Earnings Call: H1 2021

Jul 28, 2021

Welcome to today's Beru Virataz H1 2021 Results Call. My name is Judy, and I'll be your coordinator for today's event. Please note that today's call will be recorded. And for the duration of the call, the lines will be in listen only. However, you will have the opportunity to ask questions later on this call. I will now hand you over to your host, Didier Bichaud, Daniel's Chief Executive Officer to begin today's conference. Thank you. Thank you. Good morning, good afternoon, and good evening to everyone. Thank you for joining Bureau of Aetas' full year 2021 results on the webcast And on the call, Francois Chabot, our Group CFO is here with me to present our results along with Laurent and Florent. As the pandemic is still present in several parts of the world, we continue to take Every possible measure to ensure the health and safety of all our employees, of course, this is paramount. Our CSR indicators in the first half as regards the number of accidents are showing continuing improvements. In the first half of twenty twenty one, we accompanied and helped our clients in managing their risk And in restarting their operations when needed, I would like to take the opportunity to thank Again, all our teams at Bouhouavetas remain highly mobilized and proactive. We have delivered an excellent set of results for the first half. The strong growth in revenue, Margins and cash illustrate excellent operational and financial performance across all of the group's portfolio. We are a credit to our people around the world after what has been an unbelievably challenging time over the past 18 months And continues to be so in several parts of the world. Revenue totaled €2,400,000,000 Up 14.3 percent organically, including a 22.5% increase in the 2nd quarter, Helped by the comparables. Adjusted operating profit rebounded by 75% year on year €378,000,000 with a margin of 15.6%. The increase was mainly driven by the strong top line. Cash generation was Cong at €229,000,000 reaching a 9.5% revenue conversion ratio. We enjoyed a big rebound in revenue and thanks to our highly disciplined management of working capital, It has remained low. As a consequence, the group's leverage ratio is down to 1.3 times. It is the lowest level since Bureau Veritas IPO. We benefit Fully from the balance portfolio we have established over the past 5 years and in the pie charts, you see First, how well diversified our business portfolio is and how the individual growth engines are driving each business forward. 2nd, the strong franchise across all continents. In the first half, all our regions grew double digit organically With Asia Pacific leading the pack. The Futuregrowth platform is now in place across all of the group And we are uniquely positioned to benefit from both macro and local trends in all the markets of all our businesses. To illustrate this in greater depth, let's look at the group's largest business, the Buildings and Infrastructure division. In the first half, B and I reached €700,000,000 of revenue, Equally balanced between OpEx and CapEx. It represented 40% of the group organic growth in H1. The business has 3 established growth platforms, which all delivered strong performance. First, Europe, Which is more than half the portfolio grew 15% organically. It was driven by regulatory services in France, Which was up 13% and Southern Europe, which grew above 30%. Secondly, Our Asian platform, which accounts for 21% of divisional revenue, recorded 17% organic growth. China performed very well with 24% growth fueled by large infrastructure projects. Thirdly, our Americas operations delivered 38% growth, thanks to a stellar performance in the United States. Growth was driven by large project management assistance for OpEx related services and strong dynamics for data Centre Commissioning Services. B and I's growth will continue to be driven by sustainability, which is now sponsored by concrete Government actions. Now turning to slide 9. Many countries have announced Large scale investment programs to support the transition towards a greener economy. At the recent G7 Summit, the importance of rebuilding a greener post pandemic world was one of the key messages. The return of the United States to the challenge of addressing global climate change will be a major driver. The stimulus plans such as the EU Green Deal, the American Rescue Plan in the U. S. And the Chinese 5 year investment plan target energy renovation, transport infrastructure, Industry Decarbonation or Agricultural Conditions. These are areas where Bluer Betas has Key expertise. These and other programs will generate numerous business opportunities for Bureau Veritas in the medium term, Supporting not only our Buildings and Infrastructure business, but also Energy, Business Assurance, Agreef Wood, our Consumer Products. Bureau Verita's green line of services and solutions is focused On capturing these opportunities, during H1, The focus on health, safety, quality and environmental stewardship has continued to gather momentum And importance amongst our clients. As a result, we have seen accelerating demand for our BB Green line of services and With our expertise, we serve our clients to meet their challenges all along the chain for all sectors of the economy And across all geographies. To give you a feel for what this means operationally for us, a few examples on slide 11 BV's great strength is being able to deliver a huge diversity of services. In the Resources and Production sector, H and M is taking major steps to reduce the H and M brand's costing and footwear hazardous chemical In the first half, they're extending their environmental chemical management beyond just scoping, Using Bureau Veritas Online Environmental Initiatives, they started measuring accessories and footwear. In the consumption and traceability area, contract runs from LP and Sodexo to upgrade their waste management certification in Spain, Supporting needle with food waste reduction or sustainable forest recertification and biodiversity services In the