but we should be fairly optimistic about what's going to happen next. Okay, so if you look at this slide then, we're going to look at the last few years.
Now, it's important to look at this correctly because there's a real message that has to come out of that beyond the figures. You need to go to the last column for the first half of 2026, obviously. But what you really need to understand are the first two columns. Between the first quarters, if you look in five years, we've doubled our turnover. We changed size. It's no longer the same group. If you look at the size, if you look at the volume, and if you look at our geographic sharing in the 25 main countries where we're present, things have changed. What does this mean? What it means is a very important change in the group's organization. Our clients have changed as well. So beyond the actual size of Alten, we've seen that our clientele has become more international.
We're no longer dealing with one client. We're not always dealing with them at national level. Every client has to be dealt with in two or three countries, not just one country anymore. You can imagine this has been a huge change. Then, of course, in spite of this all took place in, as I say, in spite of COVID. In those two years, we're managing the group and this change in the market. If we look at Alten as being in the top five, perhaps the top three in the world of engineering services.
We have to say that 2024 and 2025 were difficult years. We see quite flat years that were difficult. In spite of all the offshoring, et cetera, we can see that the turnover has been divided in three if you look at things that have been relocated. In spite of AI, which is increasing the needs for engineers in some projects, we've offset that with new projects and new types, the new different kinds of needs that we have. We really hope that 2026, 2027 are going to be fruitful and we're going to see growth taking off. Now I'd like to hand over to Cyril, who's going to talk about the results more specifically.
Well, thank you, Simon. What are the messages then that we have to retain for this first half year? There are two. First of all, we can see that we're returning to organic growth, that's been confirmed. Our objectives then for 2026 have been upscaled. If I look at the first one, this idea of getting back to growth. The first, the main country is, look at France. France is doing well. It's performing well, up after the first very flat quarter, they're up by 1.7%.
This is very structural, this is good. Why? Because the markets in the future are going to be interesting. ASD aeronautics, aerospacial in France. We're hoping that's going to be good. We're talking about 3% of the revenue in France, so it's important. Rail is also fairly dynamic here. That has an impact in France. As opposed to that, we'd have to look at the automotive industry, which is less than 1% in France.
We are in a public sector, so this is an electoral year, we're going to perhaps be less impacted than others. We're looking at a scope which is our core heartland, if you like, and things are doing very well. The second element is Germany. Germany is doing well. In the second quarter it's up 4.5%. Out with automotive, everything is going up in Germany, and this is going to allow us to amortize the lack of growth in the previous years. It's still there, but it's better. We're going into positive organic growth thanks to the growth of all of the other sectors. In the U.K. then we're growing. Q2 we're up 2% after a flat quarter, and this has been spearheaded by energy and defense.
Now, if we look at the markets for the five years to come, then in terms of growth, bear in mind when we do so that aeronautic, spatial defense and energy, mainly nuclear. These are structurally growing matters, and they are worth about 40% of Alten's revenue. We want to see that going up given the position we have for the upcoming years. The second element that you must retain, we are in a risky phase with the automotive industry. We have gone from 20% of turnover in 2022 to less than 14% today. We can say that perhaps the most difficult part is behind us, but we must be very cautious at group level. Secondly, when I talked about the improvement in results in the full year for 2026, our objectives, we have upscaled them. We have set them at a higher level.
You can see we could try to aim for 1.7% - 1.9%, and that is thanks to the performance that we saw in the second quarter and the visibility that we have in the second half of the year. As you said, Simon, it was a good summer. The second six months kicked off pretty well. We can allow ourselves some hope for growth in 2006, 2007. What next? Results then were around 9.2%. The first half of the year was very positive. We went from 7.3% - 8.9%. Now, if it is going to be a dominating trend, I do not know. Dominant trend, we will have to see. The visibility that we have on the second half of the year allows us to believe in the growth at regular speed that we have seen up till now.
We think there is going to be an increase in results, not just in France, but elsewhere. This is the company itself, and not just one country, the company itself that is following a certain dynamic. Next slide. Let us talk about headcount then and the growth of a number of engineers that we have. We have gone, as Simon said, went from 51,000 - 52,200 between December last year and June this year. The message is clear. All of the zones are growing. As you can see, headcount is going up in each. Look at North America. Look at France. We have got 300 more. Europe out with France has gone up as well. You have the slides figures. You can see they have all gone up. You can see the two colors.
It is extremely interesting because then again, we are looking that all the zones are performing rather well. We are fairly confident about the future, the second half of this year. This really should confirm the trend that we have seen up until now. We are going to be very synthetic here, but I think it is interesting to share with you what is happening in different markets. Let us begin with this slide. Let us look at ASD, aeronautics, space, and defense. These three market segments you can see this is accounts for a certain amount of turnover for the group. It is really a driver within the group. Clients, you have got the usual clients you are familiar with, all of them Airbus, Safran, Rolls-Royce, Dassault, Thales, et cetera.
And we're on a market which is doing well and the outlook is very good for the 10 upcoming years, with growth being pulled forward by studies, by research, design of new projects, by manufacturing, by the supply chain efficiency and effectiveness, optimization of TCO and maintenance, and maintaining services for the services industry. We want to make sure that we are a leader across the board here, and we are. You have the figures. With spatial, the whole lot comes around to about 16% of turnover. Again, I've already mentioned these clients, and these clients, many of them have just signed new contracts as well, so that's very positive. This is going to be supported by Europe as well. It's a niche market which is really growing, and I think is going to be fruitful in the upcoming years.
What about naval security is 9.7%. You've got Leonardo, you've got Thales, Naval Group, MBDA, Saab in Sweden, Navantia in Spain, the usual suspects, to coin a phrase. This is an open door. It's a European market which is fairly bullish at the moment. We hope to see growth, two-figure growth in this market. Our specificity here is this is a market that we can see delivered country per country. In France, it's France that's dealing with France. In Germany, it's Germany. In U.K., it's the U.K. You could say it's market per market definition, and this is how we want to address this market. We really want to do it country by country rather than doing it in a comprehensive manner. Let's move on. Let's look at the automotive market. You've got the figures, 13.7% of turnover, with our major clients.
You've got the same ones that you would expect to find, Stellantis, Renault, Volkswagen, Volvo, BMW, Traton, Ford, Mercedes-Benz. What we can say that this is obviously a market which structurally speaking, is not growing. It is quite obviously not growing. But we have seen a little growth in some areas, even though it's less important. We are stabilizing sequentially speaking with manufacturers, we're suffering like everybody else with equipment suppliers, as I said in the beginning. For us, it's no longer an issue because the toughest years are behind us. We're quite content with the figures we're seeing. With our current know-how, we employ a certain amount of people in this field. Let's face it. We estimate that we have a role to play in the growth of this sector. For rail then, where are we?
We're worth 3% of market share with, again, the usual suspects, Alstom, et cetera, communication systems, signaling systems. We are very nicely represented in France and Germany, a niche market where we are the major players. With industrial equipment then, 8.1% of the group's turnover. We can see that industrial equipment activities are stabilizing. With regards electronics and semiconductors, we think that the priorities of our clients is to get their parts as quickly as possible rather than really going into R&D. We have a very nice position within that market as a result. Energy then. Energy and environment. It's a very strategic market, thanks to the acquisition of Worldgrid a few years ago. Worldgrid. We have a very nice stance in the nuclear field. You can see 11.9% of turnover.
Here we deal with EDF, Schneider, Alstom, TotalEnergies, Siemens, major investments for the future and new projects in the field of oil and gas. It is very positive. At a given moment, we are not sure when, but a given moment, this is going to really become our second most important sector for Alten. We are going to continue to focus on this sector. How about life sciences? 7.4% of turnover, Sanofi, Johnson & Johnson, et cetera. This is a bit of a tough reality. Tough CRO market around clinical studies. Major players who are now transferring to the U.S. We are slightly down in growth there, but it is a future market for the company. Telecom. Structurally, again, it is a market which is not growing. In France, with SFR, et cetera, we are working upstream with these players to make sure that we have a role to play.
It has been difficult because the business scenery is changing. What about insurance? We are 8.5% of turnover, and there again, you will find major French banks, Portuguese banks, and our traditional clients. It is a market which is fairly flat. It is a very heterogeneous market. We are following the trend. In France, we are staying flat, but in Spain and Portugal, we are actually growing. It is, again, extremely important for us. Finally, retail services and the public sector, where do we stand? This is a market where we are generating a slight level of growth in the first half of the year, particularly in the U.K. and Spain, in Italy as well, and indeed in France. That is a whirlwind vision of what is happening in the market. What we would like to do is share something very important with you.
We have made a great deal of headway in the AI field. On this first slide, we are going to look at what is happening at go-to-market. We have been working a great deal on go-to-market. We have formalized a catalog of various offers, and these we have set per sector of activity. We have trained our teams, and we have dedicated teams in order to go and discuss these projects with our clients. We have KPIs for unrolling this offer, rolling it out with our clients. In front of you now, you can see on this side, per sector, the details. It is not really details. It is a few elements of how we are going to implement the catalog of offers. In each one of these subjects, there are clients and projects.
I do not want to get into the details because all the information is there anyway, but you can see that we have really made a great deal of headway. You can see we are very present in aerospace. We are looking at big data, product design. Other examples, the supply chain, very nice offer there, also in automotive. We can see if you look down the side for all the different segments, we have some very nice references, especially stuff that we are rolling out in other accounts. AI with us is not simply a slide. There are real projects, real clients behind these projects, the target of our projects. If we move on to the next slide, this is your go-to market because it is within a much wider remit.
As you know, we have a chief AI officer who is on the executive committee, and he is responsible for sharing this information with everybody in Alten, with dedicated teams. This is really steered from the top, and you've got three pilots, three streams. I've talked about the go-to market. You also have the deployment of our products and the implementation of structures and platforms. Now, three-quarters of all our employees are being trained in AI, so we've been able to go fairly quickly through this. With the go-to-market stream, I focused on the offer. 30% of all the group projects have AI contained within them, and 80% of all of the proposals are AI infused. That's quite interesting. That's quite a high figure. So a great deal of training has gone into this for our teams, and we've structured partnerships to go hand in hand with this.
We are working with Mistral and with Google, in particular, and with others. We have rolled out the program with Mistral, and we did that in the first half of this year. Rolling out AI in our projects, we saw that speeding up in the first quarter. A new work package, which was developed with an average of 10% of productivity generated thanks to this new AI infused project, and we've continued to do this, haven't we? We've continued to scale up and roll out these projects as quickly as possible and as carefully as possible. Roughly about 50 people between Morocco and India who are working on these accelerators to help our teams, to help them respond to calls for tender, and to unroll all the different projects that we're putting in place.
If you look at the streams, platforms, and infrastructure, we've really targeted the implementation of our infrastructure. Platforms deployed around Mistral, OpenAI, Anthropic, Claude, and agentic environments. We have a policy in place to help us master and manage the token. We've got token cost optimization rules in place to help us do that. I'm going to hand back to Simon, who's going to talk about mergers and acquisitions.
Thank you, Cyril, for this presentation. I'll finish that AI. We are assessing today the reduction in the number of engineers needed in the Alten's core business model by 7% per year. So what we're talking about, the same typology, the same volume of projects with AI. AI means we can be down 7% in productivity per year. And it's not us that are going to benefit from this improvement.
The clients have negotiated, and 80% of new calls for tender in front of us were in 85%, 80% of them, we have to ensure that the client can see that we've imposed AI, and we've set them into our product, and the clients are negotiating this reduction of roughly - 7% across the board in all of the projects. So in spite of that, we've managed to see organic growth, and that's why I think we have to be, I suppose, cautious with our fingers. 2% in organic growth when you encompass the growth of - 7%, and this is in the volumes required by AI performance. We are still growing organically. What does that mean for the future?
It's not because AI is in place and is going to replace a certain number of jobs, or partially replace them, or even engineers, young engineers, that our market is going to collapse. We are going to continue to grow, and we will continue to win market share, and we will win new projects in spite of AI, if you like, and we will continue to grow organically. For the last three years, I've had this question fairly regularly, so it's a fairly positive comment I'm able to make there. Now let's talk about M&A. A little disappointed with the markets around the world, the number of acquisitions made in the first quarter. When you see the size of them, it's roughly 700 people, and our goal is 3,000 - 4,000 per year.