U. S. Now as regards social ethics and governance. Bureau Guaitas He's supporting Walmart with the launch of their automated platform, Eco, records from managing sustainability compliance. The platform will centralize and accelerate sustainable claim submissions and review processes with BV Performing the ECO claim document reviews. Bivi is providing the social audit services for both document review And field services to boohoo in the UK where the company has implemented a complete review of the social accountability status And there, entire supply chain. In these few examples, we'll give you a more tangible idea of why the BB Green line is becoming such An important growth driver. Francois will now take you through the first half results. Francois? Thank you, Didier. Hello, everybody. So let's cover the key takeaways from our first half results. Revenue is 4.1% higher than The 1st semester 2019 to be expected we have been helped by the catch up effect of regulatory inspection or audit mainly in the Q1. The catch up in work is probably largely behind us now and we are now back on track where we left So to speak before the pandemic. Our margins have also improved to pre crisis levels benefiting from higher volumes In a situation of strong recovery in the first half. That said, as there are still operational inefficiencies due to sanitary constraints, This is currently perhaps too early to say that we would return to prior peak margin in the full year. We delivered a strong free cash flow, Thanks to a strict CapEx policy and efficient working capital management, which absorbed the strong top line growth. Moving now to the revenue bridge on page 14. We delivered €2,420,000,000 in half year 2021 With an overall increase of 9.9 percent, organic growth reached 14.3%, Including a stellar 22.5 percent growth in the 2nd quarter, benefiting from improving end markets across most businesses And the return to a more normal operating environment compared to the 1st semester of 2020. Worth noting that the comparables would be more challenging in the 2nd semester 2021, especially for Certification, Marine Offshore and Building Infrastructure We benefited from a catch up of postponed audits for regulatory inspections in H2 2020. To be noted ForEx had a negative impact of 4.3% mainly due to the depreciation of some emerging countries' currencies And the USD and peg currency against the euro. Turning now to the adjusted operating margin. As you can see on the slide, the increase to 15.6% is largely explained by the increase in organic margin by more than 600 basis points. Scope had a 5 bps positive impact to the group margin and FX cost 23 basis points. For your information compared to 2019, our H1 margin improved by 20 basis points. For the full year, however, as mentioned, it's too early to directly extrapolate that improvement in H2 notably due to a tougher comparables. The revenue recovery and operating leverage drove organic margins higher in all businesses. This was supported by significant cost containment measures last year and favorable business mix. The best margin improvement came from customer products, certification NB and I having suffered the most from the lockdowns and other restrictions last year. The strong operational leverage Driven by the top line recovery, Allowed Consumer Products to deliver healthy 22.6%. Certification achieved an exceptional 19.4% margin With the additional benefits of digital audit and B and I margin recovered to a normal level of 14.7% in the 1st semester. Looking at the bridge between adjusted operating profit and operating profit, there is nothing Matteo to report. We continue of course when necessary and if necessary to adapt our business model, which led to a limited restructuring cost in the 1st semester. For the full year 2021, we expect recurring costs to be in the normal run rate of €10,000,000 Net financial costs decreased €23,000,000 in the first half of twenty twenty one compared to last year. This is thanks to the proactive debt management program we have initiated back in 2019. It reflects the decrease in the average growth debt And the decrease in costs due to the early repayments of some USPP and full chain loans in 2020 As well as our €500,000,000 bond early in 2021. Looking at tax rate now, The adjusted effective tax rate of the group decreased to 32.2% from 37.9% in the 1st semester 2020. The 32.2 percent tax rate reflects the decrease in the corporate tax rate in France and brings us back to a similar level than 2019. For the full year, We still expect adjusted ETR to be in the range of 33%. Moving to the free cash flow on slide 20. As to be expected with the level of growth we have seen in the 1st semester and particularly in Q2, there is always going to be the flip side impact On working capital, so at this stage, free cash flow is still very strong at close to €230,000,000 In more detail, we have continued with our well entrenched approach to cash collection. But with the Q2 top line growth at Slightly above 22%. It is no surprise at all to see a working capital requirement outflow of €68,000,000 The operational recovery allows us to restart some CapEx projects that were put on hold last year. CapEx stood at 2.2% of revenue compared to 1.9% in the first half of twenty twenty. And we would expect this to be in the range of 2.5% to 3% for the full year 2021. As you can see on the slide, our working capital to revenue ratio It was at 7.6% in the 1st semester 2021, which is 4 points below the period pre-twenty 20. So this has helped to maintain a strong free cash generation and close H1 with an even stronger financial structure. The adjusted net debt stood at €1,170,000,000 down 12% from December. Our healthy financial profile reflects a strong free cash generation, disciplined M and A strategy With €35,000,000 of spend, net of divestment, lease payments related to IFRS 16 implementation of €55,000,000 And limited dividend outflow of €8,400,000 at the end of June. So we closed the half year with a leverage ratio Of 1.30 times, as Didier mentioned, this is the lowest level since Biotas IPO back in 2,007. So to sum up, this strong financial performance has been delivered thanks to a lot of hard work from all the teams across the busy in a very positive, Yes, still complex environment as you can imagine. Moving now to the business review. Let me share with you the highlights of the first half for each of our six businesses. First, Marine and Offshore. The business delivered a solid 5.3 percent organic revenue growth in the semester, mainly led by strong growth in the in service activity. The shipping industry is under Great pressure as we know at the moment. And in this context, we saw a rapid catch up on inspection from 2020 And some H2 inspections were even put forward to H1. So we expect a slower rate of activity in H2 as a result. As regards new construction activity, our new orders increased to 4,800,000 gross tonne in H1, Up from €3,200,000 last year. The order book at €15,300,000 gross tons End of June is up 1.7% compared to December, and it remains very well diversified. For Agri Food and Commodities, the business improved in Q2 and recorded an organic growth of 4.1% in the 1st semester. Worth noting that our agri food business achieved high single digit organic performance. Growth It was mainly fueled by agri upstream in Brazil and food testing in North America. Rising concerns for more traceability and sustainability All along the food supply chain remains a key growth driver of the business so far. For Metals and Minerals, we recorded double digit Organic growth overall. It benefited from a strong exploration market across all major commodities with gold, copper, Iron Orr leading the way and the continuing success of the group On-site Laboratory strategy. Lastly, the Oil and Petrochemical segment continued to suffer from the lower demand for oil and oil products. We continue the diversification towards non trade related activities and value added segments such as biofuel, LNG or Oil Condition Monitoring. Moving to Industry now. Revenue increased by 9.5% organically in the first half Across the board, the strategy of diversification towards OpEx and Power and AT and T markets continue to bear fruit. The Power and Entity segment remained a key growth driver of the portfolio with double digit organic performance achieved in the 1st semester. Growth came from Latin America and Europe notably. This illustrates the good execution of our diversification strategy. In the medium term, we will significantly benefit from the growth opportunities related to renewables and alternative energies. Across most geography, we are currently bidding for several wind and solar power generation projects with a good level of signing in H1, notably in the U. S, in the UK And in the Nordics in Europe. Lastly, in Oil and Gas, the performance improved. We benefited from the restart of many projects which we have put on hold And from favorable comparables, as of today, the share of oil and gas CapEx, as you know, in the group has significantly reduced to 2% of the group revenue. Moving to Building and Infrastructure. Growth has been achieved at 19.5% in the first half Fueled by all regions, notably the Americas. As said earlier by Didier, the group is well positioned, 3 growth platforms across different geographies: Europe, Asia Pacific and North America. Similar growth was delivered in both Building and Service and Construction Rated Services. By region, we delivered very strong growth in Asia led by the recovery of China. Here the business remains driven by public transportation and energy infrastructure project. The stellar performance was delivered in the Americas led by a strong rebound of our U. S. Operation and it's a combination of large project management assistance And strong dynamics for data center commissioning services as Didier described it. For Consumer Products, The business recovered with an organic growth of 23.4% in the first half, benefiting from a large pickup of activity in Asia in all product categories. This reflects the ramp up of many operations which were in lockdown for much of the 1st semester 2020. Overall, the group made further progress in its diversification strategy towards online clients. It is also supported by Strategy towards online clients. It is also supported by CapEx and acquisition spend in the first half of twenty twenty one. Finally, certification. It's been the best performance within the portfolio, up 38.6% in the first half. The strong recovery was driven by a catch up of 2020 postponed audits in the Q1 and from the activity resulting from a year of re certification as regards to our schemes. All geographical areas experienced double digit organic growth. During H1, Bioeta Sustainability Services grew above 25%, Of which 32% in Q2 only, driven notably by a strong demand for greenhouse gas emission verification scheme. Comps have played a role in our H1 performance and will continue to do so in H2. When it comes to certification, 2021 is a year with a Strong quarterly volatility that we wanted to illustrate on Slide 26. The strong H1 first as discussed, While H2 will be facing more challenging comparables as you can see on the slide, Q3 2020 and notably Q4 2020 Already benefited from a catch up of postponed audit from H1 2020. The levels of revenue achieved were above the historical revenue average. Therefore, we expect H2 2021 to be negative from an organic point of view, however, remaining slightly above 2019 normative levels. To conclude this business review, it is an excellent set of numbers with some catch up as you could see during the presentation. And I hand now back to Didier for the outlook for the second half of twenty twenty one. Thank you, Francois. The excellent first half allows us to upgrade our outlook for the full year. Assuming that there are no severe lockdowns In our main countries of operation, we now expect to achieve strong organic revenue growth from Soled previously, improve the adjusted operating margin and generate sustained strong cash flow. Obviously, this includes, of course, a slower