We have our objective, and this objective would allow us to We're able to buy more than that, but we don't want to just buy any old thing in order to ensure that we maintain the status of M&A, and we don't want to buy for buying's sake. No. There have been times where we've had our eyes on, we've had the CapEx, et cetera, and we've not been able to purchase, and we've had companies that have left us. But I think, as you can see from this slide, our M&A has been fairly limited. But there's a strong message to take from this. We've got a lot of LOIs signed. A great deal of due diligence underway, and we're very surely going to make some quite interesting announcements in the weeks and months to come.
I'm not sure if it will be before the end of the year or the first quarter of 2027, but this will help us catch up a little bit. You know Alten, you know that we're a cautious player, and we want to look at prices, and we want to look at the quality of the companies we're interested in acquiring. Now, concerning capital, well, it's not really changed. If you look at buybacks, share buyback, we did this when securities were slightly lower. All of this to ensure that there is a message of confidence out there. We believe in ourselves, we believe in what we're doing. [Non-English content].
But you can see when the securities were extremely low, we bought shares, and that leaves us a little less cash, obviously. But we make sure that we've got self-retention of more than 5%, 5.43% to be accurate. Our founders were still around 15%, and the employees with their employee sharing system are around 2.34%, and the rest is institutional investment. That is the end of the main indicators for the group, and now I'd like to hand over to Bruno, who's going to talk more in detail about the financial KPIs.
[Non-English content] Yes, hello. I do not want to go back on the analysis of organic growth. Maybe as regards the exchange rate. Here we have a second half year, if you remember, which was lying above the 3%. It has been impacted by an important exchange rate. Revenues on this basis has been impacted by 1.6%. All our financial flows and business is being done in several currencies, so 26% altogether, which means that we have a negative variation on exchange rates on our flows.
This has been obtained in the cable business as well as engineering. This negative exchange rate consequence should be rounded up during the second quarter, and the first quarter compared with the first quarter 2025. Half-year turnover. We published last July these results. I am not going to dwell upon the different analysis. I would just like to point out that ASD Naval train has been okay.
The same in U.K., thanks to energy and public sector. Our position has improved considerably. Good go back to organic growth in Germany, and this is really worth mentioning because of the automobile activities. It represented 45% of our German turnover. It is only a quarter which is left. We have de-risked our activity. But the development in Germany was very good in ASD. It represents 30% of the German turnover, but also other sectors like telco, energy in particular, and also IT, in the lesser way. An excellent activity in South Europe, where the growth has been accelerated. We still have problems in Benelux and also Eastern Europe, Netherlands in particular because of the car industry, and also in the Nordics. The improvement is visible in North America. The activity in North America has been penalized by the automobile activity.
Canada represents 30% of our Northern American activity, is growing. We expect to be back on the right track as regards organic growth, latest at the beginning 2027. The organic growth has also been confirmed in Asia-Pacific, thanks to Japan and China. The second quarter has shown significant improvement in the Nordics, and this should be confirmed, by the way. Results of the first half year. Just for you to remember, the year 2025, and in particular the first half year 2025, is a year which was not normal, we could say, because of the bad performances in several geographies, and also the operational margin was of 7.3%, but again, not normal. 2026 profited from the organic growth development, productivity, and a very clear improvement of several activities.
This is why we have an operational margin and a revenue which has increased from EUR 150 million - EUR 187.3 million. And the 7.3% of revenue of this operating profit has increased and reached 8.9%. This has nothing to do with what we do in normal years, again, or normative years. The EBIT progression, as we said before, is for 60 basis points due to the operating profit, and the SG&A represents 70 basis points. Now we have the very conservative vision of the presentation of our accounts. This has to do with HR. Whenever there is a reduction of activity, we integrate that in gross margin. Obviously, there was less this year than last year. The improvement on the margin yield due to the project management in Germany in particular. For SG&A, we profited from the absolute gaining back of value.
It had already been positive during the second half year 2025, as well as a dilution of cost because of the coming back of organic growth. This is also the consequence of what we have enhanced last year. Because of the plan, the share-based payments have not increased. The amortization of intangible assets recognized in business combination, this is recurring from year to year. It comes exclusively from the acquisition of Whatfix. You have the PDA, which has been presented in the annex documents. The non-recurring results of EUR 12.5 million. This is because of restructuring plans that I have indicated before, accounts for, let's say, EUR 10 million, EUR 6.3 million for Germany. We still have to cut down the headcount. Italy for EUR 1.6 million, and the life science activity for EUR 1.4 million. Then the proceeds from disposal. These are the fees for legal expenditures.
That's only EUR 2.6 million half year result. As we indicated, we sold an activity in life science, which was linked with the CRO activities based on an in-house solution. We didn't have the critical size, and this is why we started losing money. This is why we have an operating profit of EUR 158 million, which grew by 26.9% compared with last year. Financial income is very easy. You will see on the next slide, we have an income tax expenditure of 47.7%. This leads to the net income group share, which has improved by 38%, moving up from EUR 82.6 million to a little bit more than EUR 100 million . The financial income analysis at Alten is not deeply analyzed here.
With the IFRS standard, out of that, the financial result is at EUR 6 million, composed of different financial products, like cost of net financial debt of 5.7%, interests on leasing contract, which is EUR 2.8 million. Then we have FX income, 1.1% decrease, and other net financial incomes. Split up according to regions. The performance has improved in all our countries. We have said it before, the performance has led us to progress on our margin, 200 basis points in France from 5.5% to 7.5%. Here we have the corporate non-allocated costs. We have 9.5% margin in France. The improvement of margin is for 60 basis points accounts on the improvement of the net operating margins, and for 130 basis points, it is the improvement of SG&A, which is a little bit better than the global improvement of the group on SG&A.