growth in H2 compared to H1 due to much tougher compares. In this volatile environment, we delivered strong operating and financial performance. Our past pro form transformation has been of Considerable benefit. Moving forward, Bureau Veritas is well positioned to benefit from strong macro drivers Such as sustainability. With the 2025 strategic plan, we will capitalize on our strengths And continue our successful journey of delivering a value creating strategy for BV. Thank you very much You'll then be advised when you can ask your question. The first question is coming from the line of Paul Sullivan from Barclays. Paul, you're unmuted. I may now go ahead. Yes. Good afternoon, everyone. A couple for me. Firstly, can you are you giving us the exit rate for June? And in terms of the second Outside of Certification and Marine, would you expect to see growth accelerate across the rest of the business on the 2 year view? And then on margin, you seem to be sort of reluctant to sanction a return to peak margins this year. Is that just a function of mix? Or are you thinking about some specific investment that we should be aware of? Thank you. So regarding your good question, Paul, on margin. I'm not sure the word we have is the right one, but probably the word prudent would be the one. It's true that we are prudent regarding the second regarding H2 margin evolution Well, for a very simple reason. It is the fact that today, we are still very cautious about what is happening in Asia. We know that there is some local mobility restriction in some countries in Asia today. So it's more cautiousness than reluctancy in pushing the margin up. By the way, we are very happy with our first Semester margin, and we hope that the 2nd semester could be At least at that level, but we will discuss it at the end of the year. Regarding now the second semester And your question on the Marine and Offshore and on certification. On the Marine and Offshore, in fact, we benefited from some catch up In each one, due to the fact that some services were not given to our clients last year, So we had to do it, and we had a strong result in term of service in H1. So in H2, it will be a different Situation, knowing that the very good backlog that we had and the order that we recorded will clearly start to Impact favorably our results next year in 2022, but we may have In the 2nd part of the year, quite a slowdown. On certification, as you know, we benefited in H1 On catch up, there is no doubt about it. And as you could see on the chart presented by Francois, We already benefited from some catch up last year in Q3 and Q4. So the compare is more challenging, Meaning that the margin, for instance, on certification, which is very good in H1, will be back To a normal level in H2. So it's the reason why we feel that and it's normal because of the compare that H2 We'll be at a lower pace in terms of organic growth. But in terms of everywhere else, Would you assume everywhere else should be accelerating versus 2019? As you could see, if you compare our results to 2019, we're They're delivering quite good results even if some countries are still suffering from the virus crisis. So again, I would be cautious. Of course, it will not be the same level H1. You asked about June, by the way, it was double digit exit rate. So we did very, very well in June. So again, the 2nd part of the year, now more and more we're comparing our To 2019, we should be over 2019, okay? But this leads us to, Let's say to think that we are going to achieve high single digit for the full year in organic growth. And sorry, just to clarify that June exit rate, What was it versus 2019? Versus 2019, Well, I would say as Didier mentioned, first a comment on June itself. So the compare to 2020 is a Double digit growth kind of a similar trend as all of the other month of the Q2. When it comes to the compared to June 2019, I would say don't forget there are a couple of days more 2 if I'm correct working days and it's You could plug in mid single digit growth compared to 2019. Okay. Super. Thank you very much. Thank you so much, Paul, for your question. The next Good afternoon. Thank you for taking my questions. Firstly, you mentioned an accelerated momentum for sustainability related solutions Kreia is the entire portfolio. I don't know if you can share more precisely the growth trends you see there and how we should look And secondly on certification, the certification benefited from strong momentum In CSR related services, are you able to share with us the proportion of certification related to sustainability? And lastly on M and A, could you give us an update of your M and A pipeline and your strategic priorities? Thank you. Okay. So I'm going to start with your last question on the M and A side. We have a pipeline and I could say that we have a strong pipeline, but we are extremely disciplined And we have decided with Francois that we will continue in that direction. Since 2015, we decided that we would Make acquisition exclusively consistent with our strategy, which we did. And I must say that amongst all acquisition, we did very well. I'm very happy with all of them. And we'll continue in the same direction, meaning we are looking at what we could call bolt on acquisitions, Which will bring more value, but which will bring also expertise that are going to be Complimentary to the expertise we have and by this way we can continue to develop And to accelerate the resiliency of the group. This is absolutely clear. On the sustainability, the only thing I can tell you today is that We grow because the answer should be activity by activity. So we go, thanks to the sustainability schemes, at a faster pace than the Average organic growth of the group. So meaning that all the sustainability program Again, we are touching all of our activities from BDNFRA to ESG certification are clearly tailwind for us And providing substantial organic growth on top of the, let's say, Average organic growth, okay. On the certification, we work a lot on the Supply chain as you know and more and more we are developing now CSR certification. Board and consumers want to be sure that the Companies which are committed on their ESG KPIs achieve it And it cannot be self declaration anymore. It has to be certified, inspected, audited By company like ours, independent third party companies. So we are very sophisticated on this Important certification scheme, we are at the beginning. We are at the beginning. As you can see, most LTIPs or bonuses of CO, you can see now Clear KPIs on ESG. Of course, now to develop trust, the final consumer and the Board wants to be sure that What is declared is achieved. So this is something which is accelerating clearly. Thank you. Thank you, Julian for your question. And the next question is coming from the line of Rajesh Kumar from HSBC. Rajesh, you're unmuted. I may now go ahead. Hi, good afternoon, gents. Thanks for the color on Marine and Certification that there was a bit of catch up from last year. If you were to characterize your growth in the first half or the revenues, whichever you prefer, What proportion of it is either increased catch up from last year or revenues which will not 1st, just beyond 2021, like some of the restart activities. And what proportion of the growth is Actually coming from the kind of CSR certification, which will be recurring in nature. That's the first question. Second question on the certification. You indicated that a company cannot do self certification anymore. So are you getting involved at the Board level with the company or At an operating subsidiary or company level where you issue them individual certificates, which Then the company can add up to with another party or you to arrive at a company level certification. And also that self certification rule, which geography is that valid? That would be the second. And finally, on The margin side, what are the lessons from the pandemic you've learned in terms of operating expenses? I can totally imagine at the moment your travel costs are lower. There are some one off tailwinds. But there must be some structural improvements in terms of automation, in terms of things you've figured out during the pandemic. So what sort of medium term structural margin improvement can one hope to Expect out of peer later. Thank you for your question, Rajesh. Francois, you could take The first one and the third one, maybe if you want, you could start by the third one on the margin, and I will take the one on the certification and this very A question on Board level decision and so on. So Francois? Yes. So just on question 3 and 1, I will start with question 3 on the margin. We've got a couple of lessons learned. And in my view, there are 3 lessons learned. The first lesson, and it may sound obvious, but it's always important to remind us This one is the best level of decision when it comes to cost management is having local management fully, Fully in charge to take fast rapid and quick action in the face of the pandemic. If we had to manage all cost Containment plan from Paris telling you the results would have been completely different and not better. So that's I think the empowerment of our local management is a very strong Strength of Puroverde. 2, on the broader more broader terms, the second lesson is Remote audit, remote inspection is getting traction. I think we've mentioned in Q1 communication The share of the audits which have been conducted in a remote manner, For example, for certification, in Q1, we saw this trend maintained in Q2, meaning above 20% All the certification audit have been done remotely. We'll see in H2 with some major geographies Somehow moving away from COVID restriction, if the clients will still be willing to operate remotely, But it has obviously a very positive impact in terms of improvement of chargeable time from our auditors And as a consequence, reduction of traveling times and traveling costs. So this is still something which is very present in our H1 numbers. And the 3rd lesson is we are a people business as you know And we saw that in summary, especially in the activities having laboratories, Automation, which was well underway is really getting a strong push For a reason as simple as that some of the workforce we had in summary has could not go back to the countries where they have been working. There is a lot of South Asian workforce which used to travel here and there, which is now limited in its travel capacity And that we have replaced through automated equipment especially in the metal and mineral laboratories In the O and P Laboratories. So remote audit, automation are getting traction throughout or that these are the lessons learned for this crisis. On the very first question on the catch up, to make things simple, Consider Q2 as a catch up free zone except for Marine and Offshore. Marine Offshore, we still had quite a bunch of surveillance audits, This time moving from H2 to H1, I can further elaborate if need be. But beyond Marine Offshore, all the divisions On the I would I'd be there to call it a normative rate, but I mean, when I say compared to 2019, But I think 3 of major catch up. Francois, thank you. Welcome on your question regarding certification and Board level decision. You're absolutely right. It's clear that today for instance I'm a Board member of a company In France, the CEO committed to the Board to have 75% of his product Rosie Klebold. So he said declare the fact that he achieved this target and I said no, no, no, but We need this to be inspected and audited, which is done now, showing it's not just because I was in the board, the board members We're asking exactly the same question. Now, in fact, the CEOs have to demonstrate and to prove that what is declared to Any audit firm which are more looking at the KPIs than purely going and inspecting, auditing and certifying It's true. And it's all about trust. So this is not going to be a choice because at the end you have the Board, But you have also the consumers. I'm thinking for instance about one of our clients, I can name it, it's L'Oreal. They came to us because they are telling