We have an operating profit that increased by 150 basis points, thanks to the increase of operational margin in almost all our countries. As was said before, it is true for all the countries of the group and not only one or two countries. Within the Nordics, the situation remains difficult. This is the only place where we have an operational margin which is below 5%. In Germany, the operating margin was near to zero in 2025. It has improved and is very close to 5%, like the Asian-Pacific geography. Benelux, North America lies at 10%. But U.K., South Europe, and Eastern Europe, we have an operating margin of a little bit more than 5%. We have a healthy balance sheet. Once the dividends have been paid, EUR 1.7 million, that's a good result. Then the position in net cash is good.
As regards the development between the end of 2025 and June 30, 2026, the operational cash flow is of EUR 180.7 million, which is 8% of our turnover. We go back to an operational cash flow which comes close to the activity one, which is absolutely normal as regards what we are doing. The taxes paid are at EUR 37 million, which is less than the tax burden because what we paid in 2025 as regards the activity, they have been paid because of the activity of 2025, but the rest, which is due and paid in 2026, is based on the final figures of 2025. The need for cash is and this is due to EUR 16.5 million, of which we have a part which is due to organic growth, and 40%, which is due to the increase of DSO seasonal between December and January.
We had 86.5 days in December, and it went up to 90 days by the end of June. I would like you to remember that the DSO was of 90 days. So we have increased by a few days to the comparable day between end of June 2025, end of June 2026. The fiscal debts of the groups are linked to seasonality and activity. The variations are not significant. As you can see, the CapEx are low. It is only 0.4% of our turnover.
It is a little bit less than for a normative year. Which means that the free cash flow is at EUR 105 million. That is 5% of the turnover and increased by 33% compared with last year. This is despite the return of organic growth. On the next slide, you will see that for gliding 12 months, because we need to glide, we have 6.4% of the revenue. Our cash flow is 6.4% of our global revenue. Very quickly to the flow analysis and the other elements, the investments, financial investments are at EUR 73 million. That is the down payment and the M&A dividends are stable.
That is EUR 51.5 million with the payment end of June. The share buyback, we had spent EUR 65 million end of June. For information, EUR 1.8 million investment for 2.4% of the capital which has been bought back. Other financial flows, EUR 8 million. That is financial interest and exchange rate consequences on foreign currencies, which means that we end up the half year with a cash flow, which is quite important, EUR 313 million, a gearing of -14% after payment of acquisitions, paying of dividends, and the share buyback. I am not going to comment on the following slides because I just said what had to be said. You will be able to read that.
As a summary, what you have to remember on financial results of this group is, and it joins what Hervé and Simon already explained, Alten return to growth, organic growth during the second quarter 2026, thanks to civil, aeronautics, space defense, naval, rail, and energy, all together 42% of the turnover. The automotive is still slightly declining. Slightly. We have a stabilization of the main activities, even if the situation remains a little bit complicated for OEMs, because once you have such a decrease, there is no possibility to decrease further. So, there will be a stabilization of the activity. The operating margin has increased very importantly during the second half year. It represents 8.9%, well 9% of our global turnover. Apart from the Nordics, all the countries have improved their OPA. As I said, apart from the Nordics.
The OPA has increased by 23% and the free cash flow by 33% compared with half year 2025. The activity is completely self-financed thanks to the cash generation, which is particularly important. That leaves perspectives for the year 2026 that we have increased, of course, as long as the geopolitical situation remains unchanged. We have a growth which should range between 1.7% and 1.9%.
It is in particular end of September, beginning of October, that we have the best visibility on the new projects which are going to start on the customer side during the last quarter. This is why the operating margin has been increased. We have roughly 9% by the end of July, and we have 9.2% for the whole year as regards the positive elements that we communicated upon. Now I am going to hand over to Simon. He is going to tell us more about the growth strategy for the coming half year and the coming years.
Thank you very much, Bruno. A comment on the slide with the variations on the cash flow. There are a few things that happen only during the first half year, the share buyback and the payment of dividends. This is all together, EUR 116 million that you will not have for the second semester. So you can imagine the cash for the second half year. Now as regards the conclusion, the two slides of conclusion, summing up all that has been said till now. The complicated environment, the size of Alten, that is really a change within the organization. That is a change for the top five companies for engineering with a lot of people employed.
We are not really afraid of that, even if globally it means conquests to compensate the drop of the requirements of engineers and the necessity to keep up with the organic growth. Now all these elements all together and what is happening means that we are particularly optimistic to grow. We have a very ambitious plan for the coming years until the That is the plan, 80,000 engineers. But of course, it will take, to be able, with Cyril, to set up a very strong international organization on the management with the global accounts at international level, it used to be national. The capacity to deliver, which means a technical organization that has to produce a global project. This is already done.
I think the technical management and organization is already the best that we have within the profession because we have the possibility to deliver offshore, and it is not bound to one country anymore. It is transnational with the technical managers who are already transborder. Then we will also have to show our customers that we have strong offers in terms of AI as well as projects. Then the retail. As I said before, it is going to improve.
The capacity that we have to capture in M&A, the interesting and optimistic signs will be important, despite the fact that it is complicated because we already have 90% of our targets which have been captured. Then when they are put back on the market, it becomes extremely difficult to grab them. But we have good hopes to identify good targets in Europe. Now, it is the end of this presentation. Thank you very much for this presentation. We are ready to take your questions. Okay, let's move on to the Q and A. We have a first question from Nicolas David.
Yes, indeed. Hello, I hope you can hear me well. I would like to raise my questions as regards the margin and first of all, the guidance for the whole year. You have a margin of 5%, but it's less in the year-to-year vision. Why is it going to lower in the year-to-year forecast? It seems that we are back to the normal. It doesn't sound intuitive to have this drop off or this aim of 5%. Could you tell us more about the gearing? You would have less gearing on the TSA. Is there something logical behind that? For the engineering, you have done an enormous amount of work. ASD, the telcos are diminishing. Maybe AI is going to help out on the margins and what are we going to do for projects? It's mainly a question as regards margins.
Well, concerning the margin for the second half year, it's going to be higher than the first one, obviously. Even if we look at the second half year 2025, it's going to be higher than the one for the first half year 2025. So there is a dynamic development of first and second half year, which is due to the calendar effect, or consequence, even if it is less important than for all the activities which are embedded in a package, et cetera. I do not share the same analysis than yours.