on their shampoo bottle that there is no product in their shampoo. But now it's certified by Borobeta because we tested the product in our laboratories In terms of chemistry, there is no problem. And we are more and more now consulted by our own clients or other clients We'll have to prove to the community, their Board, but also the community and the citizens and their final consumers That what they said declare is true. It's all about trust. And of course, as independent company, we are very well placed Thank you so much for your question, Rajesh. And the next question is coming from the line of Annalise Vermillion from Morgan Stanley. Annalise, you're unmuted. I may now go ahead. Thank you and good afternoon. Thank you for taking my questions. I just have 2, please. So firstly on you've talked a lot about the operational leverage and cost efficiencies and so on. And given the very strong margin In some of your divisions in the first half, I'm just wondering how much of that is still being done on a lower head I don't know if you're still in the process of rehiring people or whether that is largely completed. I'm just wondering to what some of the work you've done in the past half has been thanks to, I suppose, an overutilization of staff. Any comment on that would be helpful. And then secondly, you've thank you for all the detail on the green line and the ESG activities, and you've obviously talked about growth Being ahead of the group for some of those pillars. And I'm just wondering if you could comment on the margin on some of those newer ESG Related activities that you're doing, are they typically margin accretive to the various divisions that they fall under? Or Is it relatively in line with the divisional average? Thank you. Okay. So Francois maybe you could answer the first question? Yes. So on the first question, staff and headcounts, I think together with Didier, we took from the beginning of this year a very Careful view when it comes to deciding to re recruit or restart recruiting We'll reinitiate salary increases and I think we've done it in a way that We have been looking geography by geography, business by business along the way. As soon as we saw Somewhat of an horizon long enough in terms of business, then we took the decision to relaunch all recruitment And lastly, I would say just a couple of months ago, we finalized or Perrised increases for the whole company. So it shows that we've taken a step by step approach because we are like you Building our own business, you based on the various news from the pandemic. So and I'm proud to report that We've re recruited vastly now in the U. S, in Europe, In China as well, we've rebuilt our workforce there. On the back of the business we've gained in H1, There is no mystery that the level of growth we have delivered is obviously Linked to the low comparable, but it's as well and most importantly been possible because we have Found the resources and re recruited the right level of resources. Otherwise, the math would not have been working that that's fine. So as we gained a lot of efficiency, I would say, yes, in Q1. In Q1 especially in certification where the demand was so strong that for a usually low quarter in term of activity Our auditors could deliver more than the usual and we went back to normative margin in Q2 to make it simple. Thank you, Francois. Moving to the margin linked to the green line. If you look at the green line, of course, as you can see, we I'm going to offer our services. It could be renewables. I'm thinking about wind farms, solar farms, hydrogen. We could offer our service on decarbonization programs and we could offer our service on traceability, bio food And to the end to what I call ESG certification. In fact, when you look at these various businesses and which all along The green line? In fact, the margin will be at least similar to the margin that we enjoy in the various activities. When I say at least similar, because it needs a particular expertise. If you are, for instance, in the, Let's say, industry part, energy, tomorrow our margin on when we work on the inspection of Wind Farm or Solar Farm or Hydrogena, which is when you think about the type of inspection on the hydrogen side, it's close to what we were doing In the past, in oil and gas and on the CapEx side. So meaning that we will enjoy the same level of margin, probably quite similar. Now if you go to certification, the average margin that we enjoy in certification will be quite the same, probably a little bit better As long as we go to some specifics. So along the green line, clearly the margin should be again at the same level for me. If you think about the green line, what is important is the traction and the potential of organic growth. And let's be clear, I believe it comes back to the margin that we enjoyed in the past, which I'm sure we will, but I would prefer growing the business at that type of margin But compared to being obsessed by getting a better margin and having a lower organic growth, because the potential is huge And it is the right time to take market share. And as we are leading the pack, of course, we push As much as we can, because again we can cover the whole line and none other can do it. That's very helpful. Thank you for the color. My pleasure, Annelies. Thank you, Annalise, for your question. The next question is coming from the line of Neil Tyler from Redburn. Neil, you're unmuted. I may now go ahead. Good afternoon. Thanks again for taking the questions. I suppose 3 I've got 3. First of all, coming back to Annalise's question, but Another perspective on cost phasing, I think at the end of 2020, you talked about the operating costs having declined by about 270,000,000 And broadly, 2 thirds of that might be viewed as more temporary. So assuming that sort of €180,000,000 figure still stands, is the first half run rate on costs Already incorporating a return of that $180,000,000 on an annualized basis. That's the first question. Secondly, with regards to the remote work and the lower travel costs and chargeable