What is true also, and this is why I mentioned that, the margin difference between half year last year and this year is important, but it will be less this year for two reasons. The first one is that the margin for the first half year 2025 was not part of the normal, and now we're back to normal, so it sounds logical. Also because we did an enormous effort on SG&A, and it was reflected in our activities. So it will be less visible between first and second half year. We have other investments to do to schedule the development of our group, all the different projects that have been mentioned. We are going international, transporter, et cetera. So we do not expect a dramatic improvement of SG&A rates.
Then also, we are going to consolidate a certain number of acquisitions, which are going to account for the margin. As I indicated before, the operational margin is going to be less than the normal. So it takes one to two years to bring it back to the group level. So the dynamic is particularly logical and relevant. Now, to come back on the 10%. Indeed, it is how to increase the margin within geographies where it is less than normal. For Asia, we are at 5%. For Nordics, they will, in time, react. We are going to see the improvement dynamics, which is going to impact the project.
And even long term, it will mean the reduction of the relative rate of SG&A, but it will be longer in time. I would say as a complement, we are growing, and we have more margin in the growing phase than the reduction. Then in favor of work packages, we have higher margins because we master better our capacity to generate profits on the work packages.
If you look at asset divestment, I am not sure I had the right figure because I had 9.6% in margin. This was a stable margin. I think perhaps you have some room for maneuver, with regards this 9%. Just to give you a quick follow-up on growth, I had some very positive comments, particularly for the Nordics and the United States.
That being said, growth for the year is roughly around 2%, which is less than the second quarter last year. So what can we do in order to offset all of this?
The publication of the third quarter takes into account that which today is gaining ground, and those are the projects which are being launched. So that is usually as of September 15, we have better visibility up to October, that is, and I think this allows us to really set the figures. Of course, you must also bear in mind that the comparison that is in place, we had a very good bounce back at the end of 2025. So that means that you have a knock-on effect on how you are going to read the figures, and that might allow you to believe that this growth is going to slow down in the second half of the year.
Whereas in reality, we are continuing to recruit or continuing to win new projects. So we do have this growth dynamic which is fairly highlighted, and I think this itself is going to lead us to will be under 2% in the second quarter, perhaps. But this will allow us to reach the figures that we have communicated. So I think it was easier to do like that than to focus on 3% for the first part of 2025. Thank you. Let us move on to the next question if there is one. Frederic Boulan.
Hello. Thank you for taking my question. I want to talk about AI. You talked about inflation around 7%. You used figure of 7%. Do you think this is going to be sustainable in the upcoming years, or do you think this is going to be very much concentrated on this particular year and next year? How can this be offset by a widening of our scope, widening in the client activities? Could you describe the change in expenses with our main clients? Are we going to maintain, keep this 7% savings, or we are going to retain it to invest in projects which are wider and which would allow us to increase our turnover from our clients?
Well, what you must remember is this - 7% is what? It is a figure that shows that we are focusing on work packages and doing what our client wants. We are trying to give extra services to our client, and this is what we can see in the teams. You have to make the difference between the gross impact of AI and the reality on our staff levels, which you can see through the impact on our teams.
There is a difference. That's the first point to retain in mind when we talk about this - 7%. The second element is that this engineering market is not a market where we have 200, 300, 400 people in one place. This is very different. We're driving our clients' products with clients who have small teams, 5, 6, 7 in a team. The impact of AI is going to be less on them than on the turnover. We think AI is going to be more qualitative in order to deliver services more quickly and with better quality.
Now, I can see that there's a difference from the IT world, and here the impact is very different compared to that. Lastly, we've trained all our teams, all the business managers. We've more than trained them. They've been through e-learning, online training. They've given us a business plan based on their scope, and they were certified for this so that they can be more proactive in delivering the new uses, new business models. We didn't do that up until now. This is in order to be able to take a stance upstream with offers which are perhaps hitherto unsolicited by the clients. Of course, we are using AI in an offensive manner, as in we are on the offensive to try and win clients. A figure which is of great interest to me this week with the program, an incubator program that we established with a team.
Team. This project was used in 80% of the replies for calls for tender. At 80% at the beginning of year, but now it's 50%. So we're still using Teams. We're using this intelligently and adapting the AI to the project and the package that we're trying to implement or offer. If I may add, when you talked again about this famous 7%, this is what we see in the current contracts. Is this a trend that you think is going to set in, or is it ephemeral? Is it structural just to improve effectiveness and this perhaps will not last over time? To be honest, it's very difficult to reply to that question. This is not a homogenous 7%. You take some activities, and it can be between 10% and 80% in testing.
It really depends on many things, what's coming out every week and what new tools, what new functions are coming out. The questions that I ask now are all about training my teams, looking at the platforms, and that's our responsibility to make sure that all of this is available for our teams and make sure that our teams want to use these tools. It becomes natural. That is our job to ensure that this becomes natural behavior in order to avoid being subjected to the alias of the market. This 7% is the estimation that was done by our AI officer for the four years in front of us. It's in the specifics of Alten engineering services, the economy of production engineered by AI, with the reduction of certain tools with our clients and some tools that we furnish to our clients.
As Cyril said, it goes up in some cases from 0% - 80%, but on the specific stance of Alten, the average is 7% over four years right up until full deployment. Now, what will happen afterwards, who knows? We don't know. But our challenge is to offset this need for engineers, which is going down by 7%, with higher tariffs or by extra offers, or by conquests of an organic growth, which mean that the 2% of organic growth that we're going to suggest could correspond to the 9% five years ago or seven years ago when it was rolled out. It's just an average.
It's an estimation, an assessment done by the AI officer. Well, that really leads me to think about AI. We had Pena before, I believe. Then it was offshore, and then it was something else. It's just new developments. This one is called AI, but it's the same dynamic as we've seen in the past with new developments. We have to continue production but with different tools and be more effective. Thank you. Next question. Laurent Daure.
Good morning, gentlemen. Thank you for this presentation. I have three questions. The first one, again with regards to AI, we talked about these tools which are replacing some young engineers in your three, four-year plan. Have you anticipated an average age for the engineers in stable employment? What will be the impact that this might have on our margins? That's the first point. The second one, I want to look at the mix. You talked about 70%/30%, so engineering IT services. Are we going to see a difference in that mixture, that balance, and over the next six months in terms of growth and in terms of margins?
Finally, last question, I would like to know what your vision is for the next 5- 10 years for the nuclear activities in particular. You said 2% - 3% of our turnover today. How far can we go in this sector, and what stance should be taken in the new sectors in France? I think we're looking forward to 2030. Are we beginning to see a genesis of activity in this area there?
T hank you, Laurent. For the first question on the impact on the average age on our engineers. It's sure that fairly naturally, we're going to probably employ less young engineers, but that's not really what we're seeing today. The model isn't being brought into question because engineering, as I said earlier, AI doesn't have the same role to play in IT and in engineering. This means what? It means, quite frankly, that we have not observed a structural impact on recruitment. We recruited more people than last year, for example, or on the average age of the people employed. Now, when it comes to the margins, we are working on that because that is going to depend on our capacity to hand over to the client that which we promised, making sure that the proposals are met.
The subject is not on the table today because with the client, we are sharing the fact that the margins which emerge are reemployed, reinvested 7% of 10 people. That is a lot. Nine times out of 10, our clients are going to ask us to retain their staff. So we have to reconcile that with margins. We saw this with offshore. With the difference in growth and margin between AI, IT services, and engineering, I do not think there is any significant difference.
No, actually, there is not one. This is due to our stance in ASD, which is strong. If you look at our dynamics per sector of activity, you can see we are flat in the yellow part, if I can make IT services, and quite strong in growth in ASD and in engineering, even though we went down in the automotive industry. Overall, I do not think there is any difference in dynamic, no, I have to say. Laurent, there are statistics with which everyone is familiar. We update them every quarter, and we look at our average experience of engineers that are with us in various sectors of activity. Including the engineering world, pure engineering, R&D, et cetera. Clients do have senior employees. We have got project leaders, architects, and they really are in charge of their projects. They outsource some, but not all of their projects.
We are not going to go and tell Airbus how to design the landing gears. That is their job. We are not going to go in and say to them, "You have to get rid of 7% of your engineers." In Airbus, in places like that, they do have younger people. Their average age is 29. That means that the average level of experience is only three to four years. So with management, the average is going to go between zero to eight years of experience.
Actually, this accounts for 40% of our recruitment. In IT, it is different because our clients, they want specialists. They want to outsource as much as possible. They want to develop an application for SAP or for Salesforce or any given software. With any IT department, anything they can externalize, or if you have a BPO, offshore or not, they are going to try to outsource it.
There they are going to need people with more experience. When you say more experience, usually they are older. There is usually a gap of about three years in the average age between people from engineering and people from IT. To pick up on what Cyril said just beforehand, AI has not really had that much of an impact on the average age of engineers. There is really only just maybe one year of difference. We are still recruiting as many people. In engineering, AI has not killed the profession of young engineers, but it leaves time for schools to train engineers to use products and to construct their projects differently.
We are seeing a change. There is going to be a development of software tools in engineering it out, and we will be able to train them and allow us to have architects who become junior engineers. So it is really just an adaptation. It's a slight tweaking of what we traditionally considered to be engineers. It's going to be architects that are going to pursue their training and become engineering, and this one can be in any domain that we do, automation, whatever. So these young engineers are going to be able to train further to become more experienced.
Okay. Nuclear.
In the nuclear field, what I can share with you is that in Worldgrid, we had EPR2 which is going to work for the next five years. We're looking at growth there in 5% between now and the five upcoming years. I'm not talking about the stance that we might have on other SMR projects with Worldgrid, for example. They provided Well, you heard the schema from Simon. They work on extensive projects, but it's worth the effort because it's strategic for us. It's a very unique offer on the market, and somewhere out there, we're continuing to invest in it, and this means that we have hope that EPR2 is the second reactor, whatever is going to stop, and we will then repair it.
We'll do maintenance perhaps over the next 20 years. We are able to address the upcoming subjects for the nuclear group. That's for EDF, for example. If you're talking about the delivery of a new EPR, we have to look at how we work, how we work with major industrial players. That's where we're at our strength. So we're looking at at least 50% growth for EPR2. This knowledge and this offer have to be reconciled We will pass to the question following.
Next question.
From Inès Semaoui .
From Inès Semaoui .
Ines from BNP. [Non-English content] .
I have two questions.
The first is on energy.
[Non-English content].
Can you give us more information, please, on the type of region that is typically at stake, and do you have a typology for clients? Clients that you would have to help locally. You are talking about nuclear. Is that going to become your second segment now? Is that accompanied with what? With an increase in offshore population? My second question, I would like to come back on what you said about the public sector in France. I know that it is limited, but is there not a risk that when we deal with major French companies like Airbus and Thales, if the elections have an impact, isn't this going to have an impact in turn on the visibility that you have for the next 10 years in the aeronautics sector?
[Non-English content]. The activities around U.K. and France for nuclear activities are good. We also have a very nice position in Spain and Germany apart from that. We also would like to make sure to be able to develop around IT, so we are currently working on a project together with Worldgrid and Alten to develop IT. It is energy, but onshore activities. It is not only for nuclear, but also for other energy branches. We work mainly for operators, so it is EDF, but also Schneider, for instance. This is really the target. As regards aerospace, the world traffic is going to double every 10 years. Honestly, the French elections are not going to impact this kind of development. It is a market which is developing, increasing. Airbus is going to deliver more, the Germans also. This is what we have.
I do not know what kind of decisions are going to be taken and the ones which will have an impact on the economy in general. It is not going to be Alten or Airbus. I think what is at stake goes far beyond presidential elections. Maybe you have another opinion? Indeed, says Bruno, if you look at the real subject, that is the arrival of COMAC on this market, and they want to accelerate the development to really make a difference. The C919 has not been certified yet, but is probably going to be. It is the competitor, the newcomer, in fact, within 5 - 10 years. That is going to be positive for investments in terms of R&D and projects. With all the different projects that go along with it, with data, et cetera. The presidential elections won't have any impact on Airbus activities.
[Non-English content].
Yes. The public sector, by the way. Is this going to be impacted? We are not really exposed to that. Next question. Derric Marcon has a question.