time, could you perhaps sort of share your views on whether the conversations and contracts you're signing with customers now Represent or translating into any sort of pricing pressure to reflect that Lower cost incurred. And thirdly, back to the restart with BV offering. Could you talk a little bit in a little bit more detail about the momentum that you've had so far and you anticipate over the remainder of the year with that? Thank you. Okay. I'm going to start with the last question, and Francois will take the first and the second one. On the restart your business with BV, Of course, because of the actual situation, we still have the opportunity to, let's say, sell this product. But more important than anything, What we are noticing now is that thanks to this service, We started to work with clients who were not used to work before and we are now delivering them New schemes, in particular in terms of health and safety. I'm thinking about For instance, we started with return your business with BV. And now we have like an inspection scheme To systematically inspect the hotel regarding hygiene and regarding, of course, Even safety or even safety. So in fact, it's bringing here, gurorbetas today, some new Opportunities with new clients that didn't know us before, for instance, because we had them on the B and I on the building and infrastructure side On services which are more like inspection certification type of services. So Now is it the real return restart your business with BV or a full Group of services is moving progressively to a full scope of services because during this pandemic crisis, Clariant started to be more concerned about the hygiene in some places, offices included. So it's reason why now it's probably more challenging to just measure purely start your business with BV, but it's bringing clearly revenue to Bureau Veritas. First and second question, Francois? Yes. So on the cost side just to be specific I can give you your numbers were broadly right. But just to be sure we're talking the same language. In 2020, the main cost adjustment was staff rated, 2 third people and 1 third was more cost driven including travel. So and it represents altogether the saving of €260,000,000 in the year 2020 compared to 2019. So reduction of roughly 9% and for subcontractor 19%. So what have we done in H1? If you read the numbers, we'd see that H1 our personnel costs are up €78,000,000 So part of The savings on 2020 have been expensed in a sense already back in 2021 in order to provide the workforce to deliver. On the external subcontractor parts, which is a second leg of our production capacity, The costs are up only €10,000,000 So we've clearly ensured that first our own staff Was really busy before moving to the usual flexible resources. Again, it's a complement what I've said before, meaning We have restarted our recruitment program in the areas where we had visibility strong enough to make sure that the people we're recruiting We're busy day 1 delivering services. Now the tough part of the question is not so much what we have done in H1, it's more how much we can keep moving forward. So it would obviously depend on the level of recovery. In H1, we have reinvested in a very selective disciplined manner. We have recruited in important geographies for Bioveratas, France, China, U. S. And believe me, you can't deliver 30 percent growth in B and I U. S. When you know about the U. S. Labor market today without getting smart on recruitment. So we are looking with Didier and all the extra members on our backlogs and we will continue the disciplined manner. So From a modeling point of view, we will be back to the number of staff we used to enjoy in 2019 somewhere in the second half of the year hopefully When your level of activity we'll be back to that part in a large part of organization. The other question I think I forgot about the first the other question you have. The remote work. The remote work. The current status? And the risk of Frankly, I would say it's a bit it's a bit too early to ask the question because we've developed this remote audit a lot in the U. S, in Europe, Say in mature economies, which are just getting out of the hopefully The restriction related to the pandemic. So most probably we'd be able to tell more after summer Because those discussions are happening as we speak. The audits being reviewed for summer are currently being organized. And I don't have or we don't have a consolidated view of the percentage of our clients willing to continue With Remote Solutions. So if you are if you honor me, I'll keep this question for the Q3 publication, and You have my commitment. I will give you a more detailed answer at that time. Very good. I look forward to it. Thank you. Thank you, Neil. Thank you, Neil for your question. And the next question is coming from the line of Kate Somerville from UBS. Kate, you're unmuted and now go ahead. Thanks. Good afternoon, everyone. Three questions from me, if I can. The first question is on building and infrastructure. Obviously, this has been above significantly above the 2019 level and mostly driven by the U. S. I was wondering if you could give a bit more detail around the main drivers in the U. S. And how much of that growth you expect to continue into H2? And secondly, sorry if I missed this, I just want to get an idea about what your new guidance means. Does that strong organic growth mean High single digit. And then finally, obviously, you've delivered strong cash flow. And I was just wondering if there's any change in your sort of Your use of cash, especially if you don't find significant M and A opportunities. Thanks. Thank you for your question, Kees. So strong, I'm going to start with strong. So strong means high single digit. On the infrastructure and building side in the U. S, we are doing extremely well with a company that we bought 3 years ago, which named Primary Integration. It's about data center. It's double digit organic growth and we have a backlog which is Very big. And this company as you know is doing technical inspection in data centers. And of course with the expansion of the data centers worldwide, we bought this company which was U. S.