Hello, gentlemen. I have four questions. The first one, as regards AI, we started talking about it two years ago. It will go on for a while. Can you tell us more about the expectations of customer who would like to have more with less people? Is it possible to qualify that to say what kind of projects are concerned and the budget of R&D, where the customer doesn't want to diminish or to reduce the R&D costs because of AI or with AI? Then electronics. Could we say a few words about that? Because are they more focused on building new companies and new factories instead of working on projects?
What do you see in the coming 12 months compared with the one that we just went through? The third question is about North America with H2, which is better than H1. What are the different improvement sectors that you are aiming at? Then within the figure that you gave, Bruno, have you taken into account the acquisitions which were made? EUR 7 million by end of December last year, and it went on diminishing. The earn-out I thought was consolidated, but it doesn't seem to be the case.
Hello, Derek. I am going to try to answer your four questions. First of all, the team which was mentioned by Cyril is the team which is around the Comex. It doesn't mean that we have only this number of people participating. We have 30 in Morocco, 30 in India, technical management, roughly 15 people. In terms of investment, we have much more than that. In fact, without re-invoicing, we have the AI tools, innovation departments really investing on AI.
It goes beyond that. In terms of business impact, what happens is that when you have teams working on the customer side, they request for similar task for a similar project, where you calculate in terms of hourly production. Indeed, the customers sometimes ask for a reduction. Now obviously we are also in competition with other companies which are also going to use AI and offer savings in time and productivity. But we managed to keep up with our position on the customer sides because we do more business.
For a project with 10 people, instead of going down to eight, we are going to work on another project that we would not have been able to get if we had eliminated two people. This is what I call the management gains. It is compensated on Alten side. The loss of work due to AI is compensated by working on new projects. It could have been worse. But it is a market share gain because thanks to AI you save money. But it has been going on for 20 years. We have a lot of gains on productivity for quite a while. It was not called AI, it was called IT, but it is the same. When we say that the turnover in the automotive sector went down, it does not mean that we have less engineers working there.
It only means that the daily cost of an engineer, wherever he or she is located, is divided by two. Globally, we will have as many engineers in the automotive sector than in the aerospace one. If we have to put everyone in China one day, well, sincerely, I do not even want to talk about that because I hope it is not going to take place. Yes, but as regards AI, the costs are Is it possible to invoice the customer? If yes, how much does it represent at the group level? Real cost, it is roughly EUR 12 million. We do not re-invoice them. It is an investment. Unfortunately, I mentioned that before, the savings that AI brings in productivity, our project lasts for one and a half year in average.
As soon as we reach the new project, the customer says, "Well, for the same kind of work and the same number of units, we have this and that to do, and I would like to have a discount of 10%-15%." It is extremely difficult to keep our savings. The ones who could keep the savings of AI, but I am not so sure about them, are those having a BPO like in India. They have 300 people. The support of a software for an administration or a key account, they are going to put that in India and it is going to be cheaper. They also helped with their own internal universities and internal trainees. They had important savings. But in R&D, the projects are renewed on new subjects every one and a half year.
We do not have the time to keep the savings for us. I don't know if you understand what I say. Yes, yes. The EUR 12 million, that includes the management and not only the tools. No, no. Everything is included, the tools, the platforms, the investments, everything. This is part of what we call the not re-invoiced costs or investments at the technical management level. Like the ones that working on the accelerators. Yes. There is one thing, no one has understood the market or yet it is the cost of tokens which are associated with projects. The explosion of costs is really high. We have a platform that we target to make things easier. We are trying to look at the LLM typology for an AI investment. It's necessarily going to be increased.
At a certain time, the discussion with customers will be about reinvoicing the tokens which have been used. There is no other choice. Yes, that was part of my question. Do you reinvoice? No. Like the salary cost of the engineer plus the cost of tokens, et cetera. No, not yet. This is what Simon told you about. It's not part of the DNA. We are selling what our engineers do. Now we have to develop support tools. We will have to do that because we're going to have secondary costs. Like for instance, when the customers required work packages, we included technical management costs. We have a margin which is linked to that. We were asked to develop projects within our walls, so within our buildings and facilities. We have included that too. That's so much per day.
Now maybe we will have also to integrate all the AI tools according to the project typology. It's not done yet. We have to learn how to do it. Okay, fine. We start with the PMO activities to do that because the correlation between service delivering intellectual property and work which is being done will have to change. Then we have our engineers working on the customer side, and then they use the customer's tokens and infrastructure because it's internal and sometimes it's at our level. As regards electronics, this market is complicated. We do not have so much of it, and I regret it because I am an electronic engineer. So why don't we have so much of it? Because we need a very wide category of population. When you have a work package, it takes decisions, technicians, blue collars, test equipment, labs.
You have to deliver e-cards which have been tested, et cetera. It is not really part of the DNA Alten where we have only engineers. It's complicated for us, or we should have to pair up with other providers. But sometimes we have a partnership with other companies to deliver electronics. But usually, electronics is really put aside. We have a little bit technical assistance. Or technical support, but not so much. I was thinking at the semiconductors. Well, semiconductors, there we have 800 people working for all the big companies of semiconductors between U.S.A. and India. We would like to ramp up to, I don't know, 1,500. But the prices of companies working on semiconductors, that's three times the turnover. That's a little bit scary, and we don't know if it's going to be sustainable.
We almost signed three, and each time negotiation failed on due diligence or requalification of the real EBIT. Anyway, complicated. In mechanics, yes, we are moving on very slowly. 1,000 engineers based mainly in the U.S. We have a few activities in Germany, but that is it. ASML, that is a machine. This is where we are very present, 500 people working with it. But this is not semiconductor. It is the industrial equipment machine sector, and this is different. As regards North America, that creates a link with what I was saying. North America is strategic. We have a little bit less than 3,000 engineers working on that for American projects, of which half is doing the low cost development in India or in Mexico. Colombia also because it is really moving. It has become interesting for the U.S. market.
We have to capture 10,000 engineers on projects in North America. We are looking like mad for acquisitions, but we do not have so many. The Indians, they win markets in the U.S.A., but they work in India. So what we are looking at are Indian companies working and serving American customers. But again, it is becoming more and more expensive. We will be successful in North America the day we will manage to buy Indian companies. Most of the time it is local to local. I talk about U.S.A. and not Canada. A lot for defense, aerospace, and even Boeing is offshoring a lot to India. For defense, we will have to create a company with a CFIUS. We think about that. The best managers working in the defense sector in France are observing all that. They have set up a watch.
It will be mainly, to start with, U.S. and India. Now to the earn-outs. We have bought up two companies, 1,000 people. We had one located position on the short earn-out. The volume is not very important, and I think that if we do what we have in the pipeline, and if we make an official announcement, then we will have an important earn-out provision for 2026. It is already contained in the figure for 2026. Yes, it is part of it.
Okay, thank you very much.
Next question. Jeremy . Can you hear me?
Yes. Well, thank you very much to the teams for those figures. I have put my question in the chat. I have a first question as regards the share of the world work packages. Could you tell us within the engineering?
Well, it represents almost 80% of turnover. We are quite mature, and it corresponds to the customer's wishes. We want to have teams managed by the technical management. The definition of the work package is not a lump sum package or project. We deliver a managed team with the technical management and around the competence. We measure the number of hours, and we deliver, again, a lump sum. It is extremely difficult because it is innovation, R&D, specification change all the time. We spend a lot of time looking at the contract, management contracts, more than the work which has to be done. It represents today roughly 80% of our turnover in engineering. It is back to normal. In the IT services, this is what we call the yellow world at Alten. Bank finance, retail distribution, et cetera.
We deliver technical support, 1/3 of work package and 2/3 of technical support, and we organize that in terms of competencies, very precise competencies linked to a project or a specific request from the customer, like market finances, et cetera. I have two questions as regards AI. The counterpart, is that going to be an increase of 7% of engineers cost per year? Not at all. It is the number of engineers which are requested. It has decreased by 7% in general, but we think it's going to be the end of the tunnel in seven years' time. Once we have increased the productivity of AI. No one delivers a precise answer on that. It is what the AI officer told us. Those 7% are not going to be caught back by the increase of seniority or whatever.
It is being done by the winning of more market shares. Yes, but if you could keep this productivity gains, you will see an increase of the margin. But unfortunately, as I said before, they want for each project to have all the costs included. Do you have requests from side of our customers to replace internal softwares packaged by internal business solution that you developed for them? Have you observed that? No. In the world of engineering, that represents a lot of our turnover. We work on short-cycle innovation and not specific products. It exists in the world of IT services and all the big companies, ESN, Capgemini, Accenture, and whoever. They have a department which is called Product, and they develop specific applications for customers. This is not Alten's business at all. You do not have any other models.
Well, okay, you talked about France, you've talked about Britain. I think there was GBP 74 million in risk that wasn't divided, and I thought that subsidiary was then closed. Should we be looking at the constitutional provisions cash out in 2026, 2027?
Well, I do not know. It is really scandalous. An English subsidiary which develops business outside France, which pays its tax according to French ratios. It has just been process after process, so penalties. This idea of fraud. We would inject it, they injected so they would have an audit over the 10 years, et cetera. It was absolute racket. It is scandalous. That is where we are. We have provisioned the amount. We are trying to feed that up the chain to the head of state. We are trying to put great deals of pressure on this because this is a system which is generalized in many groups. When they have subsidiaries abroad, they try and pretend that it is a French subsidiary, but when it is not actually, whereas this is all We have reduced activity there anyway.
Yeah, but what do you mean? It is provisions. It is the second provision and the balance sheet.
I will let Bruno reply. For reasons Bruno has explained, it is a very complex tax position. That is why we fed it up the chain to the head of state. So 2026, 2027, we hope to have some results there to see exactly what has happened. But given the current political context, we can presume that this kind of decision will be taken out with the sort of a legal framework. I am really weighing my words here when I say it is a real racket. Thank you. We have a question from Nicolas David.
[audio distortion].
I'm afraid I didn't hear that correctly. You're talking about turnover. You're saying if there weren't any gains in productivity, you want to meet 2% or 4%. Is that not a little optimistic? If we see that there are opportunities elsewhere than with a given client, is this not linked to the fact that they could find less expensive projects which will help infuse the budget and allow for other projects, so there's a gain in effectiveness even though the volumes are different? You might think that this is linked to something else, future outsourcing or a hike in the R&D budget, et cetera. Actually it comes down to the architecture of volumes. Everything's linked. The client maintains its budget in order to keep things simple.
He's going to impose increased productivity, so less engineers for the same task, but reduces its panel of suppliers because every year they review their supplier selection. We always manage to be in the top, so we have an extra market share, and that's pretty much how it happens because it's more practical for the client to do it like that. You're talking about gaining more market shares than actually opening up new market shares, because you're not really talking about unblocking a budget then. You're trying to do the same or even more volume with the same budget. When you talked about this 7%, we have to look at savings and needs and volume of engineers with our clients. We're going to offset that with the gains in market share by the Alten teams. I'm sorry, everybody's speaking at once there.
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If we had to compare this to offshore production and IT before, when you saw price reductions, reduction in salaries. No, that's another process. The number of engineers staying the same, but the costs are divided by three. Of course, that then cuts the turnover in three for the same number of engineers. That's what happens in the automotive industry. Yes, but this seems to be slower. We're at 1,600 engineers who work in the automotive field. You know them. 15 years ago, they were all in France. Today, there are 1,600 engineers, and 200 of them live in France, and the rest are offshore.
So it's different. You can remember the discussion that took place a few years ago when we were talking about offshore, onshore, and how it was going to be catastrophic. We've all seen what's happened, and the reality is that growth was improved. I think we're looking at the same type of phenomenon. We're not looking at soft skills and production. It's going to be done differently, but it's pretty much the same process. The budget remains. The budgets are used different, shared out differently. Thank you.
I think I've seen the time. I know that so much is happening in Alten. We could stay for another two hours, but thank you for having participated in this meeting. We are obviously available to take any extra questions afterwards by mail, et cetera. I hope that you have all the information that you need for Alten at the moment, and I'd like to wish you all an excellent day and a great weekend. Thank you very much and goodbye.