-based, But now we can give the service worldwide. But we decided to keep this company verticalized, it's a vertical for Borovitas because it's a pure expertise. So we deliver the service worldwide, but it's Again, the revenue is in the U. S. To give you an idea, there were 120 people working for PI 1 year ago, 2 years ago, and there are 200 people now. And these guys are extremely expert as you can imagine. The second is the OpEx. We bought this company named EMG and we won some very large projects across many sectors, Many sectors. In this case, in fact, we are defining Some protocols with retailers could be schools and after we go audit and inspect again these protocols. And this company is growing very fast, in particular because of what happened with the COVID, but not just that. For instance, you should take some I'm not going to give the brand name, but let's say, fast food shops, Chants, they decide to digitalize the way they are delivering their food. Our job here is to go and visit all of these fast food stores To check, inspect to be sure that they are compliant with the decision which is made centrally by the chain. And this is now something which is clearly moving fast in the U. S. The second point is a transaction. There are a lot of transaction and we are in this case inspected buildings before they are sold to new owners. And this is something which has accelerated a lot. So it's the reason why we have such a good performance in building an infrastructure in the U. S. And I must say that we are very pleased with these companies and some other we bought some good compliance companies. In this case, we are Auditing the at the design phase, We're auditing all the drawers the drawings, sorry. And we do it For the government or for the local authorities. And this again is expanding. And last but not least, infrastructure. As you may know, we got a very big contract with Sun Airport in which is LaGuardia In the U. S. And we are getting more. And you can imagine the opportunities we have in front of us after what happened in Florida With this building which collapsed because some building owners now want their buildings to be inspected. So It's the reason why we're doing so well in the U. S. On the building and infrastructure side. So I guess your question on cash, which is two sides in what's happening and what are we doing with this. I think on both sides of the equation, the answer is discipline. We are very disciplined when it comes to cash collection. And The all Boethas Executive Committee is clearly very much aligned on maintaining a high discipline in terms of cash collection and working capital management. I am personally extremely happy that despite the strong growth, we've maintained a working capital ratio to revenue Way below pre crisis levels, we used to be at 10%, 12%, 13% in H1 And we maintain below 8% at the end of June 7.6%, which for it's a sign that we may have learned something as well this crisis on this front and we remain very disciplined. So that's one. We are as well Very disciplined when it comes to capital allocation. What are we doing with this cash? It would be very tempting with the leverage at I think Didier has been very clear as well. We've been successful through Well organized bolt on acquisition program for the last 6 years now. We'll continue with this. You know the multiples are good at me. So far, we've managed to buy bolt on companies At affordable rates and a rate that brings a decent return to the shareholders and one intention is continue that route, continue that way. The inflection we'll be making in H2 compared to H1 It's more on the front of capital expenditure CapEx. We've remained very cautious in H1 And we are guiding for total CapEx in the full year closer to 2.53%, Which means somewhat of an acceleration and a good chunk of this acceleration would be on our Consumer Product division That we accompany to diversify geographically and diversify in terms of services, investing Continuing our investment in the technology front. So discipline on cash collection and discipline on investments For the second half of the year. Perfect. Very clear. Thank you. Thank you, Kate, for your question. And the final question is coming from the line of Nicolas Thabo from Stifel. Nicolas, you're unmuted, and now go ahead. Good afternoon. Thank you very much for taking my questions. The first one would be just a clarification on the O and P trends. I mean, are you expecting a rebound in Q3? And how is it evolving? And do you expect the price pressure to continue going forward? And then on Consumer Products, can you give us more color on the expected evolution of the profitability? As you just said, You intend to expand and invest in that segment over the at least the short term? Thank you very much. Yes. On your first question, Nicolas, on all on petroleum, I do not see any rebound. The good news is that we touched The floor, meaning that we do not see any more deterioration in both in terms of revenue and in terms of margin. So but I do not see any rebound yet and probably before a while. On the Consumer Product, Francois, would you answer this question? Yes. On Consumer Products, you've seen that at the end of the 1st semester, we are not quite yet back to 3.90% level in terms of revenue. But margin wise this division is usually delivering around 23% in H1 And around 25% in H2 mainly due to the seasonality of Chinese New Year. And I think we can say that We are back on track with this type of margins. So we expect H2 to reflect historical profitability Levels for Consumer Products. Thank you very much. Thank you, Nicolas. That was the last question, if I'm right. So I wish you all a good morning, good afternoon and good evening. And thank you for your attention. And for those who are going to be on vacation, good vacations. Thank you, everyone, for joining us on today's call. You may now disconnect your handset host. Please